Realm Therapeutics

www.realmtx.com TICKER: RLM     EXCHANGE: AIM

Realm Therapeutics is an emerging specialty bio-pharmaceutical company developing therapeutic products to treat immune related disorders in adults and children, using its proprietary hypochlorous acid-based technology. 

LATEST REPORTS

 
Review underway after Atopic Dermatitis miss
Published: Aug 15 2018

Realm Therapeutics plc (RLM), a clinical stage bio-pharmaceutical company focused on developing novel therapeutics in immune-related diseases based on its proprietary hypochlorous acid (HOCl) technology, has reported preliminary top-line data from its Phase II trial of PR022 in Atopic Dermatitis, in tandem with H1’18 financial results.
RLM’s randomised, double-blind, placebo controlled, Phase II clinical trial, PR022 showed no difference from vehicle in the primary endpoint of percentage change in Eczema Area Severity Index (EASI) versus baseline. The Company is now analysing the data to interpret the top-line result, as well as the other data collected in the study.
The conclusions of this review will be used to inform decision-making going forward, and this includes evaluating the implications of these data for RLM’s preclinical HOCl dermatology pipeline in Acne and Psoriasis – both of which had been making good progress. RLM indicates that it will also review the possibility of acquiring one or more new assets, although no specific detail is available. They expect to disclose the outcome of the review in September.
RLM also  reported results with a higher H1’18 net loss of $10.6m compared to a loss of $3.9m in H1’17. This was primarily due to an increase operating expenditure to $10.9m in H1’18 (versus $4.6m in H1’17) and included $7.4m of R&D costs to cover the clinical studies of PR022 and PR013 and $3.5m of G&A to cover NASDAQ listing. Net cash and equivalents stood at  $23.7m for the period to the end of June 2018.
Pending the outcome of the review, we are suspending our forecasts and valuation that we can update when the Group’s strategic direction becomes clearer in September. In the meantime, RLM has the benefit of significant cash on the balance sheet, an experienced Executive team, and substantial IP filed. 
 
On track for Atopic Dermatitis readout in Q3
Published: May 24 2018

Realm Therapeutics (RLM) is developing a pipeline of novel topical treatments for highly prevalent dermatology indications using its proprietary stabilised hypochlorous acid (HOCl) technology. RLM is investigating the potential already seen in its preclinical studies with topical HOCl formulations to date. They suggest immunomodulatory activity alongside well-documented safety evidence: an encouraging base from which to potentially deliver efficacious and safer alternatives to first line therapies.
Today RLM confirmed it has met its targeted enrolment completion timeline for its US Phase II study for its lead candidate PR022. This is a topical gel for treating mild-to-moderate Atopic Dermatitis (AD) which is on track to achieve a headline data readout in Q3’18. A total of 122 patients have been recruited into the double-blind, randomised, multi-centre Phase IIa study which included a parallel placebo control group.
Atopic Dermatitis affects c. 20m people in the US alone and is largely a paediatric condition with few treatment alternatives to first-line topical steroids with side effects that include skin thinning and a comprised immune system with prolonged use. We think that the topical gel 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), provided the early promise is borne out.
RLM is close to providing a secondary trading market for its shares in the US, having publicly filed its registration statement in relation to a listing of American Depositary Shares (ADSs) on the Nasdaq Global Exchange. The registration of share and warrants also satisfies obligation from the recent placing and there are no immediate plans to delist from AIM or to raise new capital in this US list. In our view, an ADS listing should enable RLM to raise its investment profile in its initial commercial market.
We maintain our sum of the parts DCF valuation of RLM at £79m, equivalent to 68p / share. This is derived using a 12.5% discount rate and includes £57.5m for AD, net of $29m (£21m) of the cash, short-term investments and expenses. For now, we exclude any value attributed to Acne Vulgaris or Psoriasis and so initiation of related new clinical trials would provide potential upside to our valuation.
 
Atopic Dermatitis the focus in 2018
Published: May 03 2018

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. 
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.
The company initiated a Phase II study for its lead candidate PR022 a topical gel for treating mild-to-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.
RLM remains on the front foot: advancing its dermatology pipeline and is currently evaluating a third topical dermatology indication in Psoriasis. 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.
 
Investor Forum, March 2018
Published: Apr 03 2018

Alex Martin, CEO, gives an update on the progress of their product and patent suite, runs through the recent financials and outlines the Group's outlook for the future.
 
