Antisense Therapeutics (ANP) PDFA longer step, but a clearer...

Antisense Therapeutics (ANP) PDFA longer step, but a clearer pathSPECULATIVE BUY (maintained) | Target price: A$0.26 (previous: A$0.27)

| Current price: A$0.10ANP has announced a pivot from a Ph2/3 registrational trial design in EU to a smaller, more traditional Ph2b structure. While the move potentially adds timeline risk, we view the more traditional pathway will result in a better final regulatory package, while bringing forward efficacy data on a double-blinded placebo-controlled result which has been its major point of criticism to date.
Previous study timelines were clearly at risk, likely due to the capital insufficiency to run a trial of this size (~$70m all-in). The new design greatly reduces the upfront component due to a smaller design and pushes the requirement for the larger open-label extension and associated drug manufacture.
Ultimately, investors and potential partners get most of the answers they're looking for sooner and cheaper. Certainly, there are two sides to this given this may not be what investors had originally invested for with pros and cons for each. The move makes the story more of a nearer-term catalyst story, but potentially a longer tail to commercialisation. Our risked target price reduces marginally to A$0.26 (from A$0.27) and we retain our Speculative Buy recommendation. FY22 results ANP reported its FY22 results showing a net reported loss for the period of A$5.8m (MorgansF: A$11.1m), with delays to in-clinic progression slower than we had anticipated (and resulting onset of higher R&D expenses). Makes more sense given today's announcement. ANP closed FY22 with A$19.2m in cash and no debt.
Thoughts on pivotal to Ph2b pathway change The pivot in trial structure changes the potential timelines. At this stage, we would have to assume ANP would still require a formal Ph3 although likely a smaller and more focused single-arm placebo controlled confirmatory study. Upside here if an accelerated pathway is obtained. The trial is expected to start late CY22 and appears to be broadly the same design and protocols outside of reduction in primary dosing regimen (from 12 months to 6 months). Risks to obtaining new approvals we see as low. Ultimately the new structure extends potential timelines and, if a formal Ph3 is required, a higher total cost to get to market. However, in this risk-on market with uncertain macro-environment, we view this pathway as more appealing to a broader range of investors with a stepped progression of catalysts. We like that it also brings forward a major catalyst (double-blinded placebo-controlled result) which has held it back in the past and likely dampened partnering discussions. Early days, so clearly more to come on this front, including closing the gap on the funding shortfall. At this stage, ANP anticipates it is still about $5-8m short to run this to final readout (~2Q'CY24).
Significantly lower than the $14m shortfall to futility analysis and then a further ~$36m to bring to completion. Forecast and valuation update We have adjusted our model to assume face-value elongation of the timeframes (including a smaller Ph3 trial + costs) which pushes out our commercialisation forecasts. This is marginally offset by slightly lower market risk rates applied in our WACC. Significant upside remains if partnering opportunities present although we reserve this as upside (pending deal structure of course). Our risked valuation moves marginally lower to A$0.26 (from A$0.27). Investment view
We see this move as more beneficial to shorter-term investors with more concrete clinical data to be released over the next 12-24 months. With the more condensed time to valuable data, we see better short-term opportunities but note the long-term value is slightly diminished (at this stage) with potentially longer timeframes to approval and higher all-in costs assuming Ph3 is required. Price catalysts Ph2b commencement (4Q'CY22), finalise recruitment (3Q'CY23), Ph2b topline readout (1/2Q'CY24), certainty on funding arrangements (TBA). Risks Prolonged delays in trial recruitment and commencement / Failure of DMD in Ph2b program / Funding requirements.

Iain Wilkie +61 7 3334 4521 [email protected]