Achillion, Omeros, Ra Rx, Reata, ChemoCentryx, And Others In The IgA Nephropathy Space

by: Altum Research

Primer for renal disease companies.

I cover five competitive companies working towards blockbuster status.

Alexion's competition is coming, which of these small caps will get there first?

ChemoCentryx and Reata are underfollowed and underappreciated.

Achillion is make-or-break by year end.

I began this article with the intent of an Achillion Pharmaceuticals (ACHN) focus. However, as I learned more about each of these 5 companies, I've decided to give an equal spotlight to each. I will preface the real reason for this renal-focused article is due to my own diagnosis of IgA nephropathy (IgAN) but my prognosis is good; I will likely have stable (non-progressive) disease until much later in life. Most of these companies are working with IgAN in the pipeline or very similar diseases with potential to treat IgAN later:

  • Alexion (ALXN) with Soliris
  • Omeros (OMER)
  • Akari Therapeutics (AKTX)
  • Amyndas (Private Co.)
  • Apellis Pharmaceuticals (APLS)
  • ChemoCentryx (CCXI)
  • Ra Pharmaceuticals (RARX)
  • Merck (B-Cell target) Clinical Trial
  • Anthera (OTC:ANTH) (B-cell target??)
  • Reata Pharmaceuticals (RETA) (Nrf2 activators)

For this work, I will be comparing as many of the small caps as I can. While AKTX was interesting from a science perspective, it seems the company won't be making it - so they are out. I won't be analyzing Merck or the other big pharma players either, and I will ignore ANTH. Thus, I am focusing on OMER, APLS, CCXI, RARX, RETA, and ACHN.

Complement System Primer

I really don't like whoever named this, but let's carry on. If you have never heard of complement system before, or don't know how it works, it is fairly complicated. Watch this 11-minute video if you'd like:

The video covers the classical pathway as well as the alternative pathway - but doesn't go over the lectin pathway, the 3rd of the three pathway within the complement system pathway. The lectin pathway is most important for OMER, as their protein target, MASP, is of the lectin pathway.

Essentially, the complement system is a group of proteins that bind to pathogens, cleave themselves, releasing signals into the serum and 'tagging' the pathogen for attack. The final 'terminal' pathway recruits multiple proteins that insert within the pathogen's membrane, creating a pore, and lysing or destroying the cell.

Why does this have anything to do with renal disorders?

Over-activation of the complement pathway or improper auto-immune problems can cause the complement system to create that membrane attack complex (MAC) on the body's own cells, killing them. This is the primary problem in paroxysmal nocturnal hemoglobinuria (PNH). A genetic mutation causes blood cells in patients with PNH to not express 'protective' membrane proteins. These proteins would normally signal to the complement system to not attack these cells - but when they are no longer present, complement system will lyse the cells, in this case, red blood cells.

Another notable example of complement-related disease is atypical hemolytic uremic syndrome (aHUS), which is a serious disease of over-activation of complement proteins which cause hemolysis like PNH, but also over-activation of white blood cells, and damage to multiple organs, including the kidneys.

Both PNH and aHUS are the primary indications that are treated with Soliris (Eculizumab) which is sold by Alexion, and when it first came out, was the most expensive drug on the planet. Alexion, although having 3 approved drugs, is largely regarded as a 1-trick pony, and valued at $24 billion - that is one expensive pony (Soliris).

Image taken from

Soliris is the quintessential blockbuster drug - raking in multiple billions a year for a small population of people - because of that huge price tag. Hence, companies trying to get into the same space warrant a close look. They can go after aHUS and PNH, but other additional indications could be possible to hit with the same drug, though Soliris hasn't paved the way yet in those.

Image from Achillion corporate presentation

If you follow ACHN this is not a new image to you. The point of this slide is to show you where the key biotech players are in their strategy for fighting complement-mediated diseases. We have 8 of them targeting the terminal pathway - all trying to mimic Soliris with some sleight of hand showing better efficacy, safety, or otherwise. The other group is targeting the lectin pathway - Omeros, Apellis, and Amyndas. Then, to the upper right, we have Achillion, which is targeting Factor D within the alternative pathway. Notice Achillion sits alone, giving them some sort of advantage if the alternative pathway turns out to be an objectively better route than the terminal pathway.

