Sequana Medical — MOJAVE early efficacy validates DSR 2.0

Cardiorenal syndrome (CRS) is a series of disorders where acute or chronic dysfunction in either the heart or kidneys can have a negative impact on the function of the other organ. CRS involves a complex interplay between heart failure and kidney disease and often manifests as a self-reinforcing negative feedback cycle with reduced cardiac output leading to decreased glomerular filtration by the kidneys, increased sodium avidity (active salt and water retention) and congestion. The exact cause of CRS is not fully understood, but effective fluid management is a key component to treating these patients.

Currently, loop diuretics are the drug of choice for decongestion therapy but they may exacerbate many of the core mechanisms thought to underly CRS, leading to worsened diuretic resistance and continued CRS. There are approximately one million US hospitalisations from HF each year,1 of which 90% result from fluid overload symptoms, and patients often stay up to five days. These long stays pose a financial challenge for hospitals as existing treatments with loop diuretics show limited effectiveness, and about 25% of these cases due to congestion are readmitted within 30 days (c 50% are readmitted within six months).2 Therefore, effective management of fluid overload for a sufficient amount of time is critical both for patients and payers (insurers).

Sequana presented recent analysis of the biomarker data from the previous RED DESERT and SAHARA studies using first-generation DSR (DSR 1.0) that gives insights into the mechanism of DSR and its potential use in CRS. As a reminder, the SAHARA top-line results showed that the DSR therapy can effectively manage fluid overload and restore euvolemia, improve diuretic response and resolve persistent congestion in diuretic-resistant CHF patients (patients who had persistent congestion despite taking maximum SoC loop diuretic therapy). SAHARA showed that the need for loop diuretic medication in CHF patients can be substantially reduced, and for a sustained period, following a first phase of intensive DSR therapy.

Following this intensive DSR therapy round, the diuretic response (in terms of both urinary output and urinary sodium excretion) following a diuretic challenge increased markedly versus baseline (pre-DSR treatment), and this improvement in response persisted for up to a year post the intensive DSR therapy round. As a result of a marked improvement in diuretic response, patients in SAHARA were able to significantly reduce the need for loop diuretics medication for at least six to 15 months following the DSR therapy phase of the study, with nine out of 10 evaluable SAHARA patients having had a reduction of more than 90% of their required dosing. Exhibit 1 shows the reduction in diuretic dose required over the 12 months post the intense therapy round.

The SAHARA trial demonstrated proof-of-concept that DSR can resolve persistent congestion in diuretic-resistant CHF patients, and the treatment led to lasting improvements in kidney function and cardiometabolic parameters. Importantly, all evaluable patients improved their New York Heart Association status by at least one class (in a four-class scale) and experienced no congestion-related hospital readmissions during the study.

Because of the complexity of CRS, biomarkers are important tools in assessing diagnosis, risk prediction and prognosis in patients with HF and impaired kidney function. Some of the most commonly used biomarkers are described below.

More recently, Sequana reported additional biomarker data from the SAHARA and RED DESERT studies. When examining biomarkers NT-proBNP and CA125, which are barometers of cardiac stress due to volume overload and important for CRS, both SAHARA and RED DESERT showed statistically significant improvements in both parameters post-DSR therapy for up to at least five months. Similar improvements were also seen in the kidney function biomarkers: there was a sustained reduction of blood urea nitrogen and increase in creatine clearance, both indications of improved renal function, maintained up to 12 months post treatment. In addition, based on the overall kidney improvement function, the excretion of uremic toxin indoxyl sulphate improved and remained high until the end of the follow-up period.

In cardiovascular parameters, there was a significant improvement in the left ventricular ejection fraction in patients in both studies, with the responses maintained up to 12 months post treatment. With regard to systolic blood pressure, there was a transient increase in blood pressure (BP) during the active DSR treatment period, which normalised to baseline levels within five months following completion of this treatment round. The company interprets the transient BP increase as an indication that the Hawthorne effect (where study subjects modify their behaviour because they are aware they are being observed) can likely be ruled out as a meaningful factor in these studies. The reason why this effect is believed to be inconsequential is that the BP would not be expected to increase if the improvements in the other discussed clinical data points were strictly due to improved medication compliance (given that this medication is normally more likely to reduce BP rather than increase it).

Collectively, these biomarker results from the SAHARA and RED DESERT studies suggest that DSR treatment can not only reduce the need for loop diuretics but also result in sustained improvements of both cardiac and renal parameters. We note that the company has estimated, based on the Seattle Heart Failure Model, using post-hoc data, that at six weeks post an intensive DSR therapy round (as per Phase I of SAHARA and RED DESERT studies), subjects having completed the DSR therapy would have a c 75% lower predicted one-year mortality (c 5%) versus at screening (c 20%).

