Canada TSX: APLI, US OTCQX: APLIF

We previously reported on the need for COVID-19 therapeutics, including in the post-vaccine world, Appili Therapeutics and Avigan the Antiviral Pill to Treat Coronavirus (link here).  Since the publication of that report, daily infections have only continued to rise, and nursing facilities and hospitals are facing an intensified crisis. The vaccines on the horizon require few weeks to 30 days to take effect, and this fails to address an active outbreak which has more and more people being infected each day in a facility or a region.

There are many other limitations with vaccines to point a few:

• Supply shortages and distribution challenges will limit access – it will likely take months to years to vaccinate the global population.
• Efficacy data reported so far is based on a few months’ worth of data and it is unknown how long protection might last.
• Quality and durability of immune response in elderly and other high-risk groups is not well understood.
• Many individuals may not be eligible for vaccination, as the UK regulator issues allergy warning for Pfizer vaccine , read the story here (Link here)

Given the currently heightened need for interventions, we will now examine Appili’s clinical and regulatory strategy and detail the trials being run in the near-term and when their next results can be expected. As a reminder, Appili’s drug, favipiravir (Avigan®), is an oral tablet taken twice daily that inhibits the RNA-dependent RNA polymerase, critical viral machinery which SARS-Cov2 predominantly uses for its replication in the human body. In theory, if this specific polymerase could be disrupted or shut off, the virus infection would fail to replicate itself effectively. By inhibiting this replication in the critical early days of infection, the body would have ample time for its naturally gradual process of turning on the adaptive immune response and then much more easily clean up a small viral load rather than playing catchup and fighting against the tide of a giant, widespread mess. A closer look at Appili’s strategy and ongoing trials will clarify its potential as a bridge to vaccination and its utility for those in the future who won’t be vaccinated. As a reminder, even in a world with yearly flu shots, the flu therapeutic Tamiflu was a blockbuster during pandemic influenza years, and in its final years of exclusivity during a typical non-pandemic flu season, it was generating over $500 million in revenues in the US alone.

EUA – Emergency Use Authorization – The Key to Unlocking Avigan’s Potential

The most important milestone for Appili will be achieving FDA Emergency Use Authorization (EUA) of Avigan in the treatment and/or prevention of Covid-19. With EUA, doctors will be able to readily prescribe Avigan to a mass market whose needs are currently unmet by any proven FDA-approved drugs. Unlike IV-administered treatments, outpatients could be treated rapidly with this oral, broad spectrum antiviral before symptoms worsen and severe disease develops, or hospitalization is needed. Because of its format as a shelf-stable pill which can be mass produced, Avigan could also be utilized to control outbreaks in long-term care facilities and protect as a prophylaxis for those who have been exposed to Covid but have not yet tested positive or developed symptoms. This can only be achieved by a readily accessible treatment like Avigan that patients can self-administer at home in an immediate timeframe. The “sit and wait” approach to early Covid “treatment” has sabotaged the pandemic response by pre-selecting for treatment only the most severe cases that land in the hospital, rather than treating symptoms before they become severe and preventing the hospitalizations up front. EUA will provide Appili and the Consortium (see below) with market exclusivity and the ability supply the market with this drug that has never been approved in the US. With the same data Appili is generating for FDA, they will be able to similarly get worldwide approvals in key markets and provide governments with stockpiles in a world where vaccine doses are going to be limited in supply for a long time and infections will persist. The EUA and other approvals will enable sales and generate profits for Appili that will be transformative to the company and its currently undervalued stock price.

The Consortium

In late October, Appili announced a collaboration, development, and supply agreement with Dr. Reddy’s Laboratories (RDY), a premier generic drug manufacturer, and GRA-Global Response Aid for worldwide development of Avigan as a Covid therapeutic and prophylactic treatment. Dr. Reddy’s and GRA had previously partnered with FUJIFILM Toyama Chemical Co., Ltd., (Fujifilm), the inventors of Avigan, in a global licensing transaction (excluding only Japan, Russia, and China). With the new agreement Appili now joins this global Consortium and its worldwide collaboration effort which is intended to accelerate development, commercialization, and distribution of Avigan as a primary weapon against Covid.  By joining the Avigan Consortium, Appili is now responsible for the design and implementation of clinical trials in the US and Canada and will receive a profit share on sales in those countries. They will also be eligible to receive royalties for Avigan sales in Europe and Latin America.

