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InMed Pharmaceuticals recently announced that the first human clinical trial (755-101-HV) of its lead program, INM-755 for the treatment of epidermolysis bullosa (EB), is currently around 50% enrolled with full enrollment expected this quarter and data in H220. This trial is testing two strengths of INM-755 cream on the intact skin of 22 healthy volunteers. The company expects to file a clinical trial application (CTA) for a second trial (755-102-HV) this quarter with initiation in Q220. This upcoming trial would test INM-755 on eight healthy volunteers with small wounds.
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InMed Pharmaceuticals |
INM-755 trial full enrollment expected this quarter |
Financial update |
Pharma & biotech |
20 February 2020 |
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Business description
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InMed Pharmaceuticals is a research client of Edison Investment Research Limited |
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InMed Pharmaceuticals recently announced that the first human clinical trial (755-101-HV) of its lead program, INM-755 for the treatment of epidermolysis bullosa (EB), is currently around 50% enrolled with full enrollment expected this quarter and data in H220. This trial is testing two strengths of INM-755 cream on the intact skin of 22 healthy volunteers. The company expects to file a clinical trial application (CTA) for a second trial (755-102-HV) this quarter with initiation in Q220. This upcoming trial would test INM-755 on eight healthy volunteers with small wounds.
Year end |
Revenue (C$m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
06/18 |
0.0 |
(5.3) |
(0.04) |
0.00 |
N/A |
N/A |
06/19 |
0.0 |
(9.1) |
(0.05) |
0.00 |
N/A |
N/A |
06/20e |
0.0 |
(14.9) |
(0.09) |
0.00 |
N/A |
N/A |
06/21e |
0.0 |
(16.4) |
(0.09) |
0.00 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortization of acquired intangibles, exceptional items and share-based payments.
The clinical program for INM-755 has begun
InMed is currently progressing through the planned Phase I program for INM-755, which consists of two separate trials (755-101-HV and 755-102-HV), one in healthy volunteers with normal, intact skin and the second with healthy volunteers with small wounds. A Phase I/II in approximately 12–15 EB patients is expected to begin in early 2021 following additional IND/CTA filings globally.
Data presented at EB World Congress
The company recently presented preclinical data at the 2020 EB World Congress in London, which indicated that cannabinol (CBN), which is the active ingredient in INM-755, has an effect on pain and inflammation that will likely be important in the treatment of EB (as well as other dermatologic indications). Also, CBN may significantly upregulate the keratin K15, which may be able to compensate for a malfunctioning K14 and combine with K5 to form the necessary adhesion between the epidermis and dermis. This could potentially lead to greater skin integrity and fewer blisters in EB simplex patients with K14 mutations.
INM-088 development progressing
INM-088 for glaucoma is currently in multiple formulation and pharmacology studies. A final formulation is expected to be selected in Q120. IND-enabling preclinical toxicology studies are expected to start in the second half of the year.
Valuation: C$256m or C$1.49 per basic share
We have adjusted our valuation, from C$259m or C$1.50 per basic share (C$1.24 per diluted share), to C$256m or C$1.49 per basic share (C$1.22 per diluted share). The change is due to a lower cash balance. InMed had C$12.0m in cash and marketable securities at 31 December and we believe this provides a runway into FY21.
Quarterly update
InMed continues progress with its Phase I program in healthy volunteers, with trial 755-101-HV approximately halfway through enrollment, which is expected to complete by the end of Q120 with data in H220. As a reminder, the Phase I program consists of two separate trials (see Exhibit 1). Trial 755-101-HV is enrolling 22 healthy volunteers with normal, intact skin and will evaluate the systemic and local safety, tolerability and pharmacokinetics (PK) of two dosage strengths of INM-755 cream. Trial 755-102-HV will have around eight healthy volunteers with small wounds to evaluate the local safety of the product. The small blister wounds will be created at the clinical site and will largely mimic the types of wounds typically seen in EB simplex patients. A CTA for trial 755-102-HV is expected this current quarter with trial initiation expected in Q220. A Phase I/II in approximately 12–15 EB patients is expected to begin in early 2021 following additional IND/CTA filings globally. Note that all these trials will be double blind and vehicle controlled.
