Thursday, September 28th 2023

Poolbeg Pharma PLC

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With their unique capital light model, exciting pipeline of products and platforms is now the time for Poolbeg Pharma?

 

“…Biotech investors may want to add POLB to their list of small caps to follow, a company with cash in the bank, an experienced management team, and they are entering a very exciting period with a number of near-term value inflection points…”

 

It’s been a tough year for biotech stocks, which have fallen with the wider technology market through 2022. But some of the more robust prospects are perhaps now moving into value territory, pressing ahead with the patient process of developing new treatments with the potential to open big new markets. One may be Poolbeg Pharma (AIM:POLB), which has made quiet progress this year towards defining three new candidate biotechnologies, and an array of other initiatives.

POLB is another sciences small cap to emerge from the Raglan Capital stable run by health care entrepreneur Cathal Friel, following in the footsteps of Open Orphan (AIM:ORPH) and Amryt Pharma (AIM:AMYT). The company aspires ‘to become a “one-stop shop” for big pharma to find Phase II ready products for development and commercialisation’. ORPH made waves at the height of the pandemic when it worked with the Government’s vaccines task force to organise the first Covid ‘human trial challenge’, in which volunteers were inoculated against the virus under controlled conditions. POLB aims to commercialise ORPH’s extensive clinical data repository, developed through 20 years of challenge trials testing how the body’s immune system can be boosted to overcome influenza, RSV, HRV, and now SARS-CoV-2.

POLB is organised according to an innovative ‘capital light clinical model’ designed to position the company to bring products to market quickly and cheaply where they can potentially be monetised through licensing to the pharmaceutical majors. CEO Jeremy Skillington says the model is ‘an important differentiator’ that allows the company to ‘reposition existing drug candidates and develop assets to Phase II stage quickly with relatively modest investment where they can then potentially be acquired/licensed to big pharmaceutical companies.’ POLB went public last summer, raising £25m, to which Mr Friel contributed £0.5m. The company has since listed on the OTCQB Venture Market to highlight its US profile. POLB’s management team has a proven track record in identifying, acquiring and accelerating biotech through development to commercialisation. Mr Friel, who serves as Chairman, has guided Amryt Pharma and Open Orphan to market, and respective values of £550m and £140m. Mr Skillington was instrumental in the £325m acquisition of biotech company Inflazome by pharma giant Roche.

POLB remains well capitalised for its ongoing programme, the company’s most recent interims reporting a cash balance of £18.9m as at 30 June 2022. The loss for the period was £1.6m, comprising R&D expenses of £0.7m and administrative costs of £1.2m.

POLB’s progress since IPO

 

POLB 001, the company’s flagship candidate technology, is a ‘Phase II-ready p38 MAP Kinase inhibitor’ offering an effective treatment for inflammation suffered by patients with severe influenza. Though there are robust vaccines influenza is still a brutal disease, infecting 12pc of the world’s population each year, causing five to 10 million hospitalisations and 500,000 deaths. Severe influenza triggers ‘cytokine storms’, violent whole-body responses to the infection that can generate serious complications including sudden, serious cardiac events, tissue damage, pneumonia and sepsis. Current treatments disrupt viral replication but, unlike POLB 001, do not directly address these hyperinflammatory episodes: Tamiflu, for example, the current market leader, becomes less effective within a couple of days, after which severe symptoms can lead to hospitalisation. If licensed POLB 001 would also offer potential for applications beyond influenza, including certain covid cases. 

On going public last year POLB was developing other prospects that draw on data and expertise accumulated by ORPH. The PredictVital Biomarker Platform is designed identify the risk of severe disease before the onset of symptoms, like POLB 001 reducing the need for antiviral treatments and their possible side-effects. And the Vaccine Discovery Platform will allow users to search the Open Orphan repository for new treatments based on reengineering of the immune system.

Since IPO POLB has progressed those prospects, and seeded other initiatives. POLB 001 has passed Phase I trials confirming its safety for human use, and, as of May, patents for both the European and US markets have been secured. Significant progress has been made towards Phase II trials, after which POLB would be able to begin the licensing process, which the company estimates might take some 18 months. In May POLB signed a contract for the manufacture of POLB 001 for use in a forthcoming Lipopolysaccharide (LPS) human challenge clinical trial, a major stepping stone towards Phase II trials. Access to a validated manufacturing process gives the company the flexibility to produce POLB 001 as and when required for the development of diseases beyond influenza. 

POLB achieved a significant breakthrough a few weeks later when the company received ethics and competent authority approval to begin the LPS trials, which got underway in July. The tests are assessing POLB 001’s effectiveness in dampening the robust immune response to LPS which acts as a surrogate for the hyperinflammatory response associated with severe influenza and other diseases. Results are expected ‘in Q4 2022’ at which point the company ‘intends to rapidly monetise by out-licensing/partnering with pharma and biotech companies for further development of POLB 001.’ The commencement of trials fulfils the promise POLB made on joining AIM to bring the technology to the clinic by the summer of 2022.