Focus on the dermatology pipeline
Published: Mar 12 2018

Realm Therapeutics, based in Malvern PA, is an emerging specialty bio-pharmaceutical company developing therapeutic products to treat immune related disorders in adults and children, using its proprietary HOCl - hypochlorous acid based technology. RLM’s lead candidate is a topical gel, PR022 for Atopic Dermatitis (AD).
Realm 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.
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-to-moderate patient pool is valued at c $4bn.
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 of £45m. 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. 
NB you can meet Realm's CEO at the Investor Forum in London on 28 March, please register here: 
https://www.eventbrite.co.uk/e/equity-development-investor-forum-march-2018-tickets-43192146874?ref=elink
 
Funded pipeline progressing at speed
Published: Feb 15 2018

Realm Therapeutics (RLM), based in Malvern PA, is an emerging specialty bio-pharmaceutical company developing therapeutic products to treat immune related disorders in adults and children, using its proprietary Hypochlorous acid-based technology. RLM’s lead candidates include the topical gel, PR022 for Atopic Dermatitis (AD), and PR013, a topical solution to treat Allergic Conjunctivitis (AC).
RLM has today reported that it is making excellent progress advancing its proprietary therapeutic pipeline for inflammatory disease, with a cash reach to cover its Phase II programs in the first three indications. RLM’s Phase II study of PR013 in Allergic Conjunctivitis is progressing ahead of schedule with the expected top line readout shifting into Q118 (from Q2).
If the trial data achieves a certain high level of clinical efficacy, this could mean that just one additional pivotal study will be needed to support an NDA filing of PR013. The commercial potential of PR013, provided data support efficacy and safety profile, is as an alternative to topical steroids which have serious side effects, for non-responders to standard dual-acting antihistamines, a pool of c 3.7m people in the US according to ORA Clinical.
The Phase IIa study of topical gel PR022 in mild to moderate Atopic Dermatitis is also progressing to plan, with data due in Q318. The primary endpoint of the double-blind, randomised, multi-centre, placebo controlled study is the evaluation of the efficacy and safety of PR022 using percentage change from baseline assessing Eczema Area and Severity Index. Given that there are few non-steroid topical treatment alternatives, we think that PR022 stands to gain a significant share in a growing market segment which has an estimated Rx value of $4bn. 
A December 2017 year-end cash position of $33.9m is in line with our estimate and enough to cover the ongoing Phase II trials in AC and AD, and a Phase II Proof of Concept study for RLM023, taking the cash reach on our forecasts into Q319.
We retain our Sum of Parts DCF valuation of RLM at £128m, or 110p/share. The current market capitalisation at £59m still seems to us an attractive entry point into a well-funded, clinical stage biotech pipeline with little value ascribed to the active pipeline. 
 
Nearing a major inflection point
Published: Dec 21 2017

Realm Therapeutics, based in Malvern PA, is an emerging specialty bio-pharmaceutical company developing therapeutic products to treat immune related disorders in adults and children, using its proprietary Hypochlorous acid-based technology.
It has initiated US Phase II studies in Atopic Dermatitis and in Allergic Conjunctivitis which offer promise of good safety coupled with disease-modifying potential in prevalent inflammatory disease, and where there is significant unmet need for alternatives to standard topical steroids. 
One is a double-blind, placebo controlled Phase IIa study with PR022, a topical gel for mild-to-moderate Atopic Dermatitis. Given that there are few non-steroid topical treatment alternatives, we think that PR022 stands to gain a share in this expanding segment which has a current estimated Rx value of $4bn. 
The Company has also dosed the first patient in a Phase IIb study with PR013 in Allergic Conjunctivitis (AC). An estimated 3.7 million AC sufferers in the US are reported to fail on first line treatments, but have few options other than topical steroids which have serious long-term side effects.
Realm has also expanded the preclinical pipeline to cover three potential new candidates in related ocular and dermatology markets including in the moderate-to-severe acne prescription market, a potential pool of up to 20 million sufferers according to the American Academy of Dermatology.
The group ended the six-month period to June 2017 with a net cash position of $15.6m and we project that the subsequent over-subscribed $26m gross placing in October provides a cash runway into Q319 to cover current Phase II studies for lead programs plus a potential Phase IIa study in acne vulgaris.
We value RLM on a SOTP DCF basis and materially increase our valuation to £128m (from £40m), taking account of the transition of its two lead programs into Phase II studies. For now we include only the clinical stage programs in the valuation, and PR022 accounts for the largest portion of this at £55m. Our new valuation of Realm is equivalent to 110p per share.

ARCHIVE

2017
Moving to the timelines
Published: Mar 23 2017

Realm Therapeutics (RLM) reports alongside FY16 financial results that its clinical pipeline is advancing to plan. RLM also confirms that both of its lead candidates - PR022, a novel high concentration formulation of hypochlorous acid (HOCl) to treat Atopic Dermatitis (AD) and PR013 to treat Allergic Conjunctivitis (AC) - will move into Phase II studies in 2017. Consequently, top line data readouts for both candidates is anticipated during H118.
The novel topical treatments aim to provide efficacious and safer alternatives to standard treatments in both indications providing significant commercial potential. The year end 2016 cash position of $21m provides funding to cover the first Phase II study in each indication.
  • RLM has provided an update on the development timelines for its lead programmes confirming that following IND submission to the FDA, PR022 a potential immunomodulatory treatment for AD, is set to enter Phase IIa studies in H217, leading to an anticipated top line data readout in H118. Meanwhile, IND submission for PR013, a topical treatment for AC, is expected in Q317 subsequently leading to a Phase II study start in Q417. The timelines are in line with our estimates which could lead to eventual launch of PR013 in 2020 and of PR022 in 2021.
  • Financial highlights of FY16 included a widening of R&D expenditure which rose to $5m from $1.8m in FY15 (on a continuing operations basis) as development activities advanced. Overall operating expenses increased to $8m from $6.2m, driven by R&D investments, and led to a net loss of $0.5m, including the impact of the gain on the sale of the supermarket retail business. The end of year cash position stood at $21m, higher than our forecast of $19m mainly resulting from the timing of payment of costs related to the supermarket retail business shifting to 2017. We maintain our estimate that RLM has sufficient funding, based on end of December 2016 cash, to carry out Phase II trials for PR022 and PR013 and that it would need to raise $15-20m to complete the Phase II programme.
We reiterate our stance that the current market capitalisation ascribes negligible value to the pipeline, even though there is existing clinical validation of products with the same active.
Our sum of the parts DCF valuation of RLM is £40m or 80p per share, with our assumptions outlined in our initiation note. Once RLM initiates Phase II studies for both candidates, assuming it raises funding to complete the Phase II program, then our valuation would increase to £112m, net of Phase II trial costs and cash.
Leapfrogging Phase I in Atopic Dermatitis
Published: Mar 01 2017