Sequana announced positive interim data from the two patients within the non-randomised cohort (total planned n=3) from the US Phase I/IIa MOJAVE study in patients with HF and severe diuretic resistance treated with DSR 2.0. Data from the first two patients from this cohort demonstrated that DSR 2.0 is safe and well tolerated and exhibits robust initial signs of efficacy. While the data are only from a small cohort of two patients, it is reassuring to see that US CHF patients treated with DSR 2.0 exhibit comparable responses to those seen in patients recruited in the Republic of Georgia and treated with DSR 1.0 in the SAHARA and RED DESERT trials. While the sample is extremely small, the interim data still provide an early indicator of an efficacy signal, highlighting the potential for DSR 2.0 in CHF as a potential disease-modifying therapy.

As a reminder, DSR 2.0 (a proprietary formulation of icodextrin and dextrose sugars) is designed to provide an improved therapeutic and a more favourable safety profile versus DSR 1.0. Further, we understand that an alternative sodium-free solution of icodextrin and dextrose is not commercially available for medical use. Compared to DSR 1.0, which is essentially a 10% dextrose solution, DSR 2.0 is designed to provide a longer dwelling time with slower sodium removal. Unlike in the RED DESERT and SAHARA studies, where DSR 1.0 was administered using an implanted alfapump device, DSR 2.0 is dosed through a peritoneal catheter. A key reason for this evolution in the DSR drug delivery approach was the observation of sustained and longer-term beneficial treatment effects following the DSR therapy treatment periods in the SAHARA and RED DESERT studies (and hence the implantation of a permanent alfapump device is no longer believed to be required in order to deliver persistent and lasting DSR-mediated treatment effects)

The MOJAVE Phase I/IIa study assesses the safety and efficacy of DSR 2.0 in diuretic-resistant CHF patients and consists of two groups: an open-label cohort with three patients receiving DSR 2.0 alongside optimised usual care for up to four weeks, and a randomised cohort where 20 patients will receive DSR 2.0 administered via a peritoneal dialysis (PD) catheter on top of optimised usual care for CHF for up to four weeks, and 10 patients randomised to receive intravenous loop diuretic treatment as part of maximised usual care for CHF. Both cohorts will have a three-month safety follow-up period after the four weeks of therapy.

Data from the first two patients showed comparable improvements in congestion management, diuretic response and cardiorenal status to those shown in RED DESERT and SAHARA. At the start of the study treatment period, loop diuretics were withheld and patients were treated with DSR 2.0 (up to once-daily doses) for four weeks. After the four-week treatment period, both patients maintained euvolemia without the need of loop diuretics and demonstrated improved cardiorenal status. Their diuretic response (as measured by six-hour excretion of sodium after IV administration of 40mg of furosemide diuretic) nearly normalised, with one patient showing a 712% increase in their six-hour urinary sodium excretion versus baseline, and the other showing a 195% increase. The interim data also showed a strong improvement in their kidney function, with an improvement in estimated glomerular filtration rate (eGFR) of 64% and 49% in the two patients and decreases of blood urea nitrogen of 65% and 52%.

No serious adverse events had occurred, indicating that DSR 2.0 was safe and well tolerated in these first two US patients, and both patients are currently in the follow-up period without any loop diuretics. The third patient in the non-randomised cohort has been enrolled and is expected to complete DSR treatment and initial follow-up before year-end. An independent Data and Safety Monitoring Board meeting is planned in Q124 to review the data from the three patients in the non-randomised cohort. If successful, the company plans to start the randomised cohort of the MOJAVE study in Q124. The company expects to report interim data from the randomised cohort in H224, followed by top-line data from this cohort in 2025.

Altogether, we believe the positive data from the first two patients in the non-randomised cohort are promising and provide very preliminary confirmation of the proof-of-concept shown in the SAHARA and RED DESERT studies, indicative of DSR 2.0’s potential as a disease-modifying CHF treatment.

Sequana announced new 12-month positive data on the alfapump in RRA from the POSEIDON study, which were recently shared with the FDA as part of its pre-PMA discussions. As reported previously, the alfapump convincingly met the six-month primary efficacy endpoints. The first effectiveness endpoint is the median reduction in TP, where among the 40 patients, POSEIDON achieved 100% median reduction (p<0.001) in the post-implant observation period (reflecting months four to six) compared to the pre-implant observation period, while the study’s aim was to show at least a 50% reduction. For the second effectiveness endpoint, 77% of the 40 patients experienced at least a 50% reduction in the frequency of TP procedures in the post-implant observation period versus the three-month pre-implant observation period (p<0.001). The study’s aim was to show that at least 50% of patients achieve a 50% reduction in TP procedures.

