Auris recently announced that the TRAVERS Phase II trial of AM-125 (intranasal betahistine) for treating acute vertigo is being initiated at study sites as regulatory and ethics committee approvals are coming in. An interim analysis of the data is expected in Q419. Also, its AM-201 Phase I trial for olanzapine-induced weight gain reached the midpoint in enrollment in early May and is on track for full enrollment by the end of June. Top-line data is expected in Q319.
Written by
Auris Medical Holding |
Data coming in second half |
Development update |
Pharma & biotech |
4 June 2019 |
Share price performance
Business description
Next events
Analysts
Auris Medical Holding is a research client of Edison Investment Research Limited |
|||||||||||||||||||||||||||||||||||||||||||||||||
Auris recently announced that the TRAVERS Phase II trial of AM-125 (intranasal betahistine) for treating acute vertigo is being initiated at study sites as regulatory and ethics committee approvals are coming in. An interim analysis of the data is expected in Q419. Also, its AM-201 Phase I trial for olanzapine-induced weight gain reached the midpoint in enrollment in early May and is on track for full enrollment by the end of June. Top-line data is expected in Q319.
Year end |
Revenue (CHFm) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/17 |
0.0 |
(25.9) |
(10.72) |
0.0 |
N/A |
N/A |
12/18 |
0.0 |
(12.0) |
(15.33) |
0.0 |
N/A |
N/A |
12/19e |
0.0 |
(11.3) |
(2.56) |
0.0 |
N/A |
N/A |
12/20e |
0.0 |
(17.2) |
(3.75) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalized, excluding amortization of acquired intangibles, exceptional items and share-based payments. Also, prior year EPS was adjusted for the 1:20 reverse stock split in May 2019.
TRAVERS trial interim data in Q419
Auris is developing AM-125, an intranasal formulation of betahistine for the treatment of acute vertigo. As AM-125 bypasses the digestive tract where the oral compound is readily metabolized, the intranasal formulation has demonstrated superior bioavailability over oral betahistine. The Phase II trial, TRAVERS, will include 138 patients with surgically induced acute vertigo following vestibular schwannoma excision. The trial is currently being initiated at study sites with interim data expected in Q419.
AM-201 trial nearing full enrolment, data Q319
Auris also is developing AM-201, an intranasal betahistine formulation, for co-administration with olanzapine to counteract adverse effects such as weight gain and sleepiness. The company is currently enrolling the Phase I trial in Q119 in 50 healthy volunteers in Europe and is expected to complete enrolment this quarter. Data is expected in Q319.
A reverse split and capital raise
In May, the company conducted a 1-20 reverse split in order to regain Nasdaq listing compliance and also completed a public offering of shares and prepaid warrants with approximately $7.6m in net proceeds.
Valuation: $131.0m or $32.23 per basic share
We have adjusted our valuation from $123.4m or $3.29 per basic share ($2.74 per diluted share), to $131.0m or $32.23 per basic share ($29.49 per diluted share). The increase in overall valuation was primarily due to a higher level of net cash while the increase in the per share value was due to the 1-20 reverse split, which was partially offset by the dilution from the equity raise.
AM-125 TRAVERS Phase II trial coming online
Auris recently provided an update on its AM-125 clinical program for the treatment of acute vertigo. The TRAVERS trial is a randomized, controlled, double-blind Phase II trial divided into two parts (Exhibit 1) and will include 138 patients in total with surgically induced acute vertigo following the removal of vestibular schwannoma (which is a noncancerous tumor on the main nerve leading from the inner ear to the brain, also known as acoustic neuroma). Vestibular schwannoma surgery leads to loss of peripheral vestibular input, which triggers acute vertigo.
In Part A of the trial, which the company is in the process of initiating, 50 patients will be administered AM-125 or placebo in five dose cohorts three times daily and 16 patients will receive 48mg oral betahistine three times daily (open-label, for reference purposes). Dosing will begin roughly three to four days after surgery. The company plans to report interim data in Q419 and expects to determine a dose-response curve and select a low dose and a high dose of AM-125 for the second part of the trial, which will be measured against placebo. Then in Part B of the trial, the company plans to enroll 72 patients.
Exhibit 1: TRAVERS Phase II trial outline
No. of patients |
Dose (three times daily) |
Timeframe |
Primary endpoints |
Secondary endpoints |
|
Part A |
50 (experimental) |
Five doses up to 20mg with AM-125 |
Four weeks |
Standing on foam, tandem Romberg test |
Tandem gait, subjective visual deviation and subjective questionnaires |
16 (placebo) |
48mg oral betahistine |
||||
Part B |
72 |
High dose and low dose (determined by interim analysis) vs placebo |
Four weeks |
Standing on foam, tandem Romberg test |
Tandem gait, subjective visual deviation and subjective questionnaires |
Source: Auris Medical
Auris previously demonstrated the superior bioavailability of AM-125, intranasal betahistine, compared to oral betahistine (48mg) in both single and multiple doses (Exhibits 2 and 3) in its Phase I trial. Adverse events (AEs) were mild to moderate, described as transient and included sneezing and nasal congestion, which corresponded to dose. One patient withdrew from the trial due to an AE, but no serious AEs were reported. According to Auris, the maximum tolerated repeated dose based on local tolerability in the nose was identified and set at 40mg; the maximum tolerated single dose was not reached at 60mg.
