Respirator is sprung from University of Lund and was founded in 1999 with the aim of developing new drugs for respiratory diseases. Since then, the research-based pharmaceutical company has broadened its pipeline, including through the acquisition of Valcuria AB 2012, and is currently developing innovative drug candidates in cancer, chronic obstructive pulmonary disease (COPD) and severe asthma. They also have a project in the diagnosis of cardiovascular diseases.
The company aims to reduce the burden of these common diseases by contributing to better treatments that both improve quality of life and prolong survival. The plan is to reach the market through strategic partnerships at the development stages that optimize value for the company's owners.
Respiratorius works as a virtual company and hires the necessary expertise and resources as needed, which provides a low and controlled cost base. The company is now focusing on its two main projects; VAL001 in diffuse large B-cell lymphoma (DLBCL) and RESP9000 in COPD and severe asthma.
VAL001 against aggressive lymphoma
DLBCL is an aggressive form of lymph node cancer and the most common type of Non-Hodgkin's Lymphoma (NHL), with DLBCL accounting for about 30 percent of cases. Each year, just over 60 people in the US and Europe are diagnosed with DLBCL, which corresponds to an incidence of 000/7, making it a rare disease.
Today, the standard treatment for DLBCL is the combination therapy R-CHOP, which includes both chemotherapy and the antibody-based drug RituximabHowever, the treatment outcome leaves more to be desired and the 5-year survival is around 60–70 percent. It is this figure that Respiratorius wants to improve with VAL001.
Advancing towards Phase III
The candidate, which has undergone a phase I/IIa study with good results, is intended as an additional treatment to R-CHOP. VAL001 is to be given before the treatment to make the patient more receptive to R-CHOP, which has been shown to give good results. In the phase I/IIa study, significantly improved 1- and 2-year survival was shown for the treatment regimen compared to a matched population from the Swedish Lymphoma Registry that was treated only with R-CHOP.
A patient who survives 2 years after treatment is considered cured of the disease, and VAL001 was able to increase this proportion by 10 percent. Statistical analysis also shows that the risk of mortality is reduced by more than 50 percent. Both of these results are unusually good for new cancer drugs, not least in aggressive diagnoses such as DLBCL.
Orphan drug status and regulatory shortcut
Because VAL001 is being developed for a rare disease, and is also considered to be able to contribute to significantly better treatment outcomes, the candidate has been granted orphan drug status – Orphan Drug Designation – in both Europe and the USA. This entails a whole range of advantages, not least market exclusivity after market entry in 7 years in the USA and 10 years in Europe. In addition, there are, for example, closer cooperation with the regulatory authorities, lower regulatory fees and tax breaks.
As part of the extended regulatory assistance during the development of the drug candidate, Respiratorius participated in a so-called Scientific Advice Working Party (SAWP) with the European Medicines Agency EMAThis scientific advice on the project's continued clinical development strategy resulted in VAL001 being directly qualified for a pre-market Phase III study.
Planning a study for marketing approval and seeking participants
Prior to the Phase III study, which will include approximately 700 patients, the company will conduct a pharmacokinetic study with a new formulation of VAL001 to ensure that the dosage with the new formulation is in line with the previously tolerated maximum dose. Other remaining preparations for the upcoming Phase III study include establishing a clinical study protocol and developing and producing trial material in tablet form.
Of even greater importance is that Respiratorius is looking for an exit from the project and thus a partner for the study. Since last year, the company has been collaborating with Partner International Inc. to complete its exit strategy from the VAL001 project. Partner International's mission is to use its established network to find interested takers with the goal of reaching an agreement. In a recent interview with BioStock, Respiratorius CEO told Johan Drott that over 20 potential participants have expressed their interest in the project and that the work of finding a partner is continuing without obstacles despite the ongoing Covid-19 pandemic.
Watch the full video interview with Respiratorius CEO from BioStock's studio here.
The company's prospects for reaching a desired agreement are considered good given the impressive clinical results, existing orphan drug status in the most important markets and a solid patent situation. Respiratorius also has significant internal experience in concluding similar agreements. Johan Drott, who is also CEO of the prostate cancer company Diaprost, was highly involved when “a leading pharmaceutical company” acquired the rights to the antibody h11B6 from Diaprost. A deal with a total value in the billions through an upfront payment and research funding of USD 13 million and additional consideration that could amount to USD 90 million, which consists of the option fee together with any future commercial milestone payments.
However, while the exit process is underway, the company is continuing preparations for the Phase III study to ensure that the project does not lose momentum.
RESP9000 advances towards the clinic
Respiratorius also conducts projects in respiratory diseases with a primary focus on RESP9000 for COPD and severe asthma. The RESP9000 project was initiated in 2018 after finding a new substance that was considered to have a favorable safety profile compared to previous substances in the company's RESP1000 series, but with retained anti-inflammatory and bronchodilator properties.
