Eleison Pharmaceuticals: Betting On Late-Stage Candidates For Orphan Diseases

Jan. 28, 2022 2:15 AM ETEleison Pharmaceuticals Inc. (ELSN)INSM2 Likes

Summary

  • Eleison Pharmaceuticals acquires, develops and commercializes late-stage therapies for orphan diseases with unmet needs.
  • The Company’s three pipeline candidates have received the Orphan Drug Designation by the FDA, and two of them also from the EMA.
  • The lead program is anticipated to reach regulatory stage by early 2024.
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Eleison Pharmaceuticals, Inc. (ELSN) is a clinical stage biopharmaceutical company acquiring, developing and commercializing late-stage therapies that are in Phase II or Phase III trials, for the treatment of rare, life-threatening diseases with unmet needs. The Company was founded in 2009 to take advantage of the fast growing orphan diseases market, especially with the identification of over 7,000 rare diseases that afflict over 25 million Americans and over 27 million people in the European Union (‘EU), which is estimated to generate $209 billion in worldwide sales in 2022. Th

Company started with acquiring exclusive worldwide rights to glufosfamide, a Phase III pancreatic cancer (‘PC) drug, from Threshold Pharmaceuticals in 2009. An exclusive worldwide license to Inhaled Lipid-Complexed Cisplatin (‘ILC) in development for pediatric osteosarcoma was acquired from Insmed (INSM) in 2011. Dibromodulcitol (‘DBD) being developed for glioblastoma (brain cancer) was purchased from Targent in 2019, with the first patent issued in 2020.

Pipeline and Market

Glufosfamide, an analog of a common chemotherapeutic agent ifosfamide, is engineered to target cancer cells with its glucose-conjugated molecule. Many cancers including PC being metabolically more active than normal cells utilize glucose for cell growth and division. The PC cells take up the glufosfamide molecules concentrating the active chemotherapeutic agent in the diseased cells rather than normal cells, thus having higher specificity to cancer cells while reducing toxicity in normal cells. The product candidate has been evaluated in over 450 patients in multiple clinical trials. Data from a Phase III trial with 286 patients showed 25% improvement in median survival in 2nd line (‘2L) PC; however, the trial design could not prove statistical significance. Moreover, 40 of the 286 participants who were insulin taking patients had shortened survival.

The Company designed a new pivotal Phase III trial for treatment of 2L PC that commenced in 2014. 30 sites in the U.S. are currently open for enrollment in this trial being conducted under a Special Protocol Agreement Letter from the U.S. Food and Drug Administration (‘FDA). It is expected to complete in 2023, followed by a new drug application (‘NDA) filing with the FDA in 2024. Present care options for PC diagnosed in over 46,000 Americans yearly include surgery, radiation and chemotherapy; however, these mostly provide a palliative benefit only with five year survival rates at a mere 6%. Glufosfamide has an Orphan Designation from the FDA and EMA for the treatment of PC, providing post-approval market exclusivity of seven and ten years in the U.S. and EU countries, respectively. The last expiration of the licensed patents is 2030. The candidate has been out-licensed to Daewoong Pharmaceutical Co. Ltd. in South Korea, and to Rafa Laboratories Ltd. in Israel.

ILC (Inhaled Lipid-complexed Cisplatin) is a novel, sustained release (‘SR) formulation of cisplatin in a nanoscale lipid complex that is administered via inhalation. Designed to deliver high levels of SR cisplatin to the lung without systemic toxicities, ILC is in development for the treatment of lung cancer and pediatric osteosarcoma (‘OS) or bone cancer. ILC was evaluated in 59 patients by a prior sponsor in three clinical studies showing activity in several cancer types including lung and OS. The Company also conducted a Phase II study in 28 OS patients. ILC was well tolerated in the four studies with no dose-limiting toxicity, while side effects included reduced pulmonary function and non-systemic nausea.

Approximately 35% pediatric OS patients fail first-line therapy with metastatic recurrence only in the lungs, and five year survival less than 25%. In one of the Phase II studies, 10 of 19 pediatric OS patients with pulmonary recurrence achieved clinical benefit. In a subset of a group of three patients after complete surgical removal of pulmonary tumors, and one patient with micronodular disease, treatment with ILC resulted in three patients remaining disease free after one year, while usual recurrence is in less than six months. ILC has the potential to be the first lifesaving breakthrough in OS treatment.

