Cereno Scientific — CS1 shines in Phase IIa PAH trial

CS1-003 is a randomised, open-label, blinded endpoint, multi-centre Phase IIa trial designed to evaluate the safety and tolerability of CS1 (primary endpoint), as well as pharmacokinetics (PK) and the exploratory efficacy of CS1 (Exhibit 1). A key feature of the trial is the collaboration with Abbott, enabling access to Abbott’s CardioMEMS heart failure (HF) System, which was implanted in patients and used to continuously monitor pulmonary pressure, alongside other measures of cardiopulmonary function.

25 patients met the eligibility criteria and started in the study, and were included in the safety analyses for the trial. These 25 patients were randomised to one of the three doses: 480mg, 960mg or 1,920mg. Of the nine patients randomised to the 480mg arm, two were not evaluable, while in the 960mg and 1,920mg arms, one from each group was not evaluable. This gave seven evaluable patients in each arm of the study, all of which were included in the efficacy analyses as a pooled group due to PK observations that therapeutic drug exposure was achieved in the lowest dose group.

The CS1-003 trial was primarily intended to assess the safety and tolerability of CS1 treatment in patients with PAH (along with certain exploratory efficacy measures; study design discussed in detail later) for a 12-week treatment duration. The recently reported top-line results indicated that CS1 successfully met the primary endpoint of safety and tolerability, with no CS1-related serious adverse events at any of the administered dose levels (up to 1,920mg once a day) and only two patients discontinuing treatment due to treatment-emergent adverse events (TEAEs) (Exhibit 2). Moreover, administration of the drug did not result in clinically significant platelet reductions or bleeding events, nor were there any observed liver-related toxicities.

While Cereno has not specified the exact treatment-related TEAEs, the company reported that there were no CS1-related side effects serious enough to require hospitalisation or to cause mortality. In our opinion, this compares favourably so far with other available treatment options for PAH which often come with challenging side effects. For example, prostanoids/prostacyclin analogues from a class of drugs termed vasodilators (used in combination background therapy for PAH) come with difficult side effects such as nausea, vomiting, diarrhoea, dizziness and headache. Sotatercept (brand name Winrevair; Merck), the recently approved treatment for PAH, is also associated with serious side effects such as (but not limited to): bleeding, erythema, diarrhoea and dizziness. We note that in addition to safety and tolerability, CS1 is differentiated by its convenient oral dosing, compared to the injectable or infusion routes used in the aforementioned treatment options.

While we note that the CS1-003 trial was not powered for statistically significant tests of efficacy-related parameters, the descriptive analyses of the exploratory efficacy endpoints are encouraging, in our opinion. The company reported results for three standard efficacy measures in PAH:

REVEAL risk scores is an approach which assigns scores based on a range of distinct variables (including demographic data, clinical characteristics, laboratory data and hemodynamic results) to predict survival in patients with PAH. The risk scores range from 0 to 22, with the latter representing the highest risk. Patients with a risk score of 1–6 are considered to be low risk (12-month mortality risk of ≤2.6%), 7–9 are termed intermediate risk (12-month mortality risk of 6–7%) and those with a score of ≥9 are labelled high risk (12-month mortality risk of ≥10.7%).

According to the reported data from the CS1-003 study, 43% of the patients (nine out of 21) reported at least a one-point improvement on the REVEAL risk score, with 71% patients (15 out of 21) having an improved or stable risk score (Exhibit 3). This is important, as a one-point reduction in risk score over a 12-week period is associated with a material 23% reduction in relative risk of death after 12 months. We also believe that 29% (six out of 21) of the patients having stable scores is also meaningful, given that PAH is otherwise a fast-progressing condition lacking spontaneous improvement.

The second efficacy measure used in the study was the change in the NYHA Functional Class (FC) from baseline, an indicator of the physical activity levels and movement in patients. The 25 randomised patients in the CS1-003 study were categorised as FC II (slight limitation of activity; 10 patients) and III (marked limitation of activity; 15 patients). Of the 21 evaluable patients, the study results indicated that 33% (seven out of 21) reported an improvement in FC, while 86% (18 out of 21) noted improved or stable functional class (Exhibit 4).

The third efficacy parameter for which data were reported was the change in mPAP. Cereno collaborated with Abbott’s CardioMEMS HF System to take daily readings of pulmonary pressure (85 readings, as an average over 20 seconds, per patient over the 12-week study duration), which provided a robust and objective basis for the analysis. Normal pulmonary artery pressure is 11–20mmHg at rest and a reading of >20mmHg is associated with PAH patients.

The study results indicate that two-thirds (67%) of the patients had a sustained reduction in mPAP (14 out of 21). Moreover, the reduction in mPAP was as high as 5mmHg for one of the patients, with the reduction ranging from 0.3–4.3mmHg for the other patients who reported improvement with the treatment (Exhibit 5). For reference, management highlighted the strong correlation between reduction in estimated pulmonary artery diastolic pressure (ePAD, similar to PAP) and mortality rates, with one study indicating a 5mmHg reduction in ePAD from baseline over six months to reduce mortality risk by 30%.

