NASDAQ:EDSA
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Business Update
Advancing EB06 for Treating Vitiligo
Edesa Biotech, Inc. (NASDAQ:EDSA) is planning for a Phase 2 study of its anti-CXCL10 monoclonal antibody for the treatment of moderate-to-severe non-segmental vitiligo patients. Vitiligo is a disease that causes areas of the skin to lose color, with non-segmental vitiligo being characterized by patches appearing on both sides of the body. It is caused when pigment-producing cells (melanocytes) die or stop producing melanin as a result of an autoimmune disease, genetics, or a triggering event (e.g., stress, sunburn, skin trauma).
Past research showed that the chemokine CXCL10 was elevated in both vitiligo patient skin and serum (El-Domyati et al., 2022). In a mouse model of vitiligo, which includes CXCL10 expression in the skin, neutralization of CXCL10 in mice with established, widespread depigmentation induced reversal of disease as shown by repigmentation (Rashighi et al., 2014). In addition, serum CXCL10 levels are significantly increased in vitiligo patients compared to controls, suggesting that CXCL10 may play a role in the pathogenesis of vitiligo in humans (Gharib et al., 2021). The following slide gives an overview of the mechanism of action of EB06 and data supporting its use in the treatment of vitiligo.
A 2022 publication reported that the estimated prevalence of vitiligo patients in the U.S. is between 1.9 million and 2.8 million (Gandhi et al., 2022). This corresponds to a vitiligo market is projected to reach approximately $1 billion by 2030 (EvaluatePharma). In support of this, the following two transactions show the potential for vitiligo treatments in development:
• In October 2022, Villaris Therapeutics was acquired by Incyte (NASDAQ:INCY) for $70 million upfront and up to $1.3 billion in potential milestone payments. Villaris was developing auremolimab, an anti-IL-15Rb monoclonal antibody in preclinical development for the treatment of vitiligo.
• In October 2023, VYNE Therapeutics (NASDAQ:VYNE) announced positive results from the Phase 1b trial of VYN201 in patients with non-segmental vitiligo with a mean percentage reduction in F-VASI score for the 1.0% and 2.0% cohort of 30.3% and 39.0%, respectively. In addition, the drug was generally well tolerated with a favorable safety profile. Following the announced results, VYNE raised gross proceeds of $88 million in a private placement financing.
In addition, Opzelura® (ruxolitinib) was approved for the treatment of vitiligo in July 2022 and is projected to have sales of >$600 million for that indication in 2030 (EvaluatePharma). We believe that a successful Phase 2 trial with EB06 in vitiligo patients would result in a significant revaluation of that asset in line with the valuations assigned other vitiligo products as shown above.
The company is continuing IND-enabling work in 2025 and has already received approval from Health Canada to conduct a Phase 2 trial. The study as currently planned will enroll approximately 150 patients with severe nonsegmental vitiligo, will evaluate three different doses of EB06, and will have a primary efficacy outcome of the percentage of patients that achieve ≥50% decrease from baseline in facial Vitiligo Area Scoring Index (F-VASI50), a composite measurement of the overall area of facial vitiligo patches and degree of depigmentation within patches. The final trial protocol will be contingent on feedback from the FDA. We anticipate the IND being filed before the end of 2025.
EB05 Selected for U.S. Government Funded Study in ARDS
In June 2024, Edesa announced that EB05 (paridiprubart) was selected by the Biomedical Advanced Research and Development Authority (BARDA) for testing in a U.S. government-funded clinical trial to test three novel threat-agnostic host-directed therapeutics (HDTs) in hospitalized patients with acute respiratory distress syndrome (ARDS). The Phase 2 trial will be a randomized, double blind, placebo controlled, multi-center study. For the EB05 cohort of the study, patients will be randomized 1:1 to either EB05 plus standard of care (SOC) or to a placebo plus SOC.
