SynAct Pharma's issue creates foundation for the next step

SynAct Pharma develops new treatments for autoimmune and inflammatory diseases with the candidate AP1189. The company has recently developed AP1189 tablets that will be used in the continued development and potential commercialization.

SynAct Pharma is listed on Spotlight Stock Market since 2016, but preparing for list change to Nasdaq Stockholm main list in the second quarter of 2022.

Resolution therapy without immunosuppression

The company's treatment principle is a so-called resolution therapy which promotes resolution of inflammation, without inhibiting the immune system like many other anti-inflammatory drugs do.

This is possible because the company's technology is based on the melanocortin system. The melanocortin agonist AP1189 selectively stimulates MC1R and MC3R, which are found on immune cells, for example, which provides direct anti-inflammatory and anti-inflammatory effects. Fewer inflammation-causing molecules are produced, which reduces inflammatory activity, while at the same time stimulating the healing process and "cleaning up" the inflamed tissue.

Rheumatoid arthritis in the main focus

SynAct Pharma focuses primarily on the treatment of rheumatoid arthritis (RA), a chronic inflammatory disease that causes stiffness and pain in the joints and reduced quality of life in the sufferer. According to Global Data The market for RA treatment is expected to increase from USD 26,2 billion in 2019 to USD 29,1 billion in 2029 within *8MM.

About 47 percent of patients experience insufficient effect with current treatment options. SynAct Pharma wants to change this with the drug candidate AP1189. The company's goal is to slow the development of the inflammation itself and thereby reduce the acute symptoms, but also contribute to a faster healing process.

Promising Phase IIa data in RA supports further development

At the end of November 2021 The company was able to present positive results from BEGIN, a phase IIa study of AP1189 in patients with newly diagnosed and severe RA. The results showed a statistically significant and clinically relevant effect after four weeks of treatment with AP1189. The study met its primary endpoint, which was reduction in disease activity (Clinical Disease Activity Index, CDAI).

The results show that AP1189 has as good an effect as competing JAK inhibitors, but with a more favorable safety profile. The FDA has issued safety warnings for JAK inhibitors due to its side effects, which is advantageous for AP1189.

Dialogues with potential partners continue

Since the BEGIN data was published, the company has been in discussions with several pharmaceutical and biotechnology companies as well as potential partners. See BioStock interview with the company's CEO regarding these partner discussions.

The dialogues call for longer studies than four weeks, which is now possible after preclinical toxicology studies supporting dosing with AP1189 for 12 weeks. The company therefore now chooses to continue the clinical development with a clear focus on RA and a 12-week treatment period, to optimize the value of the AP1189 project and a possible deal.

Experienced team with track record of deals

To reach an agreement, an experienced and knowledgeable management team is required, which is the case in SynAct Pharma. The company's CEO Jeppe Øvlesen, CSO Thomas Jonassen and Chairman of the Board Torbjorn Bjerke were involved in the successes of Action Pharma, whose lead drug candidate was sold to Abbvie for 110 million USD in 2012. They were also co-founders of the Swiss biotechnology company TXP Pharma, there Questcor Pharmaceuticals acquired the rights to TXP's assets for $100 million in milestone payments.

12 weeks of dosing and first-line treatment in EXPAND

Strengthened by the results from BEGIN, SynAct Pharma is moving forward with development in RA and plans to start two Phase II clinical trials in RA patients in 2022, the first of which is called EXPAND and can be seen as an extension of BEGIN.

The patient population in EXPAND will be the same as in BEGIN, but with a longer dosing period of 12 weeks instead of four weeks. In the study, treatment-naïve patients – who have not yet been treated for their RA – will be treated with the 100 mg dose of AP1189 in combination with methotrexate (MTX) treatment. The company plans to submit a clinical trial application in the second quarter of 2022 and then be able to start the study in Europe in the third quarter.

DMARD-IR – an attractive market segment

The second phase II study will include DMARD-IR patients, i.e. RA patients with an inadequate response to treatment with DMARDs (Disease Modifying Anti-Rheumatic Drugs), the most common of which is MTX. Many of the patients treated with DMARDs never achieve the desired effect, experience a decreasing effect or suffer from side effects that prevent continued treatment. The company assesses that DMARD-IR is an attractive market segment and that it is both relevant and necessary to conduct further clinical development in this patient group.

The company's intention is to conduct the clinical development of DMARD-IR under an IND (Investigational New Drug), which would make it possible to conduct parts of the phase II study in the US. A so-called pre-IND meeting with FDA will take place in the second quarter and the company then aims to submit an IND application in the third quarter, with the goal of initiating the study before the end of the year.

Revising the development program in kidney disease

A parallel development track is the treatment of nephrotic syndrome (NS), a kidney condition that leads to high protein levels in the urine, edema and an increased risk of blood clots and infections. SynAct Pharma is now working to redesign the Phase II program in NS to take advantage of the newly developed AP1189 tablets and the possibility of increasing the treatment duration from four weeks to 12 weeks. The revised study design is planned to be presented in the second quarter of 2022.

Issue to finance development activities

To finance the above development plans, SynAct Pharma is now conducting a rights issue of SEK 150 million. The issue is fully secured via subscription and guarantee commitments and is expected to be able to finance the company's activities until the end of 2023. The issue proceeds of approximately SEK 126 million are planned to be used according to the following priority order:

Further clinical phase II development with AP1189 in RA (51 percent)
Continued development of AP1189 in kidney disease with a modified study design (7 percent)
Other research and development activities related to AP1189 and new chemical molecules (22 percent)
General administrative expenses (20 percent)

The offer in summary

TERMS	For each existing share on the record date, one subscription right is obtained. Eleven subscription rights entitle the holder to subscribe for one new share.
DRAWING COURSE	SEK 63 per share
ISSUANCE VOLUME	SEK 150 million before issue costs
SUBSCRIPTION PERIOD	April 6 – April 22, 2022
DILUTION	Approximately 8,3 percent at full subscription. The total dilution in the event that the rights issue and over-allotment issue are fully utilized amounts to 9,6 percent.