Memorandum

Adocia 2Q18 – BioChaperone Lispro + Combo Licensed in China, Search for US/EU Partner for BC Lispro Continues; Phase 3-Enabling Trial for BC Glucagon Slated for 4Q18; Strong $65 Million Cash Position – July 23, 2018

Executive Highlights

  • In Adocia’s recent 2Q18 update, the company highlighted its April partnership with Tonghua Dongbao (THDB) for the development and commercialization of BioChaperone (BC) Lispro and BC Combo in China. In a more recent expansion of the deal, THDB became Adocia’s manufacturer of biosimilar insulin glargine and lispro APIs (the former has been submitted to Chinese regulators, while the latter will soon enter phase 3). This has enabled Adocia to expand their search for a partner in the US, EU, and Japan to include those without existing insulin manufacturing capabilities. While BC Lispro is phase 3-ready, Adocia has been on the hunt for a partner since Lilly’s January 2017 partnership termination, so we’re very glad to see progress on this front. Moreover, Adocia emphasized the new cash flow – from a $50 million upfront payment – will enable R&D acceleration, pointing to the recent initiation of a phase 1 trial for BC Pramlintide Insulin.

  • Following encouraging phase 1 safety/efficacy results at ADA, Adocia announced that a new phase 1/2 trial for BioChaperone Glucagon will initiate in 4Q18. In its slide deck, the company suggested this would be the final trial before phase 3 – an exciting development in the relatively small but highly innovative glucagon competitive landscape. Additionally, Adocia joined the obesity competitive landscape earlier this year with BC Glucagon GLP-1, but the first in-human trials of this candidate have been pushed back slightly to 1H19.

  • As of June 30, Adocia had €56 million (~$65 million) in cash and cash equivalents, up from €29 million (~$34 million) in 1Q18 and from €52 million (~$61 million) in 2Q17 on the strength of the Chinese licensing deal. With up to $85 million in development milestones plus potential royalties from Tonghua Dongbao, Adocia is now in a very strong financial position. 

Adocia recently provided its 2Q18 update via press release and an accompanying slide deck. Below, you’ll find our top takeaways for 2Q18 plus a pipeline summary table outlining the company’s major diabetes and obesity candidates.

Top Four Highlights

1. Adocia Celebrates Partnership with Tonghua Dongbao for BC Lispro and BC Combo in China; Expands US, EU Partner Search to Companies without Insulin Manufacturing Capabilities

Adocia prominently highlighted its April alliance with Tonghua Dongbao (THDB) for the development and commercialization of ultra-rapid BioChaperone (BC) Lispro and BC Combo (75/25 basal insulin glargine/prandial insulin lispro) in China. The lucrative agreement landed Adocia $50 million upfront with a possible $85 million in development milestone payments ($50 million for BC Combo and $35 million for BC Lispro). We will be interested to see how much of these milestones are achieved, as there’s already serious promise surrounding phase-3 ready BC Lispro. BC Combo is much earlier but has promising phase 1b results under its belt, and we also note the immense Chinese market potential for BC Combo – premix insulin accounts for 65% of the overall insulin market there. Very notably, the alliance between THDB and Adocia was expanded in June: THDB will manufacture biosimilar insulin glargine and biosimilar lispro APIs (active pharmaceutical ingredients) for Adocia, which retains rights to the commercialization of both BC Lispro and BC Combo in the US, EU, and Japan. THDB’s insulin glargine has been filed with Chinese regulatory authorities and the insulin lispro will soon enter phase 3, but we understand that the products will still need to be approved for marketing in other regions. Adocia is looking to partner BC Lispro in the US, EU, and Japan, but with an API source secured, the company can and has expanded its search for a commercialization partner beyond companies with insulin manufacturing capabilities. Management has shared with our team in the past that a go-alone pathway for BC Lispro in the US is not off the table, though we’re still expecting a dedicated partnership prior to phase 3 clinical trials. Adocia plans to meet with FDA sometime this year to discuss the phase 3 program. Development of phase 3-ready BC Lispro has more or less stalled since Lilly terminated its licensing agreement for the product in January 2017, but we’ve been impressed by Adocia’s stalwart dedication to carrying the product through development and into patient hands. 