The company has now shifted focus to the BARDA-sponsored trial and has discontinued enrollment in the Covid-19 focused Phase 3 trial of EB05. We anticipate a new study design being filed for a Phase 3 trial in general ARDS following the results of the BARDA-sponsored trial. The move away from a Covid-19 focused ARDS trial is a smart strategic move as positive results from a general ARDS trial will increase the potential commercialization opportunity for EB05 and make the drug more attractive to potential partners.
Edesa had previously secured a commitment of up to CAD$23 million from the Government of Canada via the Strategic Innovation Fund (SIF) to help cover the expenses for a Phase 3 trial in Covid-19 focused ARDS. Given the opportunity now with the BARDA-funded trial, the company is in discussions with the Government of Canada to amend the SIF funding agreement, which includes extending the project timeline, completion date, and the potential to use the funds for a Phase 3 trial in general ARDS. We anticipate updates from the company in 2025 regarding these negotiations when warranted.
Plans to File IND for Anti-TLR4 Antibody in IPF
Edesa is planning to file an Investigational New Drug (IND) application such that a Phase 2 trial of paridiprubart (EB07) can be initiated in pulmonary fibrosis (subject to securing funding or securing a partnership), which is the end stage of a broad range of interstitial lung diseases characterized by the progressive scarring of lung tissue. There are more than 200 known causes of pulmonary fibrosis, with idiopathic pulmonary fibrosis (IPF) being the most common form. IPF affects approximately 250,000 individuals in the U.S. (Pulmonary Fibrosis Foundation) and there are only two FDA approved therapies, pirfenidone and nintedanib. The median survival for IPF is 4.5 years (Kaunisto et al., 2019).
Research over the past decade has focused on the role of damage-associated molecular pattern (DAMP) molecules in the exacerbation and progression of pulmonary fibrosis (Ellson et al., 2014). Toll-like receptors (TLRs) are pattern recognition receptors of DAMPs and play a critical role in how DAMPs exert their effects in cellular microenvironments. TLR4 in particular was shown to have a profibrotic effect in the lung when activated by DAMPs (He et al., 2009). The interaction of TLR4 and DAMPs causes the release of numerous proinflammatory cytokines on macrophages and fibroblasts (Zhang et al., 2008). Thus, targeting the TLR4/DAMP interaction may be beneficial in the treatment of fibrotic lung diseases. A summary of the preclinical evidence supporting the use of anti-TLR4 therapy in treating IPF is shown below.
Financial Update
On December 13, 2024, Edesa announced financial results for fiscal year 2024 that ended September 30, 2024. As expected, there were no revenues reported for fiscal year 2024. R&D expenses in fiscal year 2024 were $2.9 million, compared to $4.8 million for fiscal year 2023. The decrease was primarily due to decreased expenses related to the completed dermatitis study and a reduction in labor costs and non-cash, share-based compensation partially offset by an increase in expenses related to manufacturing EB05. G&A expenses totaled $4.1 million on fiscal year 2024 compared to $4.4 million for fiscal year 2023. The decrease was primarily due to a decrease in non-cash, share-based compensation partially offset by an increase in salaries and related costs.
As of September 30, 2024, Edesa had approximately $1.0 million in cash and cash equivalents. Subsequent to the end of the year, Edesa received $1.5 million in gross proceeds under a purchase agreement with the company’s Chief Executive Officer and $0.6 million in net proceeds from common stock sold under the at-the-market (ATM) facility with H.C. Wainwright that was entered into in October 2024. As of December 11, 2024, the company had approximately 3.5 million common shares outstanding and, when factoring in stock options, warrants, and restricted stock units, a fully diluted share count of approximately 4.5 million.
Conclusion
We look forward to updates in 2025 on the EB06 program in vitiligo as the company works toward filing an IND by the end of the year. Given the above transactions in the vitiligo space we believe positive results for EB06 could cause a significant revaluation in Edesa’s share price. We anticipate additional updates on EB05 as the BARDA-sponsored trial gets underway and the company continues negotiations with the Government of Canada regarding the SIF funding. With no changes to our model our valuation remains at $20 per share.
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