It is surprising that more biotechs seeking a public listing do not pursue reverse mergers, opting instead for a more expensive initial public offering. As Savara showed yesterday, if a clean shell to reverse into can be found, the results can be very satisfying.
The group found the perfect vehicle in Mast Therapeutics, and bought it for virtually nothing to boot. After Mast’s remaining project blew up – which was shrugged off by the market – the stage was set for attention to focus on Savara’s lead asset, Molgradex, whose recently begun phase II study yesterday got a strong endorsement.
The trial, Optima, involves 30 subjects with chronic lung infections due to non-tuberculous mycobacteria (NTM). Its probability of success might just have gone up, given two case reports outside this trial that have now backed Molgradex’s mechanism; the project is an inhaled GM-CSF.
The case reports, in cystic fibrosis patients with the NTM species Mycobacterium abscessus, had actually been published in the European Respiratory Journal back in February. But news that the second subject had, like the first, undergone culture conversion, signifying activity against NTM, was only revealed yesterday, enabling Savara to benefit from an 18% share price jump.
Savara has been a public company since its reversal into Mast in January 2017, so the group can if it wants make use of the momentum to top up its cash reserves, which stood at $85m at the end of the first quarter, through a public offering (ACC – Savara shrugs as Mast fades into the past, 12 March 2018).
One advantage of going public by a reverse merger, rather than an IPO, is the ability to control news flow. Although this was not the case here, Savara would not have had the fear of negative news derailing its flotation – something that can be a risk during an IPO period. Still, shell vehicles unencumbered by legacy liabilities can be hard to come by.
As for future news flow, Savara will now await readout from its Optima study of Molgradex, expected to be completed in the third quarter. While final data are not due until next year, Savara reckons interim results could come during 2018.
The trial will measure conversion of sputum culture to negative at 24 weeks in two patient cohorts: subjects who are culture-positive while on a multidrug antimycobacterial regimen, and those who are positive but have been off treatment for at least 28 days owing to lack of response or intolerance.
This is where yesterday’s second patient conversion comes into play: this subject initially showed a strong response to inhaled GM-CSF, and subsequent culture conversion was achieved without antibiotic treatment. The first subject had been treated with antibiotics.
NTM lung infection is a rare lung disorder, but is apparently a growing threat among cystic fibrosis patients, with multidrug-resistant strains like M abscessus being particularly hard to eradicate.
Cystic fibrosis patients might be particularly prone owing to having diminished macrophage activation, something thought to be linked to reductions in GM-CSF, a stimulator of macrophages. The published case reports seem to back this theory, which if accurate provides the rationale for using an inhaled GM-CSF like Molgradex.
The project is expected by the sellside to generate 2024 sales of $358m, according to EvaluatePharma, an amount that for Savara, capitalised at $320m, is not to be sniffed at.
|Optima||Molgradex (300µg), open label in 30 subjects with NTM infection||NCT03421743|