The Consortium leverages the unique capabilities of multiple companies to drive this program forward quickly and efficiently to regulatory approvals and global sales. Dr. Reddy’s and GRA are responsible for R&D, manufacturing, commercialization, and distribution of Avigan. Dr. Reddy’s has world-class manufacturing capability and extensive prior experience with FDA and worldwide drug approvals, which positions the team to complete the regulatory process quickly using Fujifilm’s extensive clinical and non-clinical Avigan data for the regulatory package to go with Appili’s oncoming clinical trial results. Dr. Reddy’s extensive commercialization experience will also go a long way in this partnership.  Together with GRA, they enable this Consortium to meet global demand for the drug. By supplying drug and backing Appili’s efforts in the clinic, this will enable a rapid and largescale distribution of the drug that no one else can achieve once the trials prove successful.

In this Consortium, Appili will run Avigan clinical trials in the US and Canada for regulatory approvals. Appili has at its disposal all Avigan clinical trial data in Covid patients provided by Fujifilm to optimally design these trials. Given Fujifilm’s previous success in a phase 3 Covid trial in Japan, we believe Appili can rapidly demonstrate Avigan’s benefit in trials. With infections rampant, enrollment should be fast with high event rates to distinguish Avigan from placebo in a short timeframe.

The key element to Avigan commercialization for Covid in the US will be FDA approval and exclusivity, which can only happen through Appili’s clinical program and its partnership in the Consortium. Bringing together the unique expertise and capabilities of these companies in the Consortium (along with all of Fujifilm’s IP and data) creates a powerful operation that enables Appili to focus on clinical trial success. By leveraging existing platforms, data, and resources of its partners, Appili will ultimately benefit from the fruits of Avigan’s success without the need to extend itself beyond its current capabilities or to create manufacturing or commercial organizations from scratch. This Consortium is positioned to achieve the elusive winner-take-all regulatory approvals and exclusivities for the launch of a global Covid Avigan commercial operation in key markets.

Phase 3 Study for early treatment of mild/moderate confirmed Covid-19 Infection (“PRESECO”)

The Preventing Severe COVID Disease (PRESECO) study is a randomized, double blind placebo-controlled multi-site phase 3 trial to evaluate Avigan’s ability to reduces the severity of symptoms speeds recovery and secondarily to prevent progression to severe disease and reduce viral load in the infected outpatient setting. The trial will enroll approximately 826 patients with mild to moderate Covid symptoms and diagnosed with a positive Covid test. Patients will take Avigan pills at home and will be supervised remotely by the site investigators. Appili had submitted their protocol to FDA in September and now after gaining clearance and signing a CRO, PRA Health Sciences, to operate the trial at multiple sites, Appili announced it has enrolled the first patient on December 2. This trial will mostly enroll in the US and will have a data readout by Q2 2021. This study will give FDA the definitive evidence it needs for confidence that Avigan can prevent severe Covid disease when provided to patients early in the course of infection.

Phase 3 Study for Prevention of Covid-19 Disease as Post-Exposure Prophylaxis (PEPCO)

The PEPCO study (Post Exposure Prophylaxis for COVID-19) is Appili’s second phase 3 program. This is another randomized double-blind, placebo-controlled, multinational study. But this trial will be run in asymptomatic individuals within 72 hours of a direct exposure to Covid and who are at high-risk of developing severe COVID-19. These participants will be either residing in long-term care facilities or in their own homes and will be monitored by site investigators. This will evaluate whether providing Avigan within the 72-hour window of a direct Covid exposure can prevent development of Covid-19 disease. They have signed on Cato Research LLC as CRO to run this trial in the US and Canada at multiple sites and intend to enroll approximately 1156 patients. This study was cleared in Canada and filed for clearance in the US and should begin enrollment and dosing in the US very soon.

The brilliance of this phase 3 program is that enrollment can be accelerated by coordinating recruitment between the two trials. Those testing positive can be enrolled into PRESECO for the trial on early Covid treatment, while the friends/colleagues/family members they exposed (who have yet to develop symptoms) will be invited into the PEPCO post-exposure prophylaxis study.  This should amplify recruitment of patients for both studies and help generate results quickly. These studies will read out in the first half of 2021 and in Q3, respectively, but an optimistic estimate could envision these trials completing more quickly than their anticipated timelines.

Phase 2 “Control” Study – Outbreak control in long-term care facilities

The third recently launched component of Appili’s clinical strategy is the Control trial, a phase 2 cluster-randomized, placebo-controlled trial in long-term care facilities, designed to evaluate Avigan’s ability to control Covid outbreaks. An ongoing outbreak at a long-term care facility is precisely where the most medical need is, with elderly and comorbid residents living in close proximity and continuous interaction with healthcare staff, and this is also where vaccines have the least ability to help the situation. By far the highest burden of disease, hospitalization, and death in this pandemic has been due to Covid outbreaks in nursing facilities. This trial will involve 16 facilities, 8 of which will receive placebo in response to an outbreak and 8 of which will receive Avigan in response to an outbreak. An outbreak is established by 2 or more residents testing positive via PCR testing. Exposed or infected staff will also receive the treatment (or placebo).  The first facility with an outbreak was dosed in October. The trial will encompass about 760 patients, and this will determine Avigan’s efficacy in response to outbreaks in nursing facilities.