Efficacy - C3G

We've got only two patients to go off in this early data in C3G. This data is from their most advanced pipeline candidate ACH-4471 in C3 glomerulopathy (C3G) or immune complex-mediated membranoproliferative glomerulonephritis (IC-MPGN).

The results clearly indicate some activity:

Interim data from the two sentinel patients in this ongoing trial demonstrated that ACH-4471 achieved complement alternative pathway (AP) inhibition resulting in a greater than 50% reduction in proteinuria, as measured by albumin to creatinine ratio (ACR), over the 14-day treatment period, and demonstrated a favorable tolerability profile.

This is good because a lot of diseases that produce proteinuria have unknown causes - it would be very troublesome to see recruitment into this trial without extensive assessment and confirmation that this is indeed resulting from alternate pathway activation.

Table made from Phase 2 preliminary data

This table shows the extent of ACH-4471 reduction in biomarker symptoms between the two patients. In a vacuum these results are great in a %-wise manner, the drug is clearly demonstrating a drop all three scores (GOOD). We can see, however, that the ACR ratio remains incredibly high for these two patients, even with the >50% drop.

The reduction in proteinuria is one of the major biomarkers for these complement-mediated renal diseases. However, C3G is an umbrella term, largely composed of three different underlying pathogenesis models of disease. To make sure that Achillion is treating patients that are likely to respond, they are looking at specific biomarkers that would indicate their symptoms are likely due to alternative pathway hyperactivation. Check here:

Patients with biopsy-established C3G or IC-MPGN with evidence of [alternative pathway] hyperactivity are eligible for enrollment. Multiple complement biomarkers indicative of AP activity, including the ratio of C3 fragments to intact C3 in plasma (fragment:intact C3), plasma Bb levels, ex vivo Ba formation, and Ba levels in urine were measured. Additional measures being evaluated include proteinuria, safety, and pharmacokinetics. Preliminary data from this Phase 2 trial suggest that ACH-4471 may have the potential to reverse AP hyperactivity resulting in improvement in proteinuria.

This is good - the company is going after the prime population of patients that will likely benefit from this drug. They are not just trying to take the whole market of proteinuria, which would be foolish, given the heterogenous nature of that symptom.

Efficacy - PNH

Well, it's unclear. The company says that they have seen reductions in lactate dehydrogenase (LDH) levels, but I cannot find quantitative numbers on this. Instead, we have this readout:

To date, Achillion has data for four patients with PNH, two of whom have completed the three-month trial and have entered the long-term extension trial. One additional patient continues to receive dosing in the three-month trial and a fourth patient voluntarily withdrew from the trial on day 41 for reasons unrelated to safety.

Are we then to assume the withdrawal was from efficacy?

In summary, interim data from these ongoing trials demonstrated that ACH-4471 achieved clinically meaningful complement inhibition and demonstrated a favorable tolerability profile with no reports of clinically meaningful increases in liver enzymes. In this emerging data set, ACH-4471 has improved LDH, hemoglobin, fatigue score and other measures of response including PNH clone size. These interim results support the Company's global expansion plans for the PNH clinical program.

So, the drug is doing something, all endpoints are being hit, but we don't know actual numbers yet. Additionally, no increases in liver enzymes - good.

Safety - A little thin on data

To be clear - since Soliris is not orally available, any orally available drugs that are equivalent would potentially bring in massive sales due to the greater convenience of administration. However, with small molecules comes liver toxicity. We, as investors who understand aim to understand our risk as best as possible, should get a good idea whether we're going to see problems with this in the future.

Within the phase 1 study, we have some comments on safety:

In the multi-ascending dose 14-day phase I clinical trial, two cases of self-limited, alanine aminotransferase, or ALT, elevations (Grade 3 and 4) were observed post-treatment at doses of 500mg and 800mg twice daily, respectively, with neither subject exhibiting signs or symptoms of hepatic decompensation. Both subjects' ALT levels normalized without intervention during follow-up. Further, no treatment-associated fever or infections were observed.