|
Exhibit 2: Single-dose AM-125 bioavailability vs oral betahistine |
Exhibit 3: Multi-dose AM-125 bioavailability vs oral betahistine |
|
|
|
Source: Auris Medical |
Source: Auris Medical |
|
Exhibit 2: Single-dose AM-125 bioavailability vs oral betahistine |
|
|
Source: Auris Medical |
|
Exhibit 3: Multi-dose AM-125 bioavailability vs oral betahistine |
|
|
Source: Auris Medical |
AM-201 for olanzapine-induced weight gain
Auris has also initiated the Phase Ib pharmacokinetics/pharmacodynamics (PK/PD) trial in AM-201, intranasal betahistine for the prevention of olanzapine-induced weight gain. Fifty healthy volunteers are currently being enrolled at one site in Europe and the trial was halfway through enrolment as of early-May. Enrollment is expected to complete by the end of June with data in Q319. The primary and secondary endpoints are weight gain and daytime sleepiness, respectively, whereas PK analysis will assess potential drug to drug interaction.
Exhibit 4: AM-201 Phase I PK/PD trial design
Screening |
Olanzapine titration |
Maintenance |
|
■ Male and female healthy volunteers ■ 18–50 years of age ■ BMI 18–25kg/m2 |
■ Titrate up to 10mg (7.5mg) once daily within first week ■ Replace subjects who do not tolerate olanzapine or gain a clinically relevant amount of weight/high glucose level |
■ Maintain olanzapine dose for three weeks |
Source: Auris Medical
Valuation
We have adjusted our valuation from $123.4m or $3.29 per basic share ($2.74 per diluted share), to $131.0m or $32.23 per basic share ($29.49 per diluted share). The increase in overall valuation was primarily due to a higher level of net cash, while the increase in the per share value was due to the 1-20 reverse split, which was partially offset by the dilution from the equity raise. Note that the company has moved from quarterly to semi-annual financial reporting, hence we are using the 31 December 2018 cash level as our baseline.
Exhibit 5: Valuation of Auris Medical
Program |
Market |
Indication |
Clinical stage |
Probability of success |
Launch year |
Peak sales |
rNPV |
|
AM-125 |
US |
Acute vertigo |
Phase I |
30% |
2023 |
88.73 |
$23.7 |
|
AM-125 |
Europe |
Acute vertigo |
Phase I |
45% |
2022 |
113.12 |
$59.2 |
|
AM-201 |
US |
Mental health supportive care |
Phase I |
20% |
2024 |
128.72 |
$15.4 |
|
AM-201 |
Europe |
Mental health supportive care |
Phase I |
20% |
2025 |
143.85 |
$21.1 |
|
Total |
119.48 |
|||||||
Net cash and equivalents (As of 31 December 2018 + May offering) ($m) |
11.56 |
|||||||
Total firm value ($m) |
131.04 |
|||||||
Total basic shares (May 2019 estimated, m) |
4.1 |
|||||||
Value per basic share ($) |
32.23 |
|||||||
Options and warrants (as of 31 December 2018, split-adjusted, m) |
0.4 |
|||||||
Total diluted shares (m) |
4.4 |
|||||||
Value per diluted share ($) |
29.49 |
|||||||
Source: Auris Medical reports, Edison Investment Research
Financials
As of 31 December 2018, Auris had CHF5.4m in cash and equivalents and CHF1.4m in debt. After the end of the quarter, Auris announced the full repayment of its loan facility with Hercules Capital, which eliminated the CHF1.4m in debt. In May, the company raised approximately $7.6m in net proceeds through the issuance of 440,000 shares of common stock and 1,721,280 in pre-funded warrants. In our forecasts, we model a total of CHF57.4m in financing needs through 2023 (previously CHF65m from which we subtracted the $7.6m in equity proceeds). We record this need as illustrative debt.