Exhibit 1: Expected clinical trial program
Trial |
Type of patients |
Expected size |
Treatment protocol |
Purpose |
Timing |
Phase I |
Adult healthy volunteers with normal, intact skin |
22 |
14 days on intact skin; two dosage strengths |
Systemic and local safety/PK |
Initiated. Expect completion of enrollment by end of Q120. Data expected in Q320. |
Phase I |
Adult healthy volunteers with small wounds |
Around 8 |
Seven days on small wounds; two dosage strengths |
Local safety |
Enrolment expected to begin in Q220 with data expected Q320. |
Phase I/II |
EB patients (first adults, then children) |
12–15 |
30 days on intact skin and possibly wounds; two dosage strengths |
Systemic and local safety and efficacy |
Initiate in Q121, following IND/CTA filings in additional countries globally. |
Source: InMed Pharmaceuticals
Importantly, the safety studies can be used as the basis for a clinical trial program in other indications as INM-755 may have applications in other dermatologic indications involving inflammation and pain. The active ingredient of INM-755, the minor cannabinoid CBN, has been shown in a variety of published preclinical studies to have an effect on pain,1 inflammation (due to the inhibition of the expression of cytokines)2 and bacterial infection.3 In addition, and recently presented at the 2020 EB World Congress in London, InMed has demonstrated in its own preclinical studies an effect on both pain and inflammation. In pain, InMed’s research has demonstrated a positive impact in nerve growth factor (NGF) induced pain models in rats. With regard to inflammation, CBN was tested on IL-8 and MMP-9, markers of inflammation suspected of having links with chronic cutaneous inflammation. Depending on dose, IL-8 was reduced by 35–54% and MMP-9 was reduced by 22–40%.
Zygmunt et al., Δ9-Tetrahydrocannabinol and Cannabinol Activate Capsaicin-Sensitive Sensory Nerves via a CB1 and CB2 Cannabinoid Receptor-Independent Mechanism. Journal of Neuroscience. 1 June 2002, 22 (11) 4720-4727
Jan et al., Attenuation of the ovalbumin-induced allergic airway response by cannabinoid treatment in A/J mice. Toxicology and Applied Pharmacology, 188 (2003), 24–35.
Appendino et al., Antibacterial Cannabinoids from Cannabis sativa: A Structure−Activity Study. Journal of Natural Products, 2008 71(8), 1427–1430.
INM-088 for glaucoma is advancing and is currently in multiple formulation and pharmacology studies. A final formulation is expected to be selected in Q120. IND-enabling preclinical toxicology studies are expected to start in the second half of the year. CBN is also the active ingredient in INM-088 and has been shown to have efficacy in glaucoma. In cats, CBN significantly reduced intraocular pressure (IOP) by around 27% after nine days.4 If INM-088 is able to replicate this effect in humans, efficacy would be in the realm of current therapies, which, while efficacious, have toxicity issues and low patient compliance (estimated at 41–78% of patients5).
Colasanti et al., Intraocular pressure, ocular toxicity and neurotoxicity after administration of cannabinol or cannabigerol. Experimental Eye Research, 1984 39(3), 251–259.
Denis et al., Adverse effects, adherence and cost-benefits in glaucoma treatment. European Ophthalmic Review 2011;5:116–122
With regards to InMed’s E. coli-based biosynthesis process, its development continues to move forward. InMed is also investigating an alternative process (the exact nature of which is undisclosed) that may have advantages in terms of cost and yield, and will decide which approach to advance in the coming weeks.
Valuation
We have adjusted our valuation, from C$259m or C$1.50 per basic share (C$1.24 per diluted share), to C$256m or C$1.49 per basic share (C$1.22 per diluted share). The change is due to a lower cash balance.
Exhibit 2: InMed valuation table
Program |
Stage |
Probability of success |
Launch year |
Peak sales |
rNPV |
|||
Biosynthesis (manufacturing) |
Development |
23% |
2022 |
1,574 |
$224 |
|||
INM-755 |
Phase I |
7.5% |
2026 |
345 |
$20 |
|||
Total |
$244.4 |
|||||||
Net cash and equivalents (As of 31 December) (C$m) |
$12.0 |
|||||||
Total firm value (C$m) |
$256.4 |
|||||||
Total basic shares (as of 31 December 2019, m) |
172.3 |
|||||||
Value per basic share (C$) |
$1.49 |
|||||||
Options and warrants (as of December 2019, m) |
37.1 |
|||||||
Total diluted shares (as of December 2019, m) |
209.4 |
|||||||
Value per diluted share (C$) |
$1.22 |
|||||||
Source: Edison Investment Research
Financials
InMed reported an operating loss of C$3.4m in its fiscal second quarter (the quarter ending 31 December 2019), up from C$2.9m in the same quarter in the previous year due to the progression of its pipeline. R&D expenses were C$1.9m for the quarter, up from C$0.9m in the same quarter in the previous year. We have lowered our expectations for R&D spending by C$0.7m for both FY20 and FY21 as the run rate was lower than we expected. We also lowered our SG&A estimate by C$0.1m for both years, again due to slightly lower than expected spending.