We highlight that the case shown in green in Exhibit 5 relates to a patient case study. The patient was the first to complete the treatment protocol and reported significant improvement on all PAH measures, including a 30% reduction in mPAP, and improvement from FC II to FC I (see our initiation note for more detail). The full study results highlight that 10 patients exhibited greater reductions in mPAP than this case study patient, emphasising the potential of CS1 to induce clinically meaningful benefits in PAH, in our view.

In addition to the three exploratory efficacy endpoints, management presented further insights from the Phase IIa clinical data, of which pulmonary vascular resistance (PVR) serves as an indirect hemodynamic measure of reverse remodelling and therefore potential for disease modification. PVR is an indicator of obstruction in the vessels and measures resistance against blood flow. It is measured in Wood units with <2 Wood units reflecting normal PVR and ≥3 Wood units indicating pulmonary hypertension.

A more detailed analysis of the data indicates that 10 of the 21 patients who completed the study showed an improvement in PVR (Exhibit 6). For one of the patients, the PVR value improved by more than 50%, from 12 Wood units (as highlighted on the x-axis) to 6 Wood units (y-axis). Moreover, five patients reported improvements between 35% and 51%, with a mean improvement of 45% among these five. Importantly, four of five best responders in terms of PVR improvement were from the low-dose group, indicating that therapeutically efficacious results were achieved in the low to mid-dose ranges (480–960mg), which we believe will likely be the doses tested in the next stage of clinical development.

For the five patients with the highest PVR improvement, management noted the inverse relation between PVR values and stroke volumes, highlighting the potential of CS1 in improving right heart function (and therefore disease-modifying capability) through improvement in PVR (Exhibit 7).

Collectively, we view the trial results as highly encouraging for Cereno’s HDACi programme. We highlight that these results add to the data package to support valproic acid (VPA, the active ingredient in CS1 and a form of which was the active ingredient in CS014) as a potentially disease-modifying treatment for PAH. This is underpinned by previously published data (further details in our initiation note) showcasing the potential of VPA to prevent and reverse vascular remodelling, recently complemented by new CS014 data which show a dose-dependent effect on remodelling (further details below).

We note that while the small size of CS1-003 may limit wider conclusions on efficacy, the data presented are sufficiently encouraging to warrant further clinical development, in our view. Management has indicated that it will engage with regulators to discuss plans for a potentially pivotal trial in PAH, which we believe will need to be placebo controlled. We expect to hear the outcome of a regulatory decision on this in H125, with the subsequent Phase IIb/III trial likely to commence from early 2026. While it is unclear whether a second Phase III study will be required for regulatory filing, for now we assume one late-stage trial will be sufficient, with potential market launch from 2029, provided the subsequent trial results are supportive.

While Cereno prepares for its discussions with the regulators on the next steps for CS1, it continues to progress with its Expanded Access Programme (EAP) for CS1, which is applicable to the patients who have completed the initial 12-week Phase IIa study. The EAP, which was approved by the FDA in January 2024, dosed its first patient in August 2024 and we expect long-term data from this in H125.

Cereno also recently announced an agreement with medical technology company Fluidda to visualise CS1’s impact on inducing long-term reverse remodelling in PAH, using Fluidda’s Respiratory Imaging solutions in a clinical trial setting. Management has communicated that discussions are ongoing with a PAH specialist to launch an investigator-initiated trial (IIT) with CS1 in collaboration with Fluidda (update in H125). Some of the patients currently enrolled in the EAP are also intended to be included in the IIT.

We expect these two initiatives to support Cereno in gaining additional insights on CS1’s potential in PAH, while helping secure the data package to aid subsequent regulatory discussions as the asset progresses to the later stages of clinical development.

Cereno’s portfolio also includes CS014 which, like CS1, is an HDACi that has been optimised for thrombosis prevention, for which preclinical data have indicated that this may be achieved without increased risk of bleeding. The candidate entered a Phase I study in June 2024 and Cereno recently presented encouraging preclinical data highlighting the potentially disease-modifying properties of CS014 in PAH and related pulmonary vascular indications. The new data come from what the company reports as a well-established model of PAH and demonstrate a robust, dose-dependent reversal of pulmonary vascular remodelling, including statistically significant reductions in small artery vessel occlusion, plexiform lesions and small vessel-related fibrosis.

We believe these observations, along with the encouraging Phase IIa CS1 data, reinforce Cereno’s efforts on building its HDACi programme, which plans to leverage epigenetic modulation to develop effective and potentially disease-modifying treatments for cardiovascular conditions. Management is targeting CS014 Phase I completion in H125, along with the required regulatory approvals for a Phase III trial. We look forward to further updates from the company on this front.

Cereno recently reported Q224 results. For a more detailed discussion of the company’s current financial position and other ongoing activities, please refer to our previous update note.

We continue to value Cereno using a risk-adjusted net present value (rNPV) approach, but increase the probability of success of the CS1 programme to 40% (from 25% previously). We plan to revisit these assumptions once there is more clarity on the next stage of clinical development. We understand that regulatory clearance for the next stage of clinical development will most likely be from H125 and could represent a major upcoming catalyst for Cereno. Provided regulators are supportive, this would lead to the subsequent trial potentially commencing from early 2026. As a result of this adjustment, we upgrade our valuation for Cereno to SEK3.9bn or SEK13.9/share from SEK2.6bn or SEK9.1/share previously (see Exhibit 8).