An international patent application (PCT), which could provide protection until 2038, was filed and a preclinical program was initiated with the candidate. So far, the substance's effect has been studied in both human lung tissue and animal models. The company is now working to compile existing data in order to discuss this with regulatory authorities, e.g. Swedish Läkemedelsverket, to ensure that planned toxicological studies meet the requirements for upcoming clinical studies. They are also working on developing an inhalable formulation of the drug and then aim to apply for a first clinical study in 2021.
Significant market potential for the company's two main candidates
COPD is an inflammatory disease of the bronchi and lungs that is characterized by a slowly increasing narrowing of the bronchi, which makes the disease painful for the sufferer. It is also one of the most common and fastest growing diseases in the world, with a prevalence of 251 million (in 2016) when the disease was also estimated to be behind over 3 million deaths and thus constitutes the fourth most common cause of death globally. As a result of air pollution and smoking, the disease is also expected to become even more common in the future, which will result in an increased burden on society as effective medicines are lacking.
The global market for COPD and severe asthma is estimated to be worth over USD 28 billion. The market for COPD drugs is also expected to grow significantly through 2025, with an annual growth rate of around 3,6 percent in the eight largest markets – the US, France, Germany, Italy, Spain, the UK, Japan and Australia – driven primarily by an increase in diagnoses.
As for the NHL market, it was valued at USD 2014 billion in 4,87 in the seven largest markets – the US, France, Italy, Germany, Spain, the UK and Japan. This figure is expected to rise to USD 5,5 billion by 2024. Assuming that all diagnoses within the NHL field have the same market value, DLBCL alone would represent USD 1,46 billion in 2014 and USD 1,65 billion in 2024. The estimated market growth is primarily driven by expected launches of new drugs, but the market base is also expected to grow as a result of demographic developments.
Both RESP9000 and VAL001 therefore address very large markets, both with substantial needs for more effective treatment alternatives. Innovative preparations that can contribute to improved treatment outcomes therefore have much to gain in these markets.
Broad portfolio
Today, VAL001 and RESP9000 are Respiratorius' primary projects, but the company has additional candidates in its portfolio. Above all, in COPD and asthma – RESP1000 and RESP2000 – but also for diagnosing cardiovascular diseases with a PET camera, one of the fastest growing new technologies in cardiac diagnostics (RESP3000).
Current with rights issue
However, capital is required to drive the projects forward and as of March 31, 2020, the company had SEK 4,8 million in liquid assets. It therefore needs to increase its financing and is currently carrying out a rights issue of SEK 25,1 million. The proceeds will primarily finance preparations for continued clinical development of the VAL001 project, e.g. development of a formulation for the phase III study. Resources will also be allocated to the toxicology program for RESP9000.
Respiratorius estimates that a fully subscribed issue would meet its working capital needs for the next twelve months. If it is not fully subscribed, it will primarily focus its resources on the VAL001 and RESP9000 pharmaceutical projects and reduce activities related to other areas.
The issue also includes an accompanying warrant that can be exercised during June/July 2021. If fully subscribed, the warrant could raise an additional approximately SEK 17,9–23,9 million after issue costs. The net proceeds from the warrant are planned to be allocated to preparations for initiating clinical studies with RESP9000.
[divider]THE OFFER IN SUMMARY[/divider]
LIST |
Spotlight Stock Market |
SUBSCRIPTION PERIOD |
2 – 16 June 2020 |
PREFERENCE RIGHTS |
For each (1) existing share held on the record date of May 29, 2020, one (1) unit right is obtained. Ten (10) unit rights are required to subscribe for one (1) unit. Each unit consists of two (2) shares and one (1) free warrant 2020/2021, (“TO1”).
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DRAWING COURSE |
The subscription price is SEK 1,60 per unit, corresponding to a price of SEK 0,80 per share. The warrants are received free of charge. No brokerage is paid.
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ISSUANCE VOLUME |
The offering includes a maximum of 31 newly issued shares, corresponding to a total of approximately SEK 434 million, and a maximum of 394 warrants, which, if fully exercised, correspond to a total of approximately SEK 25,1–15 million. |
SUBSCRIPTION OBLIGATIONS AND WARRANTY UNDERTAKING |
A number of existing shareholders and board members have submitted subscription commitments of approximately SEK 3,5 million, corresponding to approximately 14,1 percent of the Rights Issue. No remuneration will be paid for these subscription commitments.
A number of external investors have entered into guarantee commitments in connection with the Rights Issue of approximately SEK 16,6 million, corresponding to approximately 65,9 percent of the Rights Issue. |
TRADE WITH UNIT RIGHTS |
Trading in unit rights takes place on Spotlight Stock Market during the period June 2 – 12, 2020.
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TRADING WITH BTU |
Trading in BTU will take place on Spotlight Stock Market between June 2, 2020 and until the Swedish Companies Registration Office has registered the Rights Issue and the BTU has been converted into shares and warrants.
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[divider]DOCUMENTS & INFO[/divider]
[divider]MEDIA[/divider]
Watch CEO Johan Drott present Respiratorius in BioStock's studio below.
See BioStock's interview with Johan Drott below.
See a shorter version of the interview below.
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