InMed had C$12.0m in cash and marketable securities at 31 December and we believe this provides a runway into FY21. We continue to forecast the company will raise C$20m over the next two years to fund operations, which we model as illustrative long-term debt.
Exhibit 3: Financial summary
C$'000s |
2018 |
2019 |
2020e |
2021e |
||
Year end 30 June |
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 |
(1,927) |
(5,639) |
(10,215) |
(10,623) |
||
Selling, general & administrative |
(3,367) |
(3,798) |
(3,782) |
(3,933) |
||
EBITDA |
|
|
(5,530) |
(9,685) |
(14,440) |
(14,911) |
Operating Profit (before amort. and except.) |
|
|
(5,412) |
(9,561) |
(14,218) |
(14,734) |
Intangible Amortization |
0 |
0 |
0 |
0 |
||
Exceptionals/Other |
(3,197) |
(4,128) |
(1,572) |
(1,635) |
||
Operating Profit |
(8,609) |
(13,689) |
(15,791) |
(16,369) |
||
Net Interest |
88 |
434 |
(646) |
(1,708) |
||
Other (change in fair value of warrants) |
0 |
0 |
0 |
0 |
||
Profit Before Tax (norm) |
|
|
(5,324) |
(9,127) |
(14,865) |
(16,442) |
Profit Before Tax (IFRS) |
|
|
(8,521) |
(13,255) |
(16,437) |
(18,077) |
Tax |
0 |
0 |
0 |
0 |
||
Deferred tax |
0 |
0 |
0 |
0 |
||
Profit After Tax (norm) |
(5,324) |
(9,127) |
(14,865) |
(16,442) |
||
Profit After Tax (IFRS) |
(8,521) |
(13,255) |
(16,437) |
(18,077) |
||
Average Number of Shares Outstanding (m) |
142.5 |
171.3 |
173.6 |
180.5 |
||
EPS - normalised (C$) |
|
|
(0.04) |
(0.05) |
(0.09) |
(0.09) |
EPS - IFRS (C$) |
|
|
(0.06) |
(0.08) |
(0.09) |
(0.10) |
Dividend per share (c) |
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 |
|
|
1,329 |
1,241 |
1,751 |
1,630 |
Intangible Assets |
1,274 |
1,185 |
1,137 |
1,137 |
||
Tangible Assets |
56 |
56 |
614 |
493 |
||
Other |
0 |
0 |
0 |
0 |
||
Current Assets |
|
|
26,734 |
18,548 |
13,680 |
7,268 |
Stocks |
0 |
0 |
0 |
0 |
||
Debtors |
0 |
0 |
0 |
0 |
||
Cash |
26,477 |
18,039 |
13,312 |
6,900 |
||
Other |
257 |
509 |
368 |
368 |
||
Current Liabilities |
|
|
(938) |
(1,563) |
(1,657) |
(1,657) |
Creditors |
(938) |
(1,563) |
(1,657) |
(1,657) |
||
Short term borrowings |
0 |
0 |
0 |
0 |
||
Long Term Liabilities |
|
|
0 |
0 |
(10,386) |
(20,386) |
Long term borrowings |
0 |
0 |
(10,000) |
(20,000) |
||
Other long term liabilities |
0 |
0 |
(386) |
(386) |
||
Net Assets |
|
|
27,125 |
18,226 |
3,387 |
(13,146) |
CASH FLOW |
||||||
Operating Cash Flow |
|
|
(4,672) |
(8,769) |
(14,537) |
(16,355) |
Net Interest |
0 |
0 |
0 |
0 |
||
Tax |
0 |
0 |
0 |
0 |
||
Capex |
(56) |
(35) |
(52) |
(57) |
||
Acquisitions/disposals |
0 |
0 |
0 |
0 |
||
Financing |
24,483 |
273 |
(32) |
0 |
||
Dividends |
0 |
0 |
0 |
0 |
||
Other |
0 |
0 |
1 |
0 |
||
Net Cash Flow |
19,756 |
(8,532) |
(14,620) |
(16,412) |
||
Opening net debt/(cash) |
|
|
(6,708) |
(26,477) |
(18,039) |
(3,312) |
HP finance leases initiated |
0 |
0 |
0 |
0 |
||
Exchange rate movements |
0 |
0 |
0 |
0 |
||
Other |
14 |
94 |
(107) |
0 |
||
Closing net debt/(cash) |
|
|
(26,477) |
(18,039) |
(3,312) |
13,100 |
Source: InMed Pharmaceutical accounts, Edison Investment Research
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