So, we see some signs of potential liver problems - but they are happening at 500 and 800 mg twice daily. The Phase II trial group 1 results were 100 mg 3x daily, and group 2 is going to be 200 mg 3x daily. Thus, the upcoming readout is a total of 600 mg daily, versus the 1000 and 1600 mg where liver issues were cause for concern in the Phase 1. Additionally, spreading the dose out 3x makes the maximal concentration in the serum lower than in a 2x dosing. Together, I believe we should be on the safe side as in the issue of safety. It should be noted that the Phase 1 results also had a 1200 mg twice-daily dosing that apparently did not show the liver enzyme increases! Interesting.

Another issue with complement-pathway inhibitors is, since they knock-down our innate immune system to pathogens, we could expect possible infections to be more pronounced. We haven't seen that yet with ACHN's data. That is very good, but we need to wait for further readouts in the phase 2 until we can put our guard down.

In PNH patients we have had some text in their 10-k devoted to safety on that on-going trial:

In an on-going dose ranging phase II clinical trial in PNH patients, doses start at 100mg or 150mg three times daily, or TID, with allowance for intra-patient dose escalation. To date, 225mg TID has been the highest dose administered. In August 2017, we announced that interim data from this trial showed that to date a favorable tolerability profile had been observed with no reports of clinically meaningful increases in liver enzymes. Three of the four patients we reported on in August 2017 continue to be dosed in this phase II clinical trial, including two who have been on therapy with ACH-4471 for longer than nine months and one who has been on therapy for longer than six months, with ACH-4471 showing a good tolerability profile and normal liver enzyme levels.

...A fourth patient voluntarily withdrew from the trial on day 41 for reasons unrelated to safety.

Altogether it seems like we should keep a close eye out if the company starts pushing their dosing higher to get efficacy signals. From what I've read, it seems the company is being cautious and not going over 225 mg 3x daily, thus a total of 675 mg per day. While still a far way away from 500 mg 2x, we should be cautious.

That readout of 2 liver tox issues in the healthy volunteers in the Phase 1 caused the stock to drop 30% in a day. Thus, clearly, the market is very frightened from any liver toxicity. Would it kill the drug's potential if we saw some liver toxicity show up in these up-coming Phase II trials? We'll need to get a handle on the other drugs approved and in the pipeline first.



Omeros is subject to intense debate and some short-attacks. There isn't much in OMER's pipeline that hasn't been attacked, but their recent lobbyist-induced extension on pass-through status for Omidria has staved off some worries for now. But let's forget about that and get to what matters with respect to ACHN: the data in renal (or any) complement-mediated diseases.

The drug candidate to watch in Omer's pipeline is OMS-721, which targets MASP, a protein in the lectin pathway of the complement system (remember that image of key players in complement inhibitors that ACHN put out).

OMER is farther along than ACHN - they should begin enrolling patients soon for their Phase III IgAN study (was supposed to happen in February?). There is a very small amount of data for how advanced they are, regarding IgA nephropathy, but there is some.

There were four patients in the trial with IgAN. The data concludes

Proteinuria reduction was maintained in three of the four patients. In these three patients, uACRs during extended follow-up remained decreased. Specifically, those three patients maintained partial remission relative to baseline during available follow-up (75.8%, 85.9%, and 76.8% uACR decreases at 12, 11, and 3 months after cessation of OMS721 dosing, respectively). Following a substantial drop in uACR during dosing and trial follow-up, the fourth patient's uACR returned to approximately 88 percent of baseline at four months after the end of treatment with OMS721.

The data readout here seems a little strange - 12, 11, and 3 months - different endpoints for each patient. Is that response consistent throughout time? Why are these different durations - were these when proteinuria was at the lowest levels? It is hard to say. Once we get all the data together by the end of the article I'll explain why proteinuria is a very bad endpoint from a science perspective (remember I have IgAN).