  • Interestingly, Adocia emphasized the prioritization of bridging activities to launch a phase 3 pump trial, presumably of BC Lispro, as a result of their agreement with THDB (slide 13). To be sure, demonstrating safety and efficacy via CSII will be critical to BC Lispro’s clinical utilization, and we’re glad to see Adocia thinking ahead (we often hear thought leaders note a relative lack of evidence for the use of Fiasp in pumps, though patients and providers are certainly using it in them – off-label in the US, where pump use of Fiasp is not yet approved). Further, as the company’s slides emphasize, the faster on-off PK profile of BC Lispro could play a role in “closing the loop.” Indeed, Adocia recently positioned its BioChaperone Pramlintide Insulin as viable for pump use in a presentation at ADA, emphasizing the combination’s long-term stability in pumps and on the shelf, boding well for this phase 1 candidate. As a reminder, Adocia has prioritized BC Pramlintide Insulin (with human insulin) over BC Pramlintide Lispro, to our understanding due to preclinical evidence and previous work by Amylin that the combination with human insulin actually has a better PK/PD profile.

  • Adocia is still looking for a licensing partner for its phase 3-ready rapid-acting human insulin, HinsBet U100. Management maintained that they are actively seeking regional partners in emerging markets to continue development of and launch the product, which they hope to serve as an affordable prandial treatment option in markets dominated by human insulin. The last big update on HinsBet came in 4Q16, when the candidate demonstrated superior postprandial glucose control vs. Humulin in a one-hour meal test (p=0.0002), as well as non-inferiority vs. Humalog (p=0.537).

2. Phase 1/2 Trial for BioChaperone Glucagon to Initiate in 4Q18, Expected to Ready the Candidate for Phase 3 Investigation

Following expanded phase 1 results at ADA, Adocia announced that BioChaperone Glucagon will enter a phase 1/2 trial later this year. No details on the study were given, though Adocia did note that they expect this to be the final trial before phase 3. As a reminder, BC Glucagon is under development both as a severe hypoglycemia rescue treatment and for use in a dual hormone closed loop system, and the candidate joins a fairly robust glucagon competitive landscape currently led by Xeris’ MyGluca rescue pen (FDA filing expected 3Q18), Lilly’s nasal glucagon (filing expected 2H18), and Zealand’s dasiglucagon (filing expected 2019/2020). That being said, we see more than enough room for multiple next-gen products to expand the glucagon market (long in need of innovation) and see commercial success; if functional in dual hormone systems, BC Glucagon would be in a particularly strong position. Notably, the initial phase 1 trial evaluated two different formulations of BioChaperone Glucagon; while both raised blood glucose effectively (in 10 and 12 minutes on average), both were actually outperformed by Novo Nordisk’s GlucaGen, which raised blood glucose in a shorter seven minutes (p<0.001 for both comparisons). GlucaGen was also superior on mean plasma glucose increase at the 15-minute mark. However, Adocia’s Director of Biology and PK/PD Dr. Gregory Meiffren argued that both agents are “suitable” for rescue therapy, and the greater ease-of-use of liquid stable glucagon could also mean better real-world outcomes – we’d agree with this view, since the problem with current glucagon options is not their efficacy, but their very low ease-of-use and high hassle factor. That said, with a handful of other glucagon products coming to market, we’ll be keeping a close eye on comparability to standard of care glucagon going forward. Adocia also retains an interest in developing BC Glucagon for rare diseases of dysfunctional glucagonemia (post-bariatric surgery hypoglycemia and congenital hyperinsulinism).

