Biotech Stock On The Radar: Aimmune Awaits Adcom Test

Aimmune Therapeutics Inc AIMT shares have been on an extended downtrend since the start of 2018.

This thinly traded, small-cap biotech is on the radar ahead of a key FDA panel meeting scheduled for Friday, Sept. 13.

A briefing document posted on the FDA’s website Wednesday reiterated the obvious. AR101, being branded as Palforzia, was found effective in the intent-to-treat population of subjects, ages 4-17. FDA staff also delved on elevated discontinuations in the pediatric Palforzia group compared to placebo.

“We expect the panel to be completely directed towards discussions around epinephrine use and cases of eosinophilic esophagitis (EoE), things we believe the patient/physician community understand well and will willingly accept,” Endpoints News quoted Baird analyst Brian Skorney.

Brisbane, California-based Aimmune, founded in June 2011, is a clinical-stage biopharma company focusing on the development of drugs for food allergies. It employs 215 people full-time, with roughly half of them in R&D.

Market Opportunity

Over 30 million people across the U.S. and Europe suffer from food allergies, according to estimates shared by the company.

Among food allergies, peanut allergies are the most frequently occurring, causing serious outcomes and life-threatening events. About 3 million people in both the U.S. and Europe are allergic to peanuts, and there is no approved therapy to treat food allergies or prevent their symptoms.

Staying away from allergic food is recommended for those who are allergic. In the case of accidental exposure that may trigger a serious allergic reaction, treatment with antihistamines or injectable epinephrine is recommended.

Aimmune's Novel Approach

Aimmune's therapeutic approach, Characterized Oral Desensitization ImmunoTherapy, or CODIT, desensitizes patients to food allergens, thereby preventing an allergic reaction or reducing symptom severity should an allergic reaction occur.

The Pipeline

Aimmune's lead product candidate AR101 is a biologic treatment option for peanut allergy.

In mid-March, the FDA accepted the Biologic License Application, or BLA, for AR101 to treat pediatric allergy in children and adolescents ages 4-17 under the 12-to-15-month standard review period.

The BLA submission was supported by the pivotal Phase 3 PALISADE trial, which showed that treatment with AR101 resulted in a significant increase in the amount of peanut protein tolerated compared to placebo.

Another Phase 3 study dubbed RAMSES vouched for its safety. Following the acceptance of the BLA, the FDA completed all clinical and manufacturing site inspections.

The final approval could take until January, the company said. It has a commercial supply agreement with CoreRx with regard to AR101 that could ensure sufficiency of supply, including at the commercial launch.

Aimmune is looking to self-commercialize the drug in the U.S., with plans to hire 80 sales personnel, the company revealed during its second-quarter earnings call.

Aimmune plans to target 1,300 allergists who treat an estimated 70% of the patients ages 4-17 with a confirmed peanut allergy diagnosis in the U.S.

The company also said it's in talks with commercial insurers of over 61% of commercial lives in the U.S.,while it hopes to rope in insurers of over 80% of commercial lives in the U.S. by the time of the launch.

"All in all, we believe that management is taking a thoughtful approach to their launch preparation and expect this should pay dividends when they look to commercialize AR101 in late-2020/early-2021," Baird analyst Brian Skorney said of the commercialization plan.

Given the efficacy demonstrated by AR101 throughout its pivotal trials, a positive Adcom vote recommending approval of this much needed therapy is likely, Skorney said in a recent note.

In June, Aimmune filed a marketing authorization approval with the European Commission for AR101 for the same indication.

The agency has validated the application, with the review likely to take anywhere between 12 and 15 months.

Aimmune also commenced a Phase 3 study of AR101 dubbed POSEIDON in December 2018 to evaluate its efficacy and safety in young peanut-allergic children ages 1-4.

In October 2018, a Phase 2 study of AR101 in combination with dupilumab was initiated by Aimmune's partner Regeneron Pharmaceuticals Inc REGN as the study sponsor.

