Ryvu Therapeutics — First ever clinical data from lead assets in 2020

The first-in-human Phase Ib study (n=68) with SEL120, a selective CDK8 inhibitor, is enrolling patients with AML or high-risk myelodysplastic syndrome, with the first patient dosed in early September 2019. As usual, the goal of the study in this stage is to establish the recommended dose and treatment schedule of SEL120 for further development. However, like with SEL24/MEN1703, secondary endpoints include an assessment of SEL120’s anti-leukemic activity, which could provide interesting efficacy insights.

As of today, five sites in the US are active. Preliminary interim data will be released by the end of 2020 and will include patients who complete the treatment before Q320. SEL120 has potential in many other indications. For example, Ryvu indicated that it is also evaluating the potential of SEL120 in other haematological malignancies, including other leukaemias and lymphomas, but also in solid tumours. The company also plans preclinical combination studies of SEL120 with a number of other cancer treatment agents, such as targeted therapies, chemotherapy and checkpoint inhibitors (CPIs). Ryvu will present two posters at the ASH meeting.

The lead discovery and preclinical projects come from one of the two immuno-oncology and immunometabolism or synthetic lethality platforms. For a detailed introduction to Ryvu’s most advanced assets, please refer to our last published outlook report.

A2A/A2B receptor antagonist

In Q319, most of the work focused on assessing the efficacy and safety in the two most attractive projects targeting A2A/A2B and STING. Ryvu is developing a best-in-class dual A2A/A2B receptor antagonist (adenosine pathway), which is also the most advanced asset in the immuno-oncology and immunometabolism platform. Ryvu selected a development candidate that on confirmation of safety in non-GLP toxicology studies is expected to be nominated as a preclinical candidate in Q120 to initiate IND-enabling studies. Adenosine is one of the major immunosuppressive microenvironmental factors that allows tumours to avoid recognition by the immune system. The inhibition of the production of adenosine by immune or tumour cells (CD39/CD73) or blocking its effects on the immune cells (A2A/A2B receptors) is a novel therapeutic strategy in cancer immunotherapy.

Direct STING agonist

The second most advanced project in this platform involves a small molecule, direct STING agonist for systemic administration. Ryvu demonstrated the antitumour efficacy in a preclinical mouse model after multiple routes of administration. Ryvu is working on optimising the compounds and aims to identify those with the highest therapeutic potential in animal models by the end of 2019.

A STING receptor is a known mediator of the immune system that when activated induces expression of type I interferon and other T-cell recruitment factors. This results in the activation of dendritic cells, which act as antigen-presenting cells. The ultimate outcome is a tumour-specific immune response with ‘trained’ CD8+ T-cells attacking the cancer. The strategic opportunity for STING agonists could be patients not responding to CPIs, but there is also potential for use in combination with CPIs, as a single agent or in combination with targeted anticancer therapies. The strong rationale for combinations is based on the fact that CPIs act late in the immunity cycle (makes the tumour ‘visible’ to T-cells), while the STING pathway appears to prime the production of cancer-specific T-cells, so both technologies are potentially synergistic.

Selvita identified a potentially first-in-class, non-nucleotide, non-macrocyclic, small molecule, direct STING agonist (RVU312), a direct protein binder. This unique structure and optimised ADME properties distinguish Selvita's compounds from the competitors that develop derivatives of nucleic acid that, due to their chemical nature, can mainly be used for inconvenient intratumoural injections. Most recently, Ryvu presented data from this project at the 34th annual meeting of the Society for Immunotherapy of Cancer (SITC 2019), 6–10 November 2019 (poster P661). The data accumulated so far show that:

Hematopoietic progenitor kinase 1 (HPK1)

A more recently introduced project involves hematopoietic progenitor kinase 1 (HPK1), one of the major proteins in the T-cell receptor (TCR) signalling cascade. Inhibition of HPK1 could potentially have synergies with established immunotherapies like checkpoint inhibitors by addressing immune suppression in the tumour microenvironment and cancer immune response evasion. Ryvu has not yet released any data from this project, but disclosed details include the findings that the compounds are potent and active at nanomolar level, enhanced activation of T-cells in vitro and made them more resistant to immunosuppression. Ryvu is currently working on the chemistry of the compound series to identify a lead candidate for in vivo proof-of-concept studies.

