This report is published by Research Dynamics, an independent research boutique


Advancing the development of atexakin alfa

Strategic collaboration agreement with PX'Therapeutics
Relief Therapeutics ('Relief') inked an agreement with PX'Therapeutics, earlier this month, for the production of atexakin alfa, a low-dose formulation of the recombinant human protein interleukin-6 (IL-6). The drug is targeted at the treatment of peripheral diabetic neuropathy by regenerating damaged nerve fibres with the objective of relieving the associated symptoms. PX'Therapeutics, a subsidiary of the Aguettant group, is a French contract development and manufacturing organisation (CDMO) specializing in the customer-tailored development of recombinant proteins.

Under the terms of the agreement, PX'Therapeutics will optimize the existing production process for recombinant IL-6, a 185-amino acids cytokine, in Chinese hamster ovary (CHO) cells. PX'Therapeutics will also produce the clinical material that will be used for clinical trials.

We believe that the expertise of PX'Therapeutics in developing recombinant proteins will benefit Relief in efficiently conducting its clinical trials for atexakin alfa. Further, PX'Therapeutics may develop a commercial-scale process for the production of the drug.

Strategic collaboration agreement with FirstString
Relief has also established a research collaboration with FirstString Research Inc. ('FirstString') to further the clinical development of atexakin alfa in the US. This is another key agreement signed by Relief, post its recent collaboration with PX'Therapeutics.

Under the terms of the agreement, FirstString will seek US government financial support, develop relevant collaborations, and provide resources towards the Food and Drug Administration (FDA) requirements on the constitution of an Investigational New Drug (IND) application dossier for atexakin alfa in diabetic neuropathy.

This collaboration will also enable Relief to get better access to US-based grant funding from US governmental sources such as the National Institutes of Health (NIH). Given FirstString's solid track record in obtaining grant-based funding, we believe Relief will be greatly benefitted in raising the necessary funds to conduct the clinical trials for atexakin alfa. This collaboration agreement may also pave the way for atexakin alfa to be tested in US clinical trials.

Conclusion
We think that by entering into these two partnerships, the company has taken bold steps and it is developing in the right direction with respect to getting its products in the market within the estimated timeline. Relief is, simultaneously, also working on the proposed acquisition of FirstString for which it had signed the term sheet in July this year. We are of the view that once this acquisition goes through, Relief will also benefit in terms of getting access to grant-based funding for clinical trials of its other MPCs.

Valuation
These partnerships have reinforced our positive view on the company. Both the agreements complement Relief's clinical development efforts. The partnership with PX'Therapeutics will enable Relief to advance its clinical trials in Europe and help it to save cost on the expensive clinical trials, by outsourcing it to a CDMO. The other partnership with FirstString provides a suitable platform for Relief to carry out the clinical trials for its MPCs and target a potential launch in a highly lucrative US market. We have, however, not changed our valuation estimates as there was no visibility in terms of the financial impact of these two deals.

Our current approach values the company at CHF0.19 per share, with upside potential. We believe that Relief might enter into similar partnerships / agreements in the future. It may also look towards other attractive acquisition opportunities (other than FirstString) which would consolidate its pipeline of drug candidates.