Aimmune is responsible for supplying AR101 clinical trial material for the study. Aimmune is currently working on formulation and manufacturing of an investigational asset to treat egg allergy that's codenamed AR201.

The product candidate is in a Phase 2 trial in patients ages 4-26. It is also exploring a product candidate designed to treat multinut allergy, including walnut allergy.

R&D programs for identifying product candidates targeting other food allergies, including allergy to cow's milk, are is also in the works.

See also: Biotech Stock On The Radar: Ardelyx Gears Up For FDA Decision Day

Upcoming Catalysts

-Sept. 13: FDA's Allergenic Products Advisory Committee is scheduled to review the BLA for AR101

-Jan. 2020: Potential FDA approval of AR101 in children and adolescents

-First quarter of 2020: potential commercial launch of AR101 in the U.S

-Mid-2020: completion of enrollment in Phase 2 study of AR201

-Second half of 2020: Potential approval of AR101 in the EU and potential commercial launch in Europe

Competition

DBV TECHNOLOGIE/S ADR DBVT has a competing drug in development, Viaskin Peanut, that is being evaluated for treating peanut allergies in children ages 4-11.

Viaskin is an immunotherapy to be administered epicutaneously. After voluntarily withdrawing the BLA in December 2018 for want of additional data on manufacturing procedures and controls mandated by the FDA, DBV resubmitted the BLA in early August. Baird believes Aimmune's AR101 would have an edge over Viaskin: the former is targeting a threshold of 600mg, while the latter is targeting a tolerance threshold of 300mg peanut protein.

"If Viaskin Peanut is ultimately approved, we view AR101's potentially higher tolerance level as a significant advantage from a physician, payer, patient and caregiver perspective," according to the sell-side firm.

AnaptysBio Inc ANAB has a product in development for atopic diseases, including atopic dermatitis and eosinophilic asthma. The company had also previously tested it for peanut allergy.

The Finances

As is the case with most biotech companies, Aimmune, with no commercial product on the market, has yet to post revenue.

For the recent second quarter ended June 30, Aimmune reported a loss of $1.01 per share, wider than the 91-cent loss reported a year ago, as operating expenses increased from $53.81 million to $63.19 million.

As of June 30, the company had an accumulated deficit of $593.3 million.

Cash, cash equivalents and short-term investments totaled $243.67 million at the end of the second quarter of 2019 versus $303.93 million at the end of the December quarter of 2018.

Aimmune said its existing capital resources will be sufficient to fund its planned operations for at least the next 12 months, and through the regulatory approval and potential commercial launch of AR101 in the U.S. and Europe.

Stock Take

From a technical viewpoint, the issue has found buyers in the $19-$19.50 area.

From Aug. 23 through Sept. 5, a majority of its daily lows were from $18.94 to $19.54. If that area is breached, there may be limited daily support until its July 31 low of $16.95.

On the upside, the issue repelled hard off Friday's high of $21.85, weakening to close at $20.56.

The next potential daily resistance comes in at the $23 area. The reason for that being is that it represents the middle of four consecutive daily highs ($22.77-$23.20) scaled between April 8-11.

Above that area is its yearly high from January at $26.68, which matches its Nov. 20 high of $26.74. It should be noted that the stock's prior daily high on Nov. 19 was much higher at $31.83.

Source: Y Charts

Aimmune is a heavily shorted stock, with 31.17% of the total float being held as short.

The short interest has increased 12% recently. The short interest ratio, or the number of days it takes short sellers on average to cover their position at the current average volume, is also quite high at 21.8.

Credit Suisse has an Outperform rating and $30 price target for Aimmune shares.

Baird's Skorney sees the stock moving higher on a positive Adcom vote, as he said the valuation could be pricing some level of AR101 approvability risk.

Baird has an Outperform rating and $64 price target.

Joel Elconin contributed to this report.