While progressing POLB 001 the company has advanced POLB 002, a novel, ‘first-in-class’ RNA-based immunotherapy for respiratory virus infections spun out from research at the University of Warwick. POLB has secured an exclusive licence to the dual antiviral prophylactic and therapeutic candidate, which is at a late-pre-clinical development stage, and which targets pan-respiratory virus infections, which could include influenza, respiratory syncytial virus, covid and others. Respiratory virus infections are a notorious worldwide killer, contributing to more than three million deaths each year. The vaccines and antiviral drugs currently available are typically pathogen specific, meaning that some 85pc of illnesses caused by non-influenza viruses cannot be adequately treated. A US patent for POLB 002 has been secured.

POLB has also signed an Option Agreement to with University College Dublin to licence POLB 003: MelioVac, a vaccine for melioidosis, an infectious disease commonly found in the soil and surface groundwater of tropical and subtropical regions. Also known as Whitmore’s disease, melioidosis is widespread in south-east Asia, northern Australia and India, and, through climate change, is spreading to South America. There are an estimated 165,000 cases of melioidosis each year, of which more than half prove fatal. There is currently no approved vaccine. The Agreement also gives POLB access to five other potential vaccine candidates discovered by the University.

In addition to advancing these three candidates, POLB has signed an agreement to access microencapsulation and nanoencapsulation technologies developed by AnaBio Technologies to develop an oral vaccine delivery platform. Oral vaccines, which trigger the development of ‘mucosal immunity’ that prevents pathogens from infecting the body, have been used for many years against polio and typhoid. POLB will work on broadening their scope.

POLB has also licensed cutting edge AI technology to help identify new treatments. The company will use AI analysis tools developed by OneThree Biotech to facilitate the identification of new drug targets and treatments for RSV. POLB says the is the ‘first time that AI analysis has been undertaken on RSV human challenge trial data and samples to identify new drug targets’. Preliminary outputs from the work is ‘expected in H2 2022’. A few weeks later POLB signed a deal with CytoReason, another AI company, for the analysis of influenza disease progression data derived from human challenge study samples. Five of the world’s top ten pharma companies use CytoReason’s technology including Pfizer, Sanofi, Merck KGaA and Roche. CytoReason will analyse blood transcriptomics, proteomics, DNA sequences and viral loads and disease signs and symptoms from the studies.

Outlook

 

POLB’s share price since going public has reflected the pattern of the wider biotech sector. The company’s stock performed strongly through much of 2021, rising from its IPO price to touch 13p this time last year. As with most of its peers, the price has since fallen back, to just under 5p at the time of writing, taking the company’s market cap to just over £23m.

The Nasdaq Biotechnology index has fallen almost a third from the all-time high it touched 12 months ago, the sell-off in the sector in part due to dumping by ‘tourist investors’ hunting for returns during the early stages of the pandemic. The process of bringing to market a new drug, blockbuster or otherwise, is a long one that tests the patience even of those investors with a keen understanding of the biotech market. The research phase alone can take half a decade or longer, while Phase 1, 2 and 3 clinical trials can add another five years.

But some asset managers with expertise in the sector are positioning their funds for a turning of the tide, considering that prices have fallen too far relative to firms’ drug development prospects and their remaining cash levels: many good companies have been sold off along with the more speculative. Blackstone, Carlyle and Apollo have all taken significant stakes in biotech, reflecting the sector’s mainstreaming as an asset class. Companies that do progress through to the trial stage can reap exceptional rewards. Verona Pharma (US:VRNA) – AIM-traded until 2019 – saw its shares rise by 60pc in a day on news of a positive phase 3 trial for its respiratory drug.

Biotech offers opportunities for investors willing to do the research to pick the right companies, and who are prepared to wait for the regulatory process to take its course. Advances in fields such as genomics, biotechnology, diagnostics, radiotherapy and robotic surgery make it possible even for small caps to identify and treat an ever wider range of conditions. New starts have, for example, pioneered groundbreaking gene sequencing treatments, and are revolutionising the treatment of cancer through ingenious manipulation of the immune system.

Biotech investors may want to add POLB to their list of small caps to follow, a company with cash in the bank, an experienced management team, and a clear roadmap. Events on the horizon include results from the company’s RSV and influenza AI programmes, expected by the end of 2022 and Q2 2023 respectively, and from the POLB 001 LPS human challenge trial, which, if positive, will open the way to out-licencing to interested parties within the pharma and biotech sector, generating revenues from upfront payments and subsequent royalties.

To view the latest Company presentation click here

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