Realm Therapeutics (RLM) reports that top line results from its Phase II study of PR013 in Allergic Conjunctivitis (AC) failed to show efficacy and that consequently it has decided to cease further development of the topical (HOCl) hypochlorous acid-based ocular solution for AC application. The Company is continuing to prioritise the ongoing development of its most advanced dermatology programs in Atopic Dermatitis (AD) and Acne Vulgaris. There are distinct inflammatory mechanisms at play in AC as compared to in the dermatology indications. Lead product PR022 in AD is currently in Phase II studies, while RLM plans to file an Investigational New Drug application (IND) for a new program RLM023, in Acne Vulgaris in early Q418.
RLM initiated the study of PR013 in AC in December 2017 – designed to measure the response of the primary symptoms, ocular redness and itch to the application of the topical solution. While the news of the discontinuation of the AC trial is disappointing, and there is a common HOCl platform across the pipeline, the lack of correlation between the inflammatory pathways involved in AC and the dermatology indications being investigated means we see no direct read-across in the trial outcomes.
The timeline for the AD trial data report is for Q318 – and RLM reports that recruitment into the trial is progressing well. As a reminder, the American Academy of Asthma Allergy and Immunology (AAAAI) estimates that the market for treatments in the mild-tomoderate patient pool is valued at c $4bn.
RLM is due to file an IND application in Acne Vulgaris in Q418 for RLM023 - there are over 20 million estimated sufferers in the moderate-to-severe bracket that RLM is targeting. The Company seeks to differentiate its products by means of the potential antimicrobial and immunomodulatory properties, coupled with a more benign safety profile than approved standard treatments.
We have revised our sum-of-the-parts valuation – which falls from £128m to £79m – removing AC from our forecasts - but which still stands well above the current market capitalisation. Our new valuation includes £54.8m for AD, together with $33.9m (£25.5m) of reported end December 2017 cash and cash equivalents, but excludes any value attributed to Acne Vulgaris or any other pipeline candidates.
We reiterate that the planned start of clinical studies with RLM023 and data from the Phase II study of PR022 should provide potential catalysts for revaluation.