3. Obesity Pipeline: Phase 1 Study of BioChaperone Glucagon GLP-1 for Obesity Delayed from 4Q18 to 1H19

The first in-human trials of BioChaperone Glucagon GLP-1 for obesity, which were originally expected to begin in 4Q18, have been slightly delayed to 1H19. In January, Adocia revealed this venture into obesity R&D, joining a growing cohort of diabetes-focused companies expanding into adjacent cardiometabolic indications. We did notice that Adocia has shifted from “BC Glucagon Exenatide” to “BC Glucagon GLP-1” – we suspect this is for clarity and efficiency, but it did pique our interest as to whether the company might be considering other GLP-1 molecules for development in obesity, though to our understanding exenatide is likely much more accessible in terms of patent expiration. No other updates were given on BC Glucagon GLP-1, a dual agonist that joins a competitive landscape led by Sanofi’s phase 2 SAR425899. OPKO Health’s OPK88003 is in a currently-recruiting phase 2b trial in type 2 diabetes (though the company is now targeting an obesity indication), and AZ’s MEDI0382 is in a large, ongoing phase 2 dose-ranging study in type 2 diabetes. All of this is on top of a host of phase 1 and preclinical candidates that includes dual and tri-agonists from Novo Nordisk. Doubtless, there has been much excitement about the potential of GLP-1/glucagon dual agonists in diabetes, obesity, and NASH, and we would wager they represent one of the next waves of cardiometabolic treatment, particularly in obesity – we think Adocia is smart to expand into this emerging class. Obesity remains startlingly prevalent (affecting ~40% of US adults) but devastatingly underdiagnosed and undertreated; while pharmacotherapy has struggled to gain a foothold commercially, we very much think the tide is turning as clinical understanding of obesity grows and as therapies become more efficacious. In our view, the sky is really the limit for obesity market potential right now, and we’d love to see manufacturers work together (to the extent possible) to improve reimbursement and combat societal stigma. Adocia has also delayed the first in-human trials for its adjacent preclinical GLP-2 agonist teduglutide, for short bowel syndrome, to 1H19; the therapy was added to Adocia’s pipeline simultaneously with BC Glucagon GLP-1, and they will remain on the same R&D timeline.

4. Adocia Closes 2Q18 with ~$65 Million in Cash

As of June 30, Adocia held €56 million (~$65 million) in cash and cash equivalents, a considerable gain from from €28 million (~$34 million) at the end of 1Q18 and also a YOY increase over €52 million (~$61 million) in 2Q17. This growth in cash runway has primarily come from the April licensing agreements with THDB, from which Adocia gained $45 million in revenue in April 2018. On the strength of this payment, Adocia labeled its financial situation as “solid” and projected optimism about the company’s cash position, especially in light of a potential future $85 million in milestone payments plus double-digit royalties in the case that THDB brings a product to market in China.

Adocia Diabetes/Obesity Pipeline Summary

The table below reflects the latest status, as far as we are aware, of Adocia’s diabetes/obesity-related pipeline products. Items highlighted in yellow indicate notable changes to the pipeline in recent months.

Product

Indication

Status

Timeline/Notes

BioChaperone Lispro (ultra-rapid-acting insulin)

Type 1 and type 2 diabetes

Phase 3-ready

  • Secured Tonghua Dongbao as development and commercialization partner in China, retained rights to US, EU, Japan

  • Positive topline phase 1b results released in December 2017; Candidate showed significantly faster offset vs. Novo Nordisk’s Fiasp in first-ever head-to-head comparison of ultra-rapid-acting insulins

HinsBet (rapid-acting human insulin)

Type 1 and type 2 diabetes

Phase 3-ready

  • Adocia plans to license to a “regional player” in emerging markets for phase 3

  • Preclinical U500 formulation in development

  • Positive phase 2a results reported in 4Q16

BioChaperone Combo (75/25 insulin glargine/insulin lispro premix)

Type 1 and type 2 diabetes

Phase 1

BioChaperone Glucagon (liquid-stable glucagon)

Ready-to-inject hypoglycemia rescue treatment (type 1 and type 2 diabetes); also in development for dual hormone AP (type 1 diabetes)

Phase 1

  • Final phase 1/2 trial announced to begin 3Q18

  • Positive topline phase 1 results reported in 4Q17

BioChaperone Pramlintide Insulin (pramlintide/human insulin)

Type 1 diabetes

Phase 1

  • Phase 1 trial initiated April 2018; Expected to complete in 3Q18

BioChaperone Insulin Lispro/Pramlintide

Type 1 diabetes

Preclinical

BioChaperone Insulin Lispro/Exenatide

Type 2 diabetes

Preclinical

BioChaperone Insulin Glargine/Liraglutide

Type 2 diabetes

Preclinical

BioChaperone Insulin Glargine/Dulaglutide

Type 2 diabetes

Preclinical

BioChaperone Glucagon GLP-1

Obesity

Preclinical

  • Phase 1 trials delayed to 1H19

  • Added to pipeline in January 2018 as one of Adocia’s first non-diabetes candidates

 

-- by Peter Rentzepis, Ann Carracher, Payal Marathe, and Kelly Close