Exhibit 6: Financial summary
CHF000s |
2017 |
2018 |
2019e |
2020e |
|||
Year end 30 December |
IFRS |
IFRS |
IFRS |
IFRS |
|||
PROFIT & LOSS |
|||||||
Revenue |
|
|
|
0 |
0 |
0 |
0 |
Cost of Sales |
0 |
0 |
0 |
0 |
|||
Gross Profit |
0 |
0 |
0 |
0 |
|||
Research and development |
(19,211) |
(6,690) |
(6,800) |
(12,000) |
|||
Selling, general & administrative |
(5,150) |
(4,265) |
(4,307) |
(4,393) |
|||
EBITDA |
|
|
|
(24,484) |
(11,027) |
(11,253) |
(16,539) |
Operating Profit (before amort. and except.) |
|
|
|
(24,361) |
(10,954) |
(11,180) |
(16,466) |
Intangible Amortization |
0 |
0 |
0 |
0 |
|||
Exceptionals/Other |
0 |
0 |
0 |
0 |
|||
Operating Profit |
(24,361) |
(10,954) |
(11,180) |
(16,466) |
|||
Net Interest |
(1,586) |
(1,070) |
(96) |
(696) |
|||
Other (change in fair value of warrants) |
1,520 |
690 |
0 |
0 |
|||
Profit Before Tax (norm) |
|
|
|
(25,947) |
(12,024) |
(11,276) |
(17,162) |
Profit Before Tax (IFRS) |
|
|
|
(24,427) |
(11,334) |
(11,276) |
(17,162) |
Tax |
18 |
(162) |
0 |
0 |
|||
Deferred tax |
322 |
1,266 |
0 |
0 |
|||
Profit After Tax (norm) |
(25,929) |
(12,186) |
(11,276) |
(17,162) |
|||
Profit After Tax (IFRS) |
(24,087) |
(10,230) |
(11,276) |
(17,162) |
|||
Average Number of Shares Outstanding (m) |
2.4 |
0.8 |
4.4 |
4.6 |
|||
EPS - normalised (CHF) |
|
|
|
(10.72) |
(15.33) |
(2.56) |
(3.75) |
EPS - IFRS (CHF) |
|
|
|
(9.96) |
(12.87) |
(2.56) |
(3.75) |
Dividend per share (CHF) |
0.0 |
0.0 |
0.0 |
0.0 |
|||
Gross Margin (%) |
N/A |
N/A |
N/A |
N/A |
|||
EBITDA Margin (%) |
N/A |
N/A |
N/A |
N/A |
|||
Operating Margin (before GW and except.) (%) |
N/A |
N/A |
N/A |
N/A |
|||
BALANCE SHEET |
|||||||
Fixed Assets |
|
|
|
1,959 |
3,812 |
3,739 |
3,667 |
Intangible Assets |
1,629 |
3,535 |
3,535 |
3,535 |
|||
Tangible Assets |
253 |
34 |
(39) |
(112) |
|||
Other |
77 |
243 |
243 |
243 |
|||
Current Assets |
|
|
|
15,868 |
6,065 |
3,415 |
2,195 |
Stocks |
0 |
0 |
0 |
0 |
|||
Debtors |
241 |
320 |
111 |
170 |
|||
Cash |
14,973 |
5,393 |
2,953 |
1,674 |
|||
Other |
653 |
351 |
351 |
351 |
|||
Current Liabilities |
|
|
|
(10,426) |
(4,563) |
(3,117) |
(3,986) |
Creditors |
(5,884) |
(3,127) |
(3,117) |
(3,986) |
|||
Short term borrowings |
(4,542) |
(1,435) |
0 |
0 |
|||
Long Term Liabilities |
|
|
|
(9,563) |
(1,665) |
(4,065) |
(19,065) |
Long term borrowings |
(5,584) |
0 |
(2,400) |
(17,400) |
|||
Other long term liabilities |
(3,979) |
(1,665) |
(1,665) |
(1,665) |
|||
Net Assets |
|
|
|
(2,162) |
3,649 |
(27) |
(17,189) |
CASH FLOW |
|||||||
Operating Cash Flow |
|
|
|
(25,827) |
(14,447) |
(11,005) |
(16,279) |
Net Interest |
1,569 |
1,053 |
0 |
0 |
|||
Tax |
(18) |
162 |
0 |
0 |
|||
Capex |
(153) |
(1,891) |
0 |
0 |
|||
Acquisitions/disposals |
0 |
68 |
0 |
0 |
|||
Financing |
10,308 |
15,005 |
7,600 |
0 |
|||
Dividends |
0 |
0 |
0 |
0 |
|||
Other |
(2,034) |
0 |
0 |
0 |
|||
Net Cash Flow |
(16,154) |
(50) |
(3,405) |
(16,279) |
|||
Opening net debt/(cash) |
|
|
|
(20,078) |
(4,847) |
(3,958) |
(553) |
HP finance leases initiated |
0 |
0 |
0 |
0 |
|||
Exchange rate movements |
1,316 |
258 |
0 |
0 |
|||
Other |
(393) |
(1,097) |
0 |
0 |
|||
Closing net debt/(cash) |
|
|
|
(4,847) |
(3,958) |
(553) |
15,726 |
Source: Auris Medical Holding reports, Edison Investment Research
|
|
Research: Healthcare
Oxford Biomedica (OXB) is a pioneer and global leader in the development and manufacture of commercial-scale lentiviral vectors (LVV), a critical component of cell and gene therapies (CGT). OXB has numerous value streams, including manufacturing, royalties and milestones on partnered product sales. Its technology and R&D pipeline have been validated by numerous partnerships (Novartis’s CAR-T Kymriah, Axovant deal for AXO-Lenti-PD). We believe the greatest opportunity lies in OXB’s own gene therapy R&D capabilities; higher investment now is imperative to reap future economic returns in this highly innovative and potentially lucrative therapy area. We value OXB at £649m.