Ryvu Therapeutics — Rebalancing R&D pipeline towards clinical stage

As previously, Ryvu’s clinical stage pipeline (Exhibit 1) includes SEL24/MEN1703, a dual PIM/FLT3 kinase inhibitor, and SEL120, a selective CDK8/19 inhibitor. The revised preclinical pipeline now includes immunoncology projects (a small molecule STING agonist for systemic administration and an HPK1 inhibitor) and synthetic lethality projects (WRN ATPase inhibitors and cancers with a deletion of the metabolic MTAP gene). Ryvu also has several undisclosed projects at earlier stages and we expect these to feed into the preclinical and clinical pipelines.

SEL120: Lead wholly owned asset in Phase Ib

SEL120 is a first-in-class selective CDK8/19 inhibitor. Depending on subtypes, cyclin-dependent kinases (CDKs) play varied roles in the control of the cell cycle, proliferation and mRNA transcription. Specifically, CDK8 is uniquely differentiated and is part of a multi-protein complex that regulates gene expression. Preclinical studies point to potential efficacy in haematological malignancies, but also in solid tumours, such as TNBC and colorectal cancer, and in combination therapies with immunoncology products.

The first Phase Ib trial started recruiting patients with relapsed or refractory AML or high-risk myelodysplastic syndrome (HR-MDS) in September 2019. In June 2020, Ryvu presented a poster with the trial details at the European Hematology Association (EHA) Congress. The open-label, multi-centre trial is a dose escalation/small safety expansion Phase I study, which should enrol about 50 patients. As usual, the primary endpoint is safety/tolerability and to establish the recommended Phase II dose. Secondary endpoints include pharmacokinetic/pharmacodynamic (PK/PD) evaluation, but also preliminary anti-leukaemic activity.

The ongoing COVID-19 pandemic has affected enrolment speed, but the expected delay to full enrolment is around six months, which is manageable, in our view, and preferable to data loss. The initial results from the Phase Ib part of the study, therefore, are now expected in H121, with final results to follow in H221. To address the delay, Ryvu has initiated the European arm of the study earlier than planned, so that more centres would be active.

Ryvu’s R&D strategy with SEL120 reveals management’s belief in its high potential. Initially, Ryvu is targeting the third-line setting with SEL120 as monotherapy in AML and HR-MDS, which is the fastest way to market. The preclinical data, however, allows Ryvu to plan to expand the label to second- and potentially even first-line settings as a combination with standard of care.

Ryvu has also demonstrated preclinical proof of concept in a number of solid tumours, including in breast and colorectal cancer. Based on this evidence, the company has decided to initiate a new Phase I/II trial in solid tumours. Initially, this will include TNBC, and also several other types. More details and the initiation of the trial are expected in 2021.

Ryvu has accumulated a substantial data package in the preclinical studies with SEL120. The AML in vivo models chosen for SEL120 preclinical studies are known to have high translational potential. We have covered Ryvu’s key data presentations at scientific conferences in our previous reports (outlook reports in particular), but some of the highlights include:

SEL24/MEN1703 is a dual PIM/FLT3 kinase inhibitor in a Phase I/II trial for AML. In March 2020, Ryvu reported that its partner Menarini Group (via subsidiary Berlin-Chemie) had successfully completed the dose-escalation part (Phase I) of the ongoing Phase I/II study with SEL24/MEN1703, triggering a €1.75m milestone payment to Ryvu. The recommended dose for the Phase II part of the study (cohort expansion) has been established.

The Phase I results were presented at the 25th EHA Congress on 11–14 June 2020. The Phase I part of the study followed 3+3 design, which in total recruited 25 elderly (22 evaluable), advanced AML patients in five US centres. SEL24/MEN1703 was given 14 days on, followed by seven days off over 21-day cycles until disease progression or unacceptable toxicity.

