Synairgen: An Investment Brief – 26th February 2021
London Stock Exchange: SNG
*Please read the disclaimer at the end of this note*
Ongoing NIH Phase 2/3 ACTIV-2 COVID-19 Home Trial for Outpatients
Ongoing Global Phase 3 Hospital Trial for COVID-19 Patients
UK Phase 2 Hospital Trial for COVID-19 Patients reduced the chances of progressing to severe disease by 79%
UK Phase 2 Home Trial for COVID-19 Outpatients results expected Q2-2021
Synairgen (LON : SNG) is a UK-based biotech that has developed what so far promises not only to be a significant drug in the fight against Covid-19, but a broad-spectrum anti-viral that could be effective across a range of respiratory illnesses. This drug, SNG001, whose active ingredient is interferon beta-1a (IFN-beta), is easily inhaled via a nebuliser, and involves a daily dose for 14 days. IFN-beta is a potent anti-viral, and SNG001 is now in various trials, having successfully completed a phase II trial during 2020.
SNG001’s phase II trial
IFN-beta has been used for some years for treating multiple sclerosis, and Synairgen first developed SNG001 as a respiratory anti-viral for patients with asthma and COPD (chronic obstructive pulmonary disease). Inhalation directly into the lungs makes SNG001 more efficient than other possible means of delivery with fewer potential side-effects.
In early 2020, following the arrival of Covid-19, Synairgen initiated a phase II trial (SG016) in two parts, the first involving 100 patients newly hospitalised with Covid-19 and the second involving 120 patients newly diagnosed with Covid-19 and still at home.
The first part of SG016 completed in May 2020, was reported in July 2020 and peer-reviewed in November 2020 . The results were impressive, the headline finding being that SNG001 reduced the chances of progressing to severe disease by 79%.
The at-home part of SG016 closed in January 2021 and results are expected in Q2-2021.
IFN-beta plays an important role within the innate immune system. One of coronavirus’s nasty tricks is to suppress the production of IFN-beta, which weakens the natural defences, especially in those whose immune system is already compromised. The logic, therefore, behind SNG001 is that it is making good any deficiency, enabling the immune system to function as it ideally should. Secondly, SNG001, as part of the innate immune system, is generic rather than virus-specific.
IFN-beta does not itself fight the virus, but its anti-viral actions are many-sided. For example, a cell that is infected by a virus will produce IFN-beta, which instructs neighbouring, uninfected cells to prepare their anti-viral defences. These make it more difficult for the virus to enter those cells and reproduce itself, thus slowing down the rate of infection.
Since IFN-beta is pro-inflammatory, it activates the white blood cells or leukocytes, such as macrophages and natural killer cells, that themselves attack the virus. A healthy immune system will go on to produce anti-inflammatories, since these are needed to regulate the overall response and make sure that the immune system does not run of control and attack the body’s own organs. When this happens, it is known as a cytokine storm.
Many drugs that target Covid-19, such as the steroid dexamethasone, try to control this storm, so are useful when the disease is advanced. Other drugs, such as monoclonal antibodies, are virus specific, so may not be so effective against mutations. SNG001 is unusual in being generic and effective in the early stages, thus reducing the chances of serious disease.
The spectacular results for the hospitalised part of SG016, combined with the recognised strength of the science behind IFN-beta, enabled Synairgen to launch a phase III trial, SG018. This is a double-blind, placebo-controlled trial involving 610 hospitalised patients in some 20 countries, and the first patient was dosed in January. The two primary endpoints will be time to recovery and time to hospital discharge. There is also a long-Covid-19 leg, which will look at patients 60 and 90 days after beginning treatment.
Both the US and the UK have formally recognised the urgency of SG018, so the results should be due sometime in Q2 2021.
SNG001, along with three other potential treatments, has entered a US trial, ACTIV-2, as part of Operation Warp Speed. This is a phase II, at-home trial, involving up to 220 patients, and it has been deliberately set up so that it can swiftly switch to phase III, assuming the early results are encouraging. The first patients were dosed in mid-February, so it will be April before we might expect any indication of success.
The results of these trials will clearly be critical for SNG001’s prospects and Synairgen’s commercial success.
We all hope that vaccines will protect us against Covid-19, and the creation and delivery of so many effective vaccines over the last year has been a fantastic achievement. Although the picture is becoming clearer, there remain several outstanding questions, such as how effective vaccines will be against mutations and how long antibodies will last. The future path of Covid-19 is uncertain, but therapeutics like SNG001 are likely to have an on-going role in suppressing eruptions of the disease as they occur.
A second possibility is that governments around the world, having learned their lesson and as insurance against possible future pandemics, will want to stockpile generic anti-virals such as SNG001.
Finally, as was originally envisaged, SNG001 may have significant value as a generic respiratory anti-viral for asthmatic and COPD patients. In the absence of Covid-19, this might have taken many years to achieve, but assuming success here, approval should be more easily obtained.
The size of these potential markets and SNG001’s share is hard to predict. Equally hard to predict is the likely pricing of SNG001, since ultimately this will depend on its relative competitive position in these various markets. That will be determined not only on trial results but also the efficacy of competitor treatments, but there no doubt that a drug such as SNG001 that has the potential to keep patients out of hospital has significant commercial value.
Synairgen has stated that it aims to produce 100,000 treatments per month during 2021, but has also indicated that this could be stepped up in response to significant demand. With this in mind, Synairgen has already signed up two sources of IFN-beta, Akron Biotechnology and Rentschler Biopharma, and two companies to handle fill and finish, Catalent Biologics and Thermo Fisher Scientific.
Beyond SNG001, Synairgen has an approximately 17% entitlement to the net licence receipts or royalties earned by an Australian company, Pharmaxis, from an antifibrotic LOXL2 inhibitor. Pharmaxis is currently searching for a partner to carry out a phase II trial.
Synairgen, which is listed on AIM, has 200 million shares in issue, having placed 50 million shares at 175p, raising £87 million, in October 2020. The largest shareholder is Polar Capital with 10.0%. During the last 12 months, the shares have traded between a low of 16p and a high of 249p.
Disclaimer – The writer is a shareholder in Synairgen, and the views expressed in this note are his alone. This note should not be interpreted or used as investment advice.