Otherwise, we're seeing positive data from OMS721 in a better endpoint:

Numerical improvement in estimated glomerular filtration rate (eGFR), a measure of renal function, was observed in 3 of the 4 patients after the trial. Post-treatment eGFR increases ranged from 7 to 17 mL/min/1.73 m2 relative to screening values. The patient with the most severe reduction in kidney function demonstrated eGFR improvement from 30 mL/min/1.73 m2 to 47 mL/min/1.73 m2, an improvement of 57 percent. The fourth patient demonstrated stable eGFR relative to screening.

We should be able to assume that 57% improvement in eGFR is the best improvement observed in the trial of the 4 patients (3 evaluable on this endpoint). Otherwise, Omeros would have likely reported the other patients.

Unfortunately, ACHN doesn't have eGFR data for IgAN, but we do have that ACR; ACHN demonstrated a ~55% improvement in two patients, while OMER has shown ~78% improvement. Arguably better so far! Again, I will present a more condensed comparison at the end. Be aware, however, Omeros is very well recognized by the biotech community for being very secretive with presenting their data publicly.


Reata is an underfollowed, underappreciated name in this space. I find the company rather fascinating because they aren't actually going after complement inhibition. Their drug targets IgAN and other indications but is a fairly odd molecule.

It also isn't designing its trials the same as these other companies. The CARDINAL trial did have results which are supportive of giving RETA some extra eyes, however, they aren't directly in IgAN yet. We'll see IgAN-specific data at the end of 2018:

PHOENIX is an open-label, multi-center Phase 2 trial to evaluate the safety and efficacy of bardoxolone methyl in patients with autosomal dominant polycystic kidney disease (ADPKD), IgA nephropathy, type 1 diabetic CKD, or focal segmental glomerulosclerosis (FSGS). We have enrolled patients in PHOENIX from each of the four rare forms of CKD, and expect to have data from one or more of the four cohorts available during the second half of 2018.

Notice this is an extremely broad trial - 4 different renal diseases in a single Phase 2 trial. The company is either smart, brave, or stupid. I guess we'll see later this year. But what has been reported?

The Phase 2 portion of the trial enrolled 30 patients, and available data demonstrate that bardoxolone methyl significantly increased kidney function in Alport syndrome patients as measured by estimated GFR (eGFR). From a mean baseline eGFR of 54 mL/min/1.73 m2, data from patients showed a mean increase of 13.4 mL/min/1.73 m2 at Week 12 (p<0.000000001). All patients demonstrated increases in eGFR, with 87% of patients demonstrating a clinically meaningful increase in eGFR of at least 4.0 mL/min/1.73 m2 by Week 12, and 63% of patients demonstrated an increase in eGFR of at least 10.0 mL/min/1.73 m2. Additionally, 73% of patients had an improvement in CKD stage, and none worsened.

And graphically:

Image from Reata Company Presentation

Something that is strange to me here is that the standard error is clearly labelled in the right-side table, and it varies from 0.7-1.4 (a double), but the graph on the left does not show the error bars changing. (???) Anyway...

First of all, this is a different disease; this is Alport Syndrome - not IgAN, not aHUS. Alport is a genetic disease with a clear pathophysiology. IgAN is not (and C3G is dispersed into three diseases as well). Thus, getting results in Alport Syndrome, which is being targeted by a drug not hitting the complement system, we are treading on thin ice for comparisons here, and I just want to make it clear that this is very weak!

However - since Reata is going after IgAN we should lump it into the competition and evaluate its capabilities. Showing a mean increase of 13 to baseline of 54 eGFR is substantial for a genetic disease such as Alport. The IgAN data will come 2nd half 2018.

Bardoxolone methyl, Reata's lead drug, is an interesting molecule, and will require its own analysis at a later date (sorry - will likely be available to subscribers only).

Ra Pharmaceuticals

Ra is the closest me-too drug to Soliris yet visited in this article. It actually binds the same protein as eculizumab and is an antibody, so it should be the easiest to compare to Soliris for competitive sake. It will also need to be non-inferior in order to get some market share since it has no additional benefit (not orally available, shorter half-life) - RA101495 is the drug.