The primary endpoint was to determine the maximum tolerated dose (MTD) and the recommended Phase II dose (RP2D), while the secondary endpoints were the assessment of the PK profile and preliminary single agent activity. The highlights from the EHA Congress presentation include:

The trial is progressing into the Phase II cohort expansion part (DIAMOND-01), which will further investigate the single agent activity and the safety profile of SEL24/MEN1703 in relapsed/refractory AML patients. Recruitment has already started in the US and European centres (first patient recruited in July 2020 in the US and in September 2020 in Europe) and the trial is anticipated to complete in H221, a potential key catalyst for Ryvu in the near term.

SEL24/MEN1703 specifically inhibits PIM- and FLT3-related pathways and exhibits broader anti-tumour activity in AML compared to selective FLT3-ITD or PIM inhibitors. FMS-like tyrosine kinase receptor-3 gene internal tandem duplication (FLT3-ITD mutation) is one of the most common genetic mutations in AML (around 25% of newly diagnosed AML cases) and, although its inhibition has been shown to be effective in clinical trials, resistance to treatment develops rapidly. PIM kinases are major oncogenes and downstream targets with expression triggered by FLT3-induced STAT5 activity. The expression of PIM kinases amplifies FLT3’s oncogenic potential in addition to other pro-oncogenic signalling, thus presenting a rationale for a dual FLT3/PIM inhibition. Previously, third-party data have shown PIM expression increases cancer resistance to FLT3-ITD inhibitors, while PIM inhibition would restore cancer sensitivity to FLT3 inhibitors. SEL24/MEN1703, a first-in-class dual inhibitor of PIM and FLT3 kinases, can simultaneously inhibit both kinases and provides a novel treatment strategy.

Before SEL24/MEN1703 was out-licensed to Menarini, Ryvu tested it in various in vitro and in vivo studies comparing it to control or active treatment with standalone PIM (AZD1208, AstraZeneca) or FLT3-ITD (AC220/quizartinib, Daiichi Sankyo) inhibitors. These preclinical studies demonstrated a synergistic effect of dual inhibition of PIM and FLT3 kinases, which had broader anti-proliferative activity in AML cell lines than that of selective PIM inhibitors or FLT3 inhibitors. In vivo efficacy has also been demonstrated in AML models. Of particular note is that SEL24 had a largely similar effect in both the FLT3 wild type and FLT3-ITD models. The Phase I trial therefore recruited patients regardless of FLT3 mutation status. The overview of the preclinical data was published in an article in Oncotarget.

AML normally originates in the bone marrow (where new blood cells are made), but often quickly moves into the blood, resulting in uncontrolled growth and accumulation of malignant white blood cells, which fail to function normally and interfere with the production of normal blood cells. AML is the most common type of acute leukaemia in adults and affects nearly 40,000 patients in the EU and US (new cases per year). The five-year survival rate for all AML patients, irrespective of age or genetic status, is around 23%.

Until recently, the standard-of-care treatment for AML was primarily based on chemotherapy (cytarabine with anthracycline or mitoxantrone), followed by a stem cell transplant where appropriate. The goal of treatment is to reduce the blasts in the bone marrow to below 5% and return the blood cell counts to normal levels. A bone marrow transplant is generally recognised as the only curative treatment option, but is not always appropriate.

Rydapt (midostaurin, Novartis) was the first novel drug, approved in April 2017, that specifically targets FLT3 for the treatment of adults with newly diagnosed FLT3-ITD AML in combination with standard-of-care chemotherapy. This was the first large Phase III trial (RATIFY) to confirm a therapeutic benefit of FLT-ITD inhibition in AML patients. Overall survival was increased from approximately two years to just over six years and there was a 23% reduction in risk of death compared to the placebo arm (hazard ratio 0.77, p=0.0074). EvaluatePharma’s consensus forecast is for Rydapt sales of $240m in 2026.

In November 2018, the FDA approved gilteritinib (Xospata, Astellas) as monotherapy for adults with FLT3-positive AML in a relapsed or refractory setting. Approval was based on the results of the Phase III ADMIRAL trial. Treatment with gilteritinib resulted in CRs, or CRs with partial haematologic recovery in 21% of patients (95% CI 14.5–28.8%). The consensus forecast for Xospata sales in 2026 is $770m (EvaluatePharma).

