On track for Atopic Dermatitis readout in Q3
Realm Therapeutics (RLM) is developing a pipeline of novel topical treatments for highly prevalent dermatology indications using its proprietary stabilised hypochlorous acid (HOCl) technology. RLM is investigating the potential already seen in its preclinical studies with topical HOCl formulations to date. They suggest immunomodulatory activity alongside well-documented safety evidence: an encouraging base from which to potentially deliver efficacious and safer alternatives to first line therapies.Today RLM confirmed it has met its targeted enrolment completion timeline for its US Phase II study for its lead candidate PR022. This is a topical gel for treating mild-to-moderate Atopic Dermatitis (AD) which is on track to achieve a headline data readout in Q3’18. A total of 122 patients have been recruited into the double-blind, randomised, multi-centre Phase IIa study which included a parallel placebo control group.
Atopic Dermatitis affects c. 20m people in the US alone and is largely a paediatric condition with few treatment alternatives to first-line topical steroids with side effects that include skin thinning and a comprised immune system with prolonged use. We think that the topical gel stands to gain a share in an expanding treatment segment which has a current estimated Rx value of $4bn (according to the American Academy of Allergy, Asthma & Immunology (AAAAI), provided the early promise is borne out.
RLM is close to providing a secondary trading market for its shares in the US, having publicly filed its registration statement in relation to a listing of American Depositary Shares (ADSs) on the Nasdaq Global Exchange. The registration of share and warrants also satisfies obligation from the recent placing and there are no immediate plans to delist from AIM or to raise new capital in this US list. In our view, an ADS listing should enable RLM to raise its investment profile in its initial commercial market.
We maintain our sum of the parts DCF valuation of RLM at £79m, equivalent to 68p / share. This is derived using a 12.5% discount rate and includes £57.5m for AD, net of $29m (£21m) of the cash, short-term investments and expenses. For now, we exclude any value attributed to Acne Vulgaris or Psoriasis and so initiation of related new clinical trials would provide potential upside to our valuation.
Realm Therapeutics is a clinical stage biopharmaceutical company focused on utilizing its proprietary immunomodulatory technology. Co. is engaged in the development of prescription treatments for inflammatory diseases including indications in Dermatology and Ophthalmology. Co. has developed proprietary formulations of its technology for initial application in Atopic Dermatitis (PR022) and Allergic Conjunctivitis (PR013). Co.'s first product, PR022, is a proprietary non-alcohol based, topical gel, which has shown therapeutic effect in pre-clinical models of Atopic Dermatitis. Co.'s second product, PR013, a proprietary topical ophthalmic solution for the treatment of Allergic Conjunctivitis.
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