Ra released results in Dec 2017 in PNH, showing that their drug works, but can't quite get below that 1.5x upper limit of normal (ULN) on LDH levels:

Image from company report

The switch cohort, in which patients are swapping eculizumab for RaRX drug, showed signs of potential equivalence in transfusion-independent patients (the healthiest of the group):

Interim results from the ongoing switch cohort demonstrate near complete, sustained, and uninterrupted inhibition of complement activity during and after eculizumab washout. The LDH response observed to date in switch patients is bimodal based on prior transfusion requirements on eculizumab. In transfusion-independent patients from this cohort (n=5), a population segment representing approximately 80% of patients on long-term eculizumab therapy, switching to RA101495 SC has been successful as indicated by stable LDH levels and no episodes of breakthrough hemolysis.

So, in this small study, it seems like RaRX drug could potentially 'steal' some patients of eculizumab. However, one of the ideal benefits of RaRx drug is its ability to bind to a novel binding site of the complement protein C5:

Image taken from Ra Pharmaceuticals website

Unfortunately, the idea that RARX could capture the difficult-to-treat eculizumab and transfusion-dependent patient population came up short:

Among difficult to treat eculizumab patients who were transfusion-dependent at baseline (n=11) from this cohort, breakthrough hemolysis occurred after switching in seven patients, who all reverted to eculizumab treatment without complications.

Most of the patients of this cohort quit the RaRx drug and went back to eculizumab. This indicates that the 'difficult to treat' population likely isn't just from the R885H polymorphism but contains other disorders that make them eculizumab resistant or insensitive, thus also making them resistant to RA101495.

Here's an overlay that RaRx has nicely made for us.

Image from company presentation

And finally, some positive data for transfusion improvements:

Image from company presentation

3 patients going off of transfusion is an excellent result from the trial, indicating that the drug works and has potential to help patients with PNH. At this point, though, RaRx has a subcutaneous administrated compound that seems to be equivalent or slightly less potent than eculizumab, as well as having daily dosing with a shorter half-life. Intelligently, the company is not going to go after transfusion-dependent patients in its Phase 3, they will go after eculizumab naive patients and/or transfusion-independent patients.

The future of RaRx then is dependent on the potential marketability of the new Eculizumab being developed by Alexion with a longer half-life (can have once-monthly IV infusions) or whether the once-daily subcutaneous administration is more appealing to patients. It very much could tilt in favor of RaRx, even with taking 10% of that patient population, which would justify a 5-10x increase in the current share price of RaRx!


Apellis is a promising company. When I first came across the company in the early fall of 2017, I was quite convinced that they would have a good fighting chance against Soliris and RaRx. Apellis has since IPO'd as of Nov 2017, which somehow bypassed my radar.

Like Ra, Apellis is going after a once-daily subcutaneous complement inhibitor. They have excellently-presented data recently. If you have the time I highly recommend looking at their presentation, it's well done and the data is intriguing. (I like when companies can clearly communicate their data!)

We only have some data for 6 patients and a patient-by-patient basis we have 3 readouts in PNH.

Image from Apellis Presentation

Here we see that add on of their current drug to eculizumab shows excellent benefit in mean hemoglobin and LDH levels - both the major biomarkers of the status of the disease.

We can expect further data in Auto-immune Hemolytic Anemia (AiHA) in this quarter. The nephropathies (including IgAN) will have readout in the 2H of 2018. I am tentatively bullish this readout - but there are some concerns in general against IgAN that I need to talk about in the end of the article.


CCXI is not going after IgA nephropathy but they do have multiple pipeline components looking at renal diseases. To complicate any comparison further, some of their targets are outside of the complement system (targeting instead, CCR2).

Within their complement system-targeting drug pipeline, they are going after three indications:

  • ANCA Associated Vasculitis (AAV)
  • C3G
  • aHUS

The latter two clearly overlapping with some of our previous companies. However, in their CCR2-targeting pipeline, they have are going after multiple chronic kidney diseases including diabetic nephropathy and Focal Segmental Glomerulosclerosis (FSGS).