Outside the FLT3 inhibitor space, the FDA has approved other novel drugs for AML:

Despite these advances, the novel drugs have extended survival by just several months, so survival rates remain poor. In addition, these new drugs rely on combinations with chemotherapy, which causes significant toxicity and poor quality of life, so the unmet need in AML remains high. EvaluatePharma calculates the total market value of AML drugs at $1.2bn in 2020, which is forecasted to grow to $9.4bn in 2026.

By pathological definition, TNBC lacks an expression of oestrogen receptor (ER), progesterone receptor (PR) and human epidermal growth factor receptor 2 (HER2). TNBC accounts for around 10–20% of the total of new breast cancer cases each year, which would imply c 110k patients in the US and Europe. This type of cancer is typically more aggressive when compared to other types of breast cancer and is unresponsive to hormonal and monoclonal antibody therapies (eg trastuzumab).

If the cancer is still localised, surgery is the mainstay treatment. In advanced cases, the standard initial chemotherapy treatment includes classic chemotherapy agents, such as anthracyclines, taxanes, capecitabine and gemcitabine, but patients have a poorer prognosis and overall survival than in other types of breast cancer.

A variety of new targeted therapies are in investigation and during the last couple of years several novel treatment options have been approved:

Despite the recent progress in the treatment of TNBC, the clinical benefit in most cases is marginal. Demonstration of an overall survival benefit is as challenging as ever; therefore, we believe the industry’s interest in novel drugs in this indication will not subside any time soon.

Following the revision of its preclinical R&D pipeline in October 2020, Ryvu now classifies its projects into immunoncology and synthetic lethality. The immunoncology platform aims to provide novel immunotherapies mobilising the immune system to attack tumours. This approach transforms ‘cold’ or resistant tumours into ‘hot’. The disclosed programmes in this platform are STING pathway agonists and HPK1 inhibitors.

The most advanced immunoncology project in this platform is small molecule STING (stimulator of interferon genes) pathway agonists. A STING receptor is a known mediator of the immune system, which when activated induces expression of type I interferon and other T-cell recruitment factors. This results in the activation of dendritic cells, which act as antigen presenting cells. The ultimate outcome is the specific immune response with ‘trained’ CD8+ T-cells attacking the cancer. The strategic opportunity for STING agonists could be patients not responding to checkpoint inhibitors (CPIs), but there is also potential for use in combination with CPIs.

Ryvu’s STING molecules are a potentially best-in-class, non-nucleotide, non-macrocyclic, small molecule, direct STING agonist, a direct protein binder to multiple STING haplotypes. This unique structure and optimised absorption, distribution, metabolism and excretion (ADME) properties together with a possibility of systemic delivery as antibody-drug conjugate payloads distinguish Ryvu’s compounds from competitors that develop derivatives of nucleic acid, which, due to their chemical nature, are mainly used for inconvenient intratumoural injections. Activity across STING haplotypes potentially broadens the patient populations that could respond to treatment.

Ryvu is optimising the lead series of molecules and has conducted initial in vivo proof-of-concept studies and will select a drug candidate for further preclinical development.

A more recently introduced project involves hematopoietic progenitor kinase 1 (HPK1), one of the major proteins in the T-cell receptor (TCR) signalling cascade. Inhibition of HPK1 could potentially have synergies with established immunotherapies like checkpoint inhibitors by addressing immune suppression in the tumour microenvironment and cancer immune response evasion. The main strength of HPK1 inhibitors lies in their ability to simultaneously activate dendritic cells and T cells, which potentially makes them a unique immunotherapy for cancer with potential to treat both ‘cold’ and ‘hot’ tumours. Optimisation of the chemical series is currently underway to identify a lead candidate for in vivo proof-of-concept studies. Ryvu is optimising the lead series of molecules.