The Company is planning to commence a pivotal Phase II/III clinical trial of ILC in pediatric OS patients in the U.S. in 2023. The Company has sub-licensed marketing rights for ILC in the China, Hong Kong, Macau and Taiwan markets to a Hong Kong based pharmaceutical company. A Phase III study of ILC in small cell lung cancer (‘SCLC) is anticipated to commence in 1H-2022 in conjunction with the Asian partner Intelgen Limited. If approved for SCLC or OS, the Company intends to pursue other indications including non-SCLC and peritoneal metastatic cancers. ILC has an Orphan Drug Designation from the FDA and EMA for the treatment of OS, and from the FDA for the treatment of ovarian cancer. The last expiration of the licensed patents is 2030.

DBD, under development for glioblastoma (brain cancer), is a newly synthesized polymorph of the oral cytotoxic agent dibromodulcitol. Originally developed by the U.S. National Institutes of Health (‘NIH), DBD has been evaluated in over 5,000 patients. The candidate has potential to be used for brain cancer, cervical cancer, and for cancers which metastasize to the brain. The Company anticipates commencing a pivotal Phase III trial in 2022/23 and completing by 2025. DBD has an Orphan Drug Designation from the FDA for the treatment of brain cancer and the treatment of cervical cancer. The last expiration of the purchased patents is 2039.

Financials

Originally organized as a Delaware corporation in 2009, Eleison Pharmaceuticals, LLC converted from a limited liability company into Eleison Pharmaceuticals Inc. in November 2020, in connection with a $12 million common stock private equity financing from BDI Co. Ltd., a publicly traded Korean company. Following the reorganization, shares outstanding were 6.4 million and BDI owned approximately 37.5% of the stock.

The Company filed a Form S-1 registration statement with the U.S. SEC on 1/24/2022 for an initial public offering (‘IPO) of shares of its common stock. The offering has not been priced yet but the Company anticipates net proceeds of approximately $31.3 million. The Company intends to use the proceeds as below:

  • $16 million towards continued development of glufosfamide including the completion of pivotal Phase III trial in 2L PC;

  • $4 million for continued development of ILC in SCLC including initiation of planned Phase III clinical trial in 2H-2022;

  • $2 million for continued development of DBD for glioblastoma including initiation of the planned pivotal Phase III clinical trial in 2022/23;

  • $3 million for manufacture of products for trials of the three candidates;

  • $1 million for expansion of drug candidate portfolio, but no material agreements or understandings exist;

  • $5.3 million for working capital and other general corporate purposes.

The IPO proceeds together with the cash and cash equivalent balances of approximately $1.82 million as of 9/30/2021 are anticipated to provide a cash runway of at least 12 months.

Risks

The Company is an “emerging growth company,” and a “smaller reporting company,” and chosen to take advantage of reduced reporting and compliance requirements.

Following the IPO, the Company’s directors, executive officers and principal stockholders, and their respective affiliates, will beneficially own a majority shareholding to be able to control the management and affairs of the company. Such ownership concentration might harm the price of its common stock.

The Company has conducted limited operations, and neither has products approved for commercial sale nor generated any revenue from product sales.

As of 9/30/2021, the Company had an accumulated deficit of approximately $27.2 million.

In conjunction with the 2020 Reorganization, the Company entered into an amended and restated Investor Rights Agreement, on 11/13/2020, the terms of which include an obligation to make “Milestone Payments” to the stockholders, which include some officers, directors and 5% stockholders. An aggregate total of $39 million of milestone payments are potentially payable, comprising of up to $4 million upon the marketing approvals by the FDA of the Company’s development programs, $15 million upon the annual worldwide product sales of glufosfamide exceeding $100 million, and $20 million upon the annual worldwide product sales of glufosfamide exceeding $250 million. Approximately two-thirds of the potential milestone payments are payable to current officers, directors and 5% stockholders of the Company.

Bottomline

Eleison’s strategy is to take up late stage development candidates so that the Company’s products get sooner to the market with lesser development costs. Data from the lead candidate’s modified trial protocol expected by end-2023 should set the tone for the success of the company's business strategy.

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