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Probiodrug (PBD-NA): Positive read-across from BAN2401 Phase II data
Recommendation: OUTPERFORM
Target Price: EUR71.00
Current Price: EUR3.91 (COB on 12^th July 2018)

KEY TAKEAWAY

Eisai / Biogen recently reported positive top-line data for the 856-patient Phase II trial Study 201 for the anti-amyloid beta ("Abeta") protofibril mAb BAN2401 in early Alzheimer's disease ("AD"). This is the first time a late-stage trial in AD shows disease-modifying effects with regard to both Abeta reduction in the brain and an improvement of clinical function. Importantly, the data supports the Abeta hypothesis for AD therapy and is a much-needed development following a string of late-stage failures. This is good news for Probiodrug, whose lead asset PQ912 has a unique mechanism of action that inhibits the formation of toxic products of Abeta without interfering with important physiological processes. We understand that Probiodrug is exploring multiple options to finance the PQ912 Phase IIb trial that is expected to start enrolling patients in Q4/2018E. We maintain our OUTPERFORM recommendation.

Phase II trial for BAN2401 shows statistically significant efficacy at 18 months

In December 2017, Biogen / Eisai had reported that Study 201 did not meet the primary endpoint at 12 months using Bayesian analysis designed to move BAN2401 into Phase III more rapidly. However, in a remarkable turn of events, on 5th July the development partners announced that the study did show statistically significant ("s.s.") slowing of disease progression at 18 months for the highest treatment dose (10mg/kg biweekly) on the key clinical endpoint ADCOMS - which combines elements of the more traditional ADAS-Cog, MMSE and CDR-SB - when using conventional statistical analysis, and that this had also been the case at 6 and 12 months. Results of amyloid PET analysis were also s.s. at this time-point, thus reflecting a reduction of Abeta in the brain. There were no unexpected safety findings. The results of the trial will be presented in an oral session at the Alzheimer's Association International Conference ("AAIC") in Chicago on 25th July.

Data provides much-needed support for the beta amyloid hypothesis...

In addition to being positive news for Eisai, Biogen and BioArctic (the Swedish biotech company that discovered BAN2401), the data strongly supports the amyloid hypothesis as a valid target for the development of disease-modifying AD therapies. This is a welcome development for patients, industry and investors following a string of high-profile, late-stage failures in the AD space (particularly with regard to beta- and gamma-secretase inhibitors designed to block the production of Abeta) and indicates that soluble Abeta aggregates seem to be a key toxic culprit.

...and is good news for Probiodrug's PQ912 in Phase IIb development

There is also positive read-across for Probiodrug, whose lead asset PQ912, a small molecule glutaminyl cyclase ("QC") inhibitor, has a unique mechanism of action, as it inhibits the formation of synaptotoxic soluble aggregates / oligomers of Abeta without impacting physiological processes. The compound showed encouraging efficacy in a Phase IIa trial in early-stage AD patients. The Phase IIb programme includes two trials (1x Europe, 1x US) that will focus on cognition and function (activity of daily living) through the assessment of neuropsychological and functional endpoints, and assess the pathophysiological changes that characterise early AD through the measurement of changes in the EEG as well as a set of biomarkers. Both trials incorporate new draft guidance provided by EMA and FDA for early AD trials and could lead to conditional approval in 2023E.

All options on the table regarding financing of Phase IIb trial

In light of the positive BAN2401 data and the concomitant validation of the Abeta hypothesis, we would expect renewed interest from big pharma with regard to Abeta-targeting assets and hence continue to believe that a licensing deal in H2/2018E is possible, as reflected in our forecasts. That said, we understand that Probiodrug is exploring multiple financing options including a licensing deal, with all options currently on the table. New CEO Ulrich Dauer is a seasoned biotech entrepreneur and we are therefore confident in his execution ability.

Kind regards,

Brigitte de Lima, PhD, CFA | Analyst

goetzpartners Healthcare Research Team | Research Team

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