Realm Therapeutics (RLM) is developing a pipeline of novel topical treatments principally to treat highly prevalent dermatology indications using its proprietary hypochlorous acid (HOCl) technology, which has shown immunomodulatory properties coupled with a potentially favourable safety profile. FY’17 highlights included entry of lead program PR022 a topical gel to treat Atopic Dermatitis into FDA Phase II study due to provide headline data in Q3’18.
Post results our valuation of RLM is £79m, equating to 68p / share. As such we continue to regard RLM’s equity as offering an attractive entry point into a well-funded, clinical stage biotech pipeline with little value ascribed to an active pipeline.
RLM is on track to file an Investigational New Drug application (IND) for its second topical dermatology indication for new program RLM023, in Acne Vulgaris in Q418 with a view to a Phase II Proof of Concept study start in Q1’19. A third dermatology indication is being evaluated in Psoriasis, the most prevalent auto-immune disorder in the US with around 7.5m sufferers according to the American Academy of Dermatology, aiming to providing a safer and efficacious treatment alternative to potent first line therapies.
RLM initiated a Phase II study for its lead candidate PR022 a topical gel for treating mildto-moderate Atopic Dermatitis in December, with data anticipated in Q318. Previous preclinical studies demonstrated early promise of its immunomodulatory properties and efficacy alongside good tolerability. Given that there are few non-steroid topical treatment alternatives, we think that PR022 stands to gain a share in an expanding treatment segment which has a current estimated Rx value of $4bn (according to the American Academy of Allergy, Asthma & Immunology (AAAAI). This is provided the good safety and efficacy profile seen to date is borne out in clinical trials
The timing of the Phase IIa trial start for the next most advanced program RLM023 in Acne Vulgaris is now firmed up for Q1’19. AAAAI calculate that there are over 20 million sufferers in the moderate to severe class of Acne Vulgaris with an unmet need for effective treatments with a safer side effect profile than the standard topical retinoids, antibiotics or salicylic acid.
A trial setback in Q1’18 with PR013, a topical solution for Allergic Conjunctivitis (AC) administration which failed to show efficacy in a Phase II study, led to RLM ceasing development of the program. There are different mechanisms at play in the dermatology indications being evaluated than in AC and consequently we see no direct read-across in these indications.