The company has now reported that over the seven to 12 months following implantation versus the three month pre-implant period, 19 evaluable patients with refractory ascites consistently experienced a 100% median reduction in TP, affirming the sustained effectiveness of the alfapump in managing ascites and reducing the need for invasive TP procedures. While two patients needed explantation over this period (one due to recurrent urinary tract infections and one due to wound dehiscence), this was within expectations given the high disease burden among recruited patients.

The rate of major adverse events and serious infections remained within anticipated levels, underscoring the device’s manageable safety profile during this extended follow-up. Additionally, patients maintained stable renal function, with creatinine and eGFR levels exhibiting no adverse changes.

Patients’ QoL also benefited from the alfapump. Their well-being was assessed using metrics like the SF36 physical component score and the Ascites-Q score, and despite the progression of their underlying condition (RRA), a meaningful improvement in their QoL was maintained at 12 months post-implant (vs three months pre-implant). Furthermore, the alfapump continued to demonstrate a favourable overall trend in survival. The Kaplan-Meier estimate suggested a survival probability of over 70% at both 12 and 18 months post-implant, which compares favourably to published literature citing a c 20%3 to 50%4 one-year survival rate for refractory ascites patients. Altogether, these findings underline the alfapump’s consistent ability to reduce paracentesis frequency and improve patients’ sense of well-being and QoL.

Altogether, while the new 12-month data were in line with our expectations, the data reinforce our confidence in a positive outcome from the PMA process. The company remains on track to file by the end of the year, and we continue to expect an FDA decision in H224.

The North American Consortium for the Study of End Stage Liver Disease (NACSELD)-III registry is an institutional review board-approved outpatient cirrhosis registry established in 2019 among 10 tertiary-care hepatology centres in North America. A matched cohort analysis was performed by an independent entity with the goal of comparing outcomes of decompensated cirrhosis patients from the NACSELD-III registry to those from patients who participated in the POSEIDON study. Patients were matched based on the baseline Ascites-Q score (reflecting burden of disease) and gender; patients also were comparable for age and baseline MELD (model for end-stage liver disease) score after the matching. The analysis found that the proportions of all-cause hospitalisation and death within six months were similar between POSEIDON pivotal cohort patients and those from the NACSELD-III registry matched patients. For instance, the six-month data found that among the 40 matched NACSELD-III registry patients, the rates of any death or hospitalisation were similar to those found with the POSEIDON group (55.0%). A full data set is shown in the Exhibits 7 and 8.

The analysis confirmed that the safety profile of the alfapump is consistent with expectations and is comparable to RRA patients undergoing regular TP procedures. Altogether, the results suggest that patients implanted with the alfapump benefit from significantly reduced number of TP procedures (resulting in improved QoL) without an increased risk of death or hospitalisation compared to SoC. We believe this finding will further support Sequana’s upcoming PMA application, and this reinforces our confidence in a positive FDA decision (expected in H224).

The patient preference study was recommended by the FDA, to elicit patient preference attributes for using an implantable pump as treatment for RRA. The study was a survey (using discrete-choice experiment methodology, conducted by RTI Health Solutions) in 125 patients with physician-confirmed RRA due to liver cirrhosis. The purpose of the study was to determine what level of risk of treatment-related adverse events they would be willing to accept (ie risk tolerance) in order to achieve certain efficacy outcomes. Overall, the study confirmed that the surveyed US patients desired a reduction in TP, similar to what was reported in the POSEIDON study. Interestingly, the study also revealed that these US patients have a higher risk tolerance threshold compared to patients recruited in the POSEIDON study. In summary, we view these findings as encouraging and we believe they will be important for alfapump’s commercial uptake.

We leave our forecast assumptions unchanged and we continue to estimate that the company will require €130m in additional financing through the end of FY27 prior to reaching operating profitability (which we continue to anticipate in H128), including €35m before the end of FY24. As per our usual policy, we model all future fund-raising requirements as illustrative debt. We continue to assume that the company’s gross cash on hand (€17.1m at 30 June) will be sufficient for it to maintain operations into Q124.

The additional progress for the alfapump and DSR 2.0 programmes is encouraging, and we maintain our probabilities of success for alfapump and DSR 2.0 at 80% (for North America; 100% in Europe where it is already approved) and 25%, respectively.

We maintain our rNPV valuation of €359.5m. After adding €0.3m H123 net cash (€17.1m gross cash offset by €16.8m in H123 total debt, excluding €0.85m in lease liabilities), we obtain an equity valuation of €359.8m or €12.76/share (€11.64 fully diluted given options outstanding).

As a sensitivity, our equity valuation per basic share would be adjusted to €5.95/share if we assume that total future funding need (€130m) is met through equity issuances at the current share price (c €2.69/share).