Altogether the 3 prongs of this clinical strategy will provide definitive evidence on which patients and with what timing constitutes the optimal treatment with Avigan to either prevent Covid-19 or to mollify its course.

Other Avigan/Favipiravir trials

Recall that Fujifilm already announced positive phase 3 results for its Avigan trial in Japan, and we expect Japanese approval imminently. This approval will be the first validation of the Consortium, and all the data used for the Japanese filing along with all the knowledge gained through regulatory interactions there can be applied toward all future approvals by the group.

Stanford University has been running an outpatient Phase 2 trial since the summer with drug provided by Fujifilm, and this trial should read out in Q1. They are enrolling approximately 120 patients diagnosed with mild or asymptomatic Covid in a randomized double-blinded placebo-controlled trial, and the primary outcome will be the time until cessation of oral viral shedding. This will determine whether patients on Avigan are shedding virus for a shorter duration and would indicate whether the infectious period may be shortened by the treatment.

The secondary outcomes will compare between Avigan and placebo the viral load reduction, count of participants with worsening Covid disease, days until symptom resolution, count of participants with development or absence of symptoms, count of participants with antibody response, and pharmacokinetic properties (Cmax and Cmin).

Aside from being a very interesting set of data for detailed knowledge of Avigan treatment in this disease, it is worth noting that the monoclonal antibody treatments from Regeneron and Eli Lilly were approved with EUA based on a similar trial (outpatient, placebo-controlled study) merely by demonstrating a reduction in viral load and a corresponding reduction in medically attended visits.  The Stanford University trial may be too small to show a conclusive impact on medically attended visits with only 120 participants, but it should definitely demonstrate Avigan’s ability to decrease the viral load compared to placebo, much like it did in Fujifilm’s trial. And we now have multiple datasets from the antibody studies that show a reduction in viral load is beneficial to patients. Since this investigator sponsored study was run using drug provided by Fujifilm, the viral load data along with all the other endpoints can be used in The Consortium’s data package for its own FDA filings.

Another key ongoing study to keep an eye on is being run by Dr Reddy’s in Kuwait. This is a phase 3 multi-center, randomized, double blind, placebo-controlled trial in patients hospitalized with moderate to severe Covid-19 to evaluate the efficacy, safety and tolerability of Avigan as adjunct to supportive care, in comparison to placebo with supportive care. This trial is enrolling 780 patients beginning in August and could read-out in early 2021. A successful result should boost Appili stock significantly and of course adds to clinical data that can be used for regulatory filings.

Lastly, there is one additional study called “The Use of Favipiravir in Hospitalized Subjects With COVID-19” run by Fujifilm in the US.  This is a very small study with only 50 patients and won’t be the backbone of The Consortium’s FDA filings like Appili’s PRESECO, PEPCO, and Control will be, but it could provide supportive data. This trial completed in November and will read out imminently.

Summary

Covid-19 outbreaks continue to explode throughout the world, and effective therapeutics are desperately needed. Early outpatient treatment is a key part of the solution to the pandemic and one aspect that is currently lacking. Five of the Consortium’s seven ongoing Avigan clinical trials are conducted within this setting. The Covid-19 therapeutic field is littered with pipedreams, failures, and collective delusions, but Avigan is one of the few notable exceptions. So far, even the much-touted drug hydroxychloroquine has not shown a reduction of SARS-Cov2 viral load despite many trials, and even remdesivir has not shown a clear impact on viral load. Avigan stands out as exceptional and was already proven to work in Japan thanks to Fujifilm, where they had clear positive data illustrating its reduction of viral load and shortening of symptoms.

A positive result for Avigan in viral load reduction in the upcoming readout of the Stanford trial would be very encouraging and would back up previous data from Fujifilm in Japan. Appili has already set-in motion a strong clinical phase 2 and phase 3 program with CRO’s signed on and dosing either already beginning or set to begin shortly, for early and mid-2021 data readouts. Since we are already confident that Avigan is effective against Covid-19 based on existing data, we are taking very little biology risk by investing in Appili and betting on their diverse and targeted clinical strategy. The Consortium will give Appili the ability to rapidly move forward to regulatory approvals and achieve profits from global sales on a mass scale. Only the Consortium is positioned to achieve Avigan marketing approvals and exclusivity in key markets. With the pandemic raging and the continued unmet need for effective, convenient, easily-dosed Covid treatment that can be widely used, Appili is a criminally undervalued stock.

Disclosure: Author is Long APLIF & APLI