The lead projects in this area are in the discovery stages and focus on WRN (Werner syndrome helicase) inhibitors and cancers with a deletion of the metabolic MTAP gene. Due to competition, little information has been disclosed about the latter. WRN is a DNA unwinding helicase playing a role in DNA repair and genome integrity maintenance. Inhibition of WRN helicase activity impairs viability of tumour cells with so called microsatellite instability (MSI). MSI is a feature in a number of major cancer indications, where checkpoint inhibitors are widely used, however, the efficacy is usually less than 50%. The strategic opportunity for WRN inhibitors, therefore, is attractive in these indications (whether single agent or in combination with checkpoint inhibitors will be decided as the project progresses). Ryvu has started the hit expansion phase.

A project in the inflammation field, NLRP3 inflammasome inhibitors, was spun out to NodThera and seeded together with Epidarex Capital in 2016 (see our report for a detailed overview). Ryvu’s last reported ownership is 6.07% on a fully diluted basis, which should fall to 4.8% after all tranches from the B series are issued. During the latest funding round NodThera raised £44.5m from a syndicate of new investors including Novo Holdings, Cowen Healthcare Investments and Sanofi Ventures, as well as the existing shareholders 5AM Ventures, F-Prime Capital Partners, Sofinnova Partners and Epidarex Capital. The funds raised by NodThera now total to £80.8m since 2016.

NLRP3 inflammasome inhibitors, a first-in-class technology, are based on the scientific programme originated and developed at Ryvu since 2012. Inflammasomes have been identified as the molecular mechanism behind the activation cascade of interleukin (IL)-1. IL-1 is a family of pro-inflammatory cytokines that have been widely implicated in pain, inflammation and autoimmune conditions and more recently in cancer. The fact that NodThera is attracting such well-known investors in the industry shows that Ryvu is capable of discovering cutting-edge technology.

Ryvu has changed reporting standards to IFRS in 2020 and restated its 2019 results, which we now use for our estimates. Following the corporate split in 2019, Ryvu has been the beneficiary of most of the grant funding, as it is tied to R&D projects. The company booked PLN14.5m in grant funding in the first nine months of 2020 (9M20) (vs PLN22.3m in 9M19). Licensing income was PLN15.2m in 9M20 (vs PLN3.1m in 9M19), which included a €1.75m grant from Menarini after the completion of the Phase I trial with SEL24/MEN1703 and an upfront of €1.5m from Galapagos after the two companies signed a research and development cooperation agreement.

Ryvu reported a significantly improved cash position of PLN164m (net cash of PLN161m) at the end of Q320 after the share issue in July 2020. The company raised in total PLN135m net by issuing c 2.4m new shares (15% of the total number of shares outstanding prior to the issue) at PLN60 per share.

As a pure-play biotech, Ryvu reports operating losses, partially offset by the stable grant income. The 9M20 operating loss of PLN24.2m was lower than PLN34.3m in 9M19 mainly because of licensing and grant income, both of which can fluctuate on a quarterly basis. Total 9M20 operating expenses were largely similar year-on-year (PLN54.2m in 9M20 vs PLN60.1m in 9M19). Ryvu has also completed the building of its new R&D centre, which is the main reason for capex of PLN28.2m in 9M20 and PLN24.0m in 2019.

Our valuation of Ryvu is PLN1.17bn or PLN63.6 per share, compared to PLN1.10bn or PLN68.9 per share previously. The R&D assumption changes had a slight net negative effect, which was partially offset by the improved cash position after the recent share issue. We have made changes to our rNPV valuation in line with Ryvu’s revision of its R&D pipeline. Namely:

Our updated analysis indicates that Ryvu has largely maintained the overall value of its pipeline despite the discontinuation of the two preclinical projects. This is mainly because the pipeline has shifted toward clinical-stage trials, as although they require larger investments, the value creation is much more rapid. Some of the catalysts for the share price expected over the next 12–18 months include: