Echelon Wealth Has Antibe As Q1-2020 Top PickNot sure if this has already been posted. Details of ATE here are pretty much known to those already following diligently, but it's a good summation and overview. Source is https://www.theglobeandmail.com/files/editorial/Investing/ResearchReportPDFs/Top_Picks_Q1_Report_20200115.pdf (Globe and Mail paywalled site) which has lots more data beyond the main overview below. If you are a G&M subscriber, I highly recommend downloading it.
Antibe Therapeutics (ATE-TSXV) | 7 January 2020
Maintaining Top Pick Status For Innovative Pain Therapy Developer. Data From Key Phase II Trial Expected By Quarter-End
Projected Return: 204%
Valuation: NPV, 20x EPS, 12.5x
EV/EBITDA (F2025 est, 40% disc)
Event: We are maintaining our Top Pick status for ON-based drug developer Antibe
Therapeutics.
ATE shares performed well in anticipation of pending Phase II knee osteoarthritis pain data
for flagship naproxen analog drug ATB-346: During the relevant Q419 period to which our
Top Pick status applied, ATE generated total return of 15.4% that we believe reflects
favorably on investor optimism for how well the firm’s lead hydrogen sulfide-releasing
naproxen analog drug ATB-346 could perform in ongoing Phase II knee osteoarthritis pain
testing. For comparison, ATE was also one of our Top Picks during the Q319 financial period,
during which the stock also performed well (and presumably on the same Phase II data
expectations) by returning 21.9% during that period.
A bit of timeline slippage to Phase II data, but rigors of patient inclusion criteria and
ambitious logistics seem to be the likely culprit and not any limitations in ‘346 itself: Our
own investment thesis continues to reflect similarly on ATB-346’s medical prospects in pain
markets where Bayer’s (BAYN-DE, NR) branded naproxen formulation Aleve continues to
generate reasonably strong, if declining, annual sales data (€351M in F2018), though with
some recent slippage on patent expiration dynamics. That said, we are moderately
disappointed in extended timelines to data for this 360-patient multi-arm trial (two week
changes in WOMAC-quantified pain intensity in comparison to baseline and to placebo with
ATB-346 daily doses ranging from 150 mg-to-250 mg) that were originally expected by us to
be available by end-of-Q319. We reflected on timelines to data in our recent November 28th
note.
Our revised projections now assume that patient enrollment will resume imminently (if not
already) and that data could be available near end-of-Q120, probably by Mar/20 if final
patients are enrolled near end-of-Jan/20 and data lock transpired during Feb/20, both of
which seem reasonable to us. Final safety data will be equally important for supporting
future ATB-346 clinical testing, and data read-out on this theme could be available later in
Q220 (treatment-related adverse events will be tracked over three weeks, and so a bit
beyond timeframe over which primary efficacy will be assessed on pain mitigation).
Demonstration of naproxen-like pain relief without naproxen-like side effects is a seminal
Phase II expectation embedded into our model: As we have stated before, Antibe has strong
Phase I/II evidence from a 244-patient GI ulcer frequency/severity study that showed ATB-
346-treated patients (at 250-mg daily dosing, at the top-end of the range being tested in the
aforementioned knee osteoarthritis pain trial) experienced dramatically reduced GI
ulceration rate as compared to naproxen-treated patients (at its indicated dose of 550-mg
twice-daily).
The gap in GI ulceration rate of 42.1% for naproxen-treated patients vs 2.5% for ATB-346-
treated patients at two weeks was unambiguously positive for ‘346, and though we did have
clear evidence from a 12-patient Phase II open-label knee osteoarthritis pain trial that ‘346
also confers naproxen-like pain relief at this much lower dosage strength, it was clear then as
now that Antibe required much more statistically rigorous pain data to engender confidence
in the drug’s ability to simultaneously confer naproxen-like pain relief without naproxen-like
ATE-TSXV: $0.46
Speculative BUY
$1.40 TargetAntibe Therapeutics (ATE-TSXV) | 7 January 2020
Douglas Loe, PhD MBA | 416.775.1004 | dloe@echelonpartners.com