Alumis: Recent IPO With Differentiated Data In Autoimmune Diseases (NASDAQ:ALMS)

Aluminum (NASDAQ: ALMS) IPOd in June of this year and has a phase 3 molecule called ESK-001. This is an allosteric TYK2 inhibitor that targets psoriasis as well as systemic lupus erythematosus or SLE. Let me quickly explain these terms before I go redirect.

In allosteric inhibition, the inhibitor binds to an alternative site, called the allosteric site, instead of binding directly to the active site of an enzyme. This type of binding pushes the active site to do its own thing, while allowing for therapeutic changes to the enzyme’s structure or activity.

Now, TYK2 is an enzyme and it is part of the JAK (Janus Kinase) family of enzymes. These enzymes are significantly involved in cytokine signaling, which is the signaling used between cells to regulate inflammation and other immune-related conditions. Two important cytokines are interleukin-12 (IL-12) and interleukin-23 (IL-23), names that we will come across many times. next.

In addition to ESK-001, the company has another active in the clinical stage, A-005, which is another TYK2 inhibitor that targets neuroinflammation. A-005 is in phase 1 now.

Target diseases, competition and market

Plaque psoriasis and SLE are the two target indications. Plaque psoriasis is the most common form of psoriasis or PsO. PsO is a chronic skin disease caused by malfunctioning immune signaling, also known as an autoimmune disease. In PsO, the most telling symptom is scaly patches of inflamed, red skin called plaques, caused by overproduction of skin cells. Such overproduction is, again, caused by the immune system undoubtedly killing healthy skin cells.

The global psoriasis treatment market was valued at approximately $25 billion in 2023 and is expected to grow to $57 billion by 2033. There are a large number of approved drugs. These include tacrolimus, a calcineurin inhibitor. There are vitamin D analogs, such as Calcipotriol, used to treat PsO. There are also a number of corticosteroids, such as clobetasol propionate, used for severe forms of PsO.

Otezla is an oral systemic drug used for broad-spectrum scaly skin in PsO. Also, many biological products with different mechanisms of action are used. Some of these are ustekinumab (Stelara), an IL-12/23 inhibitor, a TNF-alpha inhibitor called etanercept (Enbrel), and so on. There is also Deucravacitinib (Sotyktu), a TYK2 inhibitor approved in 2022.

As of last year, there are a number of drugs with divergent mechanisms of action. There is MoonLake Immunotherapeutics’ Sonelokimab (MLTX), an IL-17A inhibitor, and Bimekizumab, which inhibits both IL-17A and IL-17F cytokines. Two topical therapies, Tapinarof and Roflumilast, are also being studied. Sonelokimab had a positive phase 2 study. Bimekizumab was approved after a positive phase 3 study.

Systemic lupus erythematosus (SLE’) is another chronic autoimmune disease. In SLE, the immune system goes haywire and attacks healthy tissues and organs. In SLE, the immune system begins to attack the skin, joints, kidneys, brain, and other organs. Scientists don’t know what causes the immune system to act this way; however, we believe it involves a combination of genetic, environmental, and hormonal factors.

Women are more prone to SLE, especially before menopause. Certain ethnic groups, such as African-American, Hispanic, and Asian populations, are also more susceptible to SLE.

The SLE market was valued at approximately $2.7 billion in 2023. Although there is no cure for SLE, various medications are used in an effort to control disease activity. Approved treatments include immunosuppressants, corticosteroids, antimalarials and, more recently, biologics.

GSK ( GSK ) developed the first biologic for lupus, Belimumab (Benlysta), and approved it in 2011. Belimumab is a monoclonal antibody that targets BLyS, or B lymphocyte stimulator, which it inhibits, thus deactivating large numbers of B cells that are active during the erroneous autoimmune response.

The FDA also approved AstraZeneca’s (AZN) Anifrolumab (Saphnelo) in 2021. Anifrolumab blocks the type I interferon receptor, which is known to be involved in lupus, and this mechanism has been tested in studies and shown to reduce disease activity.

SLE also had a number of drugs in development. Biogen (BIIB) is developing a mAb targeting BDCA2 called Dapirolizumab pegol. Bristol-Myers Squibb (BMY) has a cereblon modulator called iberdomide. Deucravacitinib, the TYK2 inhibitor we came across previously, is also a candidate.

What the above discussion tells us is that both plaque psoriasis and SLE are very differentiated markets. So we have to understand what is the use of having another molecule in the mix and with a mechanism of action that has already been explored and approved.

Position

The company calls ESK-001 a “second-generation” TYK2 inhibitor in its filings. It says that while ESK-001 is an oral small molecule, in phase 2 trials it produced response rates, as measured by the Psoriasis Area and Severity Index (PASI), “in the range seen with existing biologic therapies.” At 40 mg BID (twice daily), 64% of evaluable patients achieved PASI 75 at week 12. At 40 mg once daily (QD), this number was 56%. For the placebo cohort, this number was exactly 0%.

We previously mentioned that Deucravacitinib is another TYK2 approved for PsO. Deucravacitinib led a study called POETYK PSO-1. In this study, 58.7% of patients in the drug cohort achieved PASI 75, and at week 16, while 12.7% of placebo patients did so.

So the placebo-adjusted figure would be 46%, which is much lower than the 64% we saw in the ESK-001 study, where the placebo response was 0%. Also, this data was from 16 weeks, so there is also that difference.

Deucravacitinib led another study called POETYK PSO-2. In this study, we obtain a placebo-adjusted figure of 44.2%, which is similar to the first study. So ESK-001 does numerically much better than Deucravacitinib if we compare these studies. This is a major difference.

The company offers a number of other differentiators in the S-1 cited earlier. These are – selectivity, pharmacokinetics and molecular properties, maximum target inhibition and tolerability and safety. A nice discussion can be found in S-1, page 111.

Thus, the company is positioning ESK-001 as a better TYK2 inhibitor than the already approved Deucravacitinib. Now, Leerink analysts have pegged Deucravacitinib for peak sales of ~$830 million. Although the company estimates from BMS are much higher. A piece of that pie is the target here for ESK-001, which touts itself as a best-in-class molecule.

foundations

ALMS has a market capitalization of $612 million and “cash and cash equivalents and marketable securities of $209.5 million, … (and) aggregate net proceeds from the closing of the IPO and concurrent private placement of 233, 2 million dollars”. Research and development expenses were $48.6 million for the quarter ended June 30, 2024, while general and administrative expenses were $7.6 million. That gives them a cash runway of about 6-7 quarters or until 2026.

risks

The main risk is the highly differentiated market of the target indications. The company is trying to position itself as a better alternative to an approved drug, yet the sheer number of treatment options is, at least in this case, daunting.

The other risk is the recency of the IPO. This is always a problem. The prices did not differ much from the IPO prices. However, these are early days. IPO prices cannot be trusted, as we have seen so many times.

Trading volume is also quite low, so it could be a problem for liquidity.

Conclusion

Yes, there are some fair points that favor ALMS as an investment. They have differential data in middle studies compared to the molecule they consider equal. They also have cash. We have not reached a definite conclusion about the investability of this name, however, the risk factors mentioned here. I will continue to wait and watch.

Editor’s Note: This article discusses one or more securities that are not traded on a major US exchange. Please be aware of the risks associated with these stocks.