You can read their Phase 2 non-complement system drug data here in diabetic nephropathy. The data clearly indicates their drug is working and helping improve albumin-creatine ratio (ACR). Oddly there doesn't seem to be a dose response, however. This alone is likely a large reason the company is not valued higher.

UACR changes from baseline during 52 weeks were −2% for placebo (95% CI −11% to 9%), −18% for 5 mg CCX140-B (−26% to −8%), and −11% for 10 mg CCX140-B (−20% to −1%).

Image from company publication

The UACR changes at 52-weeks look great, however, that graph shows two things; the variability of albuminuria, and the lack of dose-response after 20 weeks. Still, the average of 5mg across all 52 weeks was below baseline. However, there was very little difference between placebo and CCX140 in many other biomarkers, including the important eGFR:

Image from company publication

With no real improvement in eGFR, no dose response, and not much differences in other important renal biomarkers, it's difficult to be supportive of any additional positive news with this drug. So...

What about the company's complement inhibitor for the indications of AAV, aHUS, and C3G?

To boot, this is an orally available drug. I don't want that fact to get lost here! A substantial value-benefit for any effective drug in complement-inhibition!

The promising CLEAR trial efficacy results in AAV, to me, are summed as follows:

Statistically significant superior improvement in lowering albuminuria, after only 4 weeks of treatment with CCX168.

There was a 47% decrease in albuminuria in patients receiving CCX168 without any steroids (p=0.0006 vs. SOC), and a 40% decrease in patients receiving CCX168 plus low dose steroids (p=0.003 vs. SOC), but an increase of 15% in patients with high dose steroid containing SOC; at Week 12, the change from baseline was -56%, -44%, and -21% in the three groups, respectively.


The mean percent change from baseline to Week 12 in BVAS was -79% in the CCX168 plus low dose steroid group, -73% in the CCX168 plus no steroid group, compared to -57% in the SOC group;

These results are very promising and have led to the equivalent of accelerated approval in Europe. This could potentially give the company the ability to market the drug while their phase III is ongoing. The company has submitted their application for this ability. That submission is likely to be approved, and we can hope for that to occur before the end of the 2018 year.

Additionally, CCXI's partnership with Vifor has been very supportive of the company's progression forward. We should be able to expect some milestone payments for approval of the conditional marketing application, further boosting cash reserves for ChemoCentryx. The only shortcoming here is that ChemoCentryx has given rights to the drug to Vifor in Europe while maintaining US and China only. Thus, they are only expected to gain milestones and some royalties. Those royalties will likely only have a meaningful impact once full launch (after successful Phase III) is completed - somewhere in the 2H of 2020, most likely.

I think the company warrants an entire piece for itself. I find the fact that this drug is orally available and could be standard of care for AAV a significant boon to the company's valuation. So, watch for our article coming out in the near future for this one.

Tidbits Before Summary

There is a lot to summarize here! Let me get some important things out of the way first, especially with regards to IgA Nephropathy and proteinuria endpoints.

IgAN is a very heterogenous disease, and likely will be identified as an umbrella term encompassing at least 2 different pathologies in the future, when more research discovers underlying causes of the disease. There are two major groups of IgAN: Those that respond to blood pressure medication, and those that don't. For the prior, the prognosis of the disease is fairly benign, most patients will go through life without complications, at least until a much older age (thankfully I fall in that category). The other group, those who have progressive disease even with blood pressure medication, have poor prognosis, and most with systemic high blood pressure have nearly double the chance of mortality. In totality, IgAN has about a 40% increased chance of mortality, and about a 20% chance of end-stage renal disease, which will require dialysis or transplant. Unfortunately, transplanted kidneys in IgA patients usually will regress back to IgA, making dialysis the most likely end-stage treatment.

With that said, proteinuria is also heterogenous. Patients in the prior, benign group, tend to have 'flare-ups' of proteinuria which are common and can be caused by inflammation or infection. Thus proteinuria does not make sense to be monitored in this population (which is the majority of IgAN). Instead, only the progressive disease will have proteinuria continuously and progressively. Thus, it is not enough to have proteinuria and IgAN in order to be considered a good patient for inclusion into these trials - especially if your end point is proteinuria! Except, of course, if you are only doing single-arm trials, but even then, a flare-up at the end of the trial in a statistically significant population, would destroy your topline results, while ultimately not having anything to do with the actual efficacy of the drug. Albeit unless your drug is superb, and even in flare-up conditions, proteinuria is knocked-down.