Disclosed targets in the synthetic lethality platform include BRM/SMARCA2. In malignant cells with the mutated SMARCA4 gene, non-mutated SMARCA2 becomes essential. Therefore, the inhibition of SMARCA2 causes cell death if there is an oncogenic mutation in the SMARCA4 gene. This concept of a ‘biological genetic flaw’, complemented by intervention with a drug that results in cell death, is known as synthetic lethality. For example, more than 8% of non-small cell lung cancers have the SMARCA4 mutation. Ryvu is developing a first-in-class BRM/SMARCA2 inhibitor (an inhibitor of ATPase/helicase activity of BRM) and is currently in the process of selecting the lead compound.

The Phase I/II trial (n=86) with SEL24/MEN1703, a dual inhibitor of PIM and FLT3 kinases in AML patients is progressing according to plan. At the time that Ryvu’s Q319 results report was published, the dose escalation part of the study (Part1) was still ongoing. In the ‘expansion cohort’ part of the study (Part 2), patients will be given the highest tolerated dose and the safety and anti-leukaemic activity of SEL24/MEN1703 will be assessed. The latest update on the programme from Ryvu’s partner Menarini came in June 2019, when the company presented two posters at clinical conferences organised by ASCO and EHA in 2019. The posters focused on the design of the study, rationale and enrolment progress, but more importantly Menarini indicated that the trial will be expanded to a fairly large number (approximately 40) of centres in the US and Europe (until now only 5 centres have been active, located exclusively in the US).

The expected advantage of SEL24/MEN1703 versus other FLT3 inhibitors, such as quizartinib (Daiichi Sankyo) or gilteritinib (Astellas), is that it could potentially be used in patients regardless of FLT3 mutational status (for a detailed discussion, see our last outlook report). Menarini will present another poster on the progress of the trial at the high-profile annual meeting of the American Society of Hematology (ASH) in Orlando on 8–9 December.

Ryvu booked PLN25.8m in revenues in 9M19, up 7% y-o-y. Subsidies were the largest part of that amount, PLN22.4m and PLN16.1m in 2019 and 2018 respectively, and the reason behind the growth. Subsidies are tied to R&D spending and can therefore fluctuate. We note that Ryvu will keep most of the subsidies obtained by the former Selvita, as they were granted by the Polish authorities from EU and government sources specifically for innovative projects. Together with the ‘2017-2021’ strategy announced in conjunction with the fund-raise in late 2018, Ryvu is entitled to receive a total of more than PLN120m if R&D work goes according to plan.

Total 9M19 operating spend increased significantly to PLN60.2m from PLN36.7m a year ago, largely due to higher ‘external services’ and ‘employee benefit expense’. Ryvu has expanded its employee count and has initiated the Phase I trial with SEL120. We expect employee numbers to stabilise going forward, but the R&D spend to increase somewhat depending on R&D activities. The Phase I trial with SEL120 has just recruited the first patient, so associated costs should reach a peak in the coming quarters. The operating loss was PLN34.3m versus PLN12.5m last year.

Ryvu reported cash of PLN89.1m and had PLN3.4m in interest-bearing debt. It is spending on operating activities (R&D is fully expensed and not capitalised) but also investing in infrastructure and therefore 9M19 capex was PLN21.6m. Ryvu initiated the construction of its new Research and Development Centre for Innovative Medicines in 2018, with estimated completion around mid-2020 and a total budget of PLN98.6m (subsidies will fund c 34%; debt and cash with cover the rest). No additional capex plans are envisioned for the moment.

The Q319 report was the first time Ryvu presented its detailed financial accounts for 9M19 and 9M18. The former Selvita published only high-level financial information for its innovation segment. We have therefore not yet developed detailed financial estimates for Ryvu. With its next quarterly update, Ryvu will publish FY19 and FY18 (comparison period) accounts, at which point we will finalise our detailed estimates. Judging from the financial performance during 9M19 and 9M18 (comparison period) described in the Q319 report, we believe Ryvu is on track with its R&D programme as set out in its 2017-2019 strategy, and has sufficient resources to achieve a number of catalysts.

Our post-split valuation of Ryvu is PLN1.08bn or PLN67.4/share. This is based on the innovations segment within the former Selvita, for which we have developed detailed assumptions set out in our last outlook report. We keep our assumptions unchanged and only adjust for net cash and rolling the model forward. Overall, we maintain our valuation approach, where we have developed detailed rNPV projects for the most advanced assets at the clinical and preclinical stages. We use a discount rate of 12.5%.

The current net cash position is sufficient to fund R&D operations until at least 2021. Ryvu’s future funding needs will depend on the income generated from any potential licensing deals and level of subsidies. Over the next 12-18 months we expect Ryvu to deliver a number of potential catalysts for the share price: