Appili Therapeutics is undervalued, says Mackie Research

Halifax, Nova Scotia-based Appili Therapeutics is a biopharmaceutical company focused on anti-infective drugs. Founded in 2015, the company’s stock began trading on the Venture Exchange in June 2019, with its share price now down slightly over that time period.

Appili has a number of drugs in development, including ATI-2307, a novel antifungal about to advance into Phase 2 trials for invasive fungal infections including those caused by Cryptococcus and Candida; ATI-1701, a tularemia vaccine candidate being developed under the US FDA’s Animal Rule, which requires only animal studies and one Phase 1 trial before BLA filing; Favipiravir, a flu drug approved in Japan which has been repurposed for COVID-19 and could be FDA-approved within 12 months; and an out-licensed drug ATI-1501, a taste-masking oral suspension of the antibiotic metronidazole, out-licensed to Saptalis Pharmaceuticals in December of 2019.

In his coverage initiation, Uddin focused on Appili’s pipeline, saying, “We believe Appili’s pipeline has significant monetization potential over the next two to three years. The company has a solid business development pipeline and is ideally looking to in-license more anti-infectives products,” Uddin wrote.

In particular on Appili’s COVID-19 drug, Uddin said the potential is huge.

“Appili has received Health Canada clearance to initiate a Phase 2 trial with FUJIFILM Toyama Chemical’s (FFTC) flu drug favipiravir for COVID-19. The compound has not been approved in the US for any indication. Appili is looking to pool global clinical data of favipiravir to support an NDA for treating COVID-19 in the US – a potential approval could occur within 12 months. If so, we expect favipiravir to be stockpiled by the US and Canadian governments – the size of the contracts could be massive given the current pandemic situation,” Uddin wrote.

Aside from its pipeline, Uddin likes Appili’s management team, led by Dr. Armand Balboni who “has all the key ingredients to a CEO,” according to Uddin. Balboni’s CV includes being a drug developer for the US Army as a Deputy Director, along with having served as the Chief, Office of Research and Technology Application (ORTA) at the US Army Research Institute of Infectious Disease (USAMRIID) and having healthcare-related capital markets experience.

On his sum-of-the-parts valuation, Uddin noted, “Investors should note several factors were not taken into consideration in our APLI valuation, including: the value of potential PRVs associated with ATI-2307 and ATI-1701, sales milestones and the majority of sales royalties of a potential ATI-2307 licensing transaction, the residual value of the four products after FY2032 and the value of ATI-1503. We believe those factors represent great upside potential to the company’s valuation going forward.”

At press time, Uddin’s $1.60 target represented a projected one-year return of 67 per cent.