Realm Therapeutics (RLM), based in Malvern PA, is an emerging specialty biopharmaceutical company developing therapeutic products to treat immune related disorders in adults and children, using its proprietary hypochlorous acid based technology. RLM (formerly PuriCore before a name change in December 2016) emerges as a focused entity having divested its non-strategic supermarket retail business for $13.5m gross. 
RLM is advancing its pipeline to plan having received FDA approval to take its lead candidate PR022 a novel high concentration formulation of hypochlorous acid (HOCl), into Phase II studies in atopic dermatitis (AD). With a strong body of safety evidence on the active of PR022 at hand, RLM has effectively bypassed the Phase I stage.
With a high unmet need for safer alternatives to standard topical corticosteroids in mild-to-moderate AD, RLM targets, alongside recently approved Eucrisa (Pfizer), for a share of the strongly steroid-averse patient pool, which has a current Rx value of c $4bn.
The Phase II program will include a Phase IIb study in adolescents given the predominantly paediatric patient population. With the treatment landscape now evolving, as a novel treatment based on a known entity, PR022 could gain a significant market share provided private payor coverage is achieved and assuming superior or equivalent efficacy to approved treatments.
RLM has sufficient funding in hand with end of December 2016 cash and equivalents of $21.4m to cover the Phase IIa AD trial in adult patients, as well as a Phase II study of PR013 a topical treatment for Allergic Conjunctivitis, due for submission during 2017. We estimate that further funding of $15-20m is required to complete the Phase II program for both candidates.
We reiterate our stance that the current market capitalisation merely values RLM at or around year end cash and ascribes negligible value to the pipeline. Our sum of the parts DCF valuation of RLM is £40m or 80p per share, on assumptions that are outlined in our recent initiation note.
Realm Therapeutics plc - Equity Development Investor Forum, January 2017
Published: Jan 27 2017

Alex Martin, Chief Executive Officer, explains the strategy behind Realm Therapeutics.
A New Realm of Opportunity
Published: Jan 19 2017

Realm Therapeutics (RLM) is an emerging specialty bio-pharmaceutical company developing therapeutic products to treat immune related disorders in adults and children, using its proprietary hypochlorous acid-based technology. RLM (formerly PuriCore plc) is now a focused entity, having divested its non-strategic supermarket retail business for $13.5m to Chemstar Corp in October 2016.
RLM is preparing to take its pipeline of novel pharmaceutical therapies, which hinges on patented high concentration formulations of hypochlorous acid, into Phase II studies during 2017. RLM will tackle unmet need for efficacious alternative treatments in prevalent forms of inflammatory disease, in indications that have attracted significant recent M&A interest.
Atopic Dermatitis, affects c20m people in the US alone and is a largely paediatric condition with few treatment alternatives to first-line topical steroids, until approval of Pfizer’s boron-based Eucrisa in December. Early stage study results from 2016 illustrate that RLM’s topical HOCl solution for atopic dermatitis, PR022, demonstrates promising signs of efficacy in preventing and alleviating the symptoms of AD, with no adverse effects.
While RLM is an emerging pharmaceutical developer, M&A multiples illustrate potential of later stage and broader dermatology and ophthalmology pipelines: Eucrisa was the chief motivation for Pfizer’s $5bn buyout of Anacor in 2015 post Phase III. Nicox acquired the remaining shares of Aciex for up to $120m, primarily to boost its ophthalmology pipeline including a Phase III AC candidate.
We estimate that RLM has sufficient funding, based on our end of December 2016 cash estimate of $19.8m, to carry out Phase II trials for PR022 and PR013. Looking forward, if RLM receives approval to start Phase II studies for its pipeline and assuming that it raises sufficient funding to complete the Phase II program, then our valuation would increase materially.
Our DCF valuation of RLM at the current time is £40m using a sum-of-the-parts valuation at a discount rate of 12.5%, which equates to 80p/share. Indeed, the current market cap values RLM at less than our estimated year end cash position, potentially offering an interesting entry point to a novel anti-inflammatory pipeline.