Catalysts are coming for these companies:

Image created by author, data pulled from SEC filings

This is my best interpretation of the data coming out for these companies. I may have missed some (please comment if you're aware of some I've missed) and I've put the potential for their ability to move the stock price in color codes: green being benign movement, yellow/orange being large moves (+/10%), and red potentially >15% moves. I am not including APLS (for now).

As you can see, Achillion has stacked their whole play deck towards the end of this year. The company will be up at least 100% or down a significant amount this time next year. That I can say with a great amount of confidence.

However, ChemoCentryx does not have very large catalysts coming from data. Instead, they will be likely getting approval (or an unfortunate denial) by the EMA for compassionate use of their drug in AAV. If unapproved, we could see the stock drop back to the single digits.

Reata and RaRX both have fairly important data readouts coming up in the PHOENIX and myasthenia gravis p2 trials, respectively.

I will be watching the PHOENIX trial very closely - I do not think they will have IgAN data from this trial by the 3rd or perhaps even the 4th quarter this year - I expect IgAN data at earliest by 2019 Q1. This is due to new centers just now opening up for this study.

Cash and Burn

Image created by author from SEC filings

These numbers are from their working capital and net losses. (Again, omitting APLS)

Conclusions here:

Achillion is likely funded well past their big data readouts later this year. In fact, they are likely funded into 2020.

Reata actually had about half of their burn rate minimized from a milestone payment, thus they only have about a year left of funds if no more milestones hit. Therefore, I believe they will likely want to raise if data is good in their interim analysis of PHOENIX2 (and hence why they are reporting such an arbitrary endpoint of "1 or all 4 cohorts". Look for a raise after that data.

ChemoCentryx was actually net positive in 2017 due to large milestone payments from Vifor. Otherwise, their losses from operations were about $66 million. Therefore, CCXI actually has around 1.5 years of dilution-free runway. And, given the likelihood of approval for compassionate use in Europe - an additional milestone may be in place. Thus, I see no dilution fears until later half of 2019. Very cool.

RaRX will need to raise this year. Perhaps after renal impairment data?

Omeros is a lot more complicated than this table can incorporate. They have their loan obligations, but also revenue from Omidria. Long short of it: I'm not going to make any guesses until the next report of Omidria sales is out.

Final Conclusions

Out of all of these, I find CCXI the most promising. I will be writing a full report on them in the coming weeks. Potentially subscriber only, so be aware of that.

I find Achillion a lottery ticket that has good science, good cash, and good potential. It is the problem of will Factor D potent enough? I will maintain my medium-sized position and potentially look at hedging this once we near those catalysts coming up later this year.

Reata seems great but I'm worried the science doesn't support their molecule. I will be reading a lot about this company as well in the coming weeks as I may potentially enroll in their Phoenix trial. If I come out with a positive outlook after this research, I will be publishing on them as well.

RaRX is the closest comparison to Alexium/Soliris of the set. The question we really want to ask here is if RaRX can show non-inferiority in future trials, will a lower price tag of their drug be enough for them to take some market share? With Alexion's Soliris 2.0 coming out with better PK/PD, where can RaRX get a foothold?

Omeros is a volatile, he-said/she-said situation that I'm not interested in devoting more time into getting to the bottom of. There are other authors that are covering the long/short theses well here. I will leave them to you.

Apellis is interesting. Because the company is so heavily valued in their other space of wet/dry AMD, I want that to get results before I start valuing them in the space with these other companies. Why I'm standoffish to the company is summarized by HealthCare explorers' concerns.

With that, thanks for reading. If you want to get information on these articles as I write them, consider joining and subscribing to my Biotech Insider group.

Disclosure: I am/we are long ACHN, RETA, CCXI. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Editor's Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.