Appili Therapeutics still has more upside, Mackie Research says

In an update to clients on Friday, Uddin maintained his “Speculative Buy” rating and $1.60 target for Appili, saying the company’s clinical assets could boost the stock higher.

Halifax biopharmaceutical company Appili, which focuses on anti-infective drug development, announced on Friday a collaboration with pharma company Dr. Reddy’s Laboratories and Dubai-based medical equipment and services company Global Response Aid for the development and supply of Avigan tablets (favipiravir) for the potential treatment and prevention of COVID-19

The announcement comes after an agreement signed in July between Dr. Reddy’s, GRA and Fujifilm, originator of favipiravir, under which Fujifilm granted Dr. Reddy’s and GRA the exclusive right to the drug in global regions outside Japan, Russia and China.

The new collaboration will see Appili assume responsibilities for the design of clinical trials, including multiple Phase 3 trials, in support of regulatory applications in the US, Canada and internationally, with the aim being for indications of early COVID-19 treatment and post-exposure prophylaxis in a community setting.

Dr. Reddy’s and GRA would be responsible for manufacturing, commercialization, and distribution of favipiravir, while Appili would be eligible for a profit share on all US and Canadian sales, as well as, royalties from favipiravir sales in Europe and Latin America.

Appili would also be responsible for clinical trials in the US and Canada. “To address the ongoing threat of COVID-19 we must not only identify effective agents through rigorous clinical evaluation, we must also ensure they are widely available, which is a particular challenge in COVID-19, where billions of people from every corner of the globe are at risk from this threat,” said Dr. Armand Balboni, Appili’s CEO, in a press release. “This consortium is designed to do just that, with world-class expertise not only in drug development but also in manufacturing and commercialization to support access.”

In his update, Uddin noted that Appili is expected to soon start a Phase 3 COVID-19 trial in the US. The company has submitted a protocol to the US FDA for a randomized, double-blind, placebo-controlled Phase 3 trial with favipiravir in adult COVID-19 patients with mild to moderate symptoms. The trial expects to recruit 826 out-patient subjects while a sub-study of 136 asymptomatic participants will examine whether favipiravir can shorten the period of viral shedding. The trial is expected to take about six months, with results anticipated by the end of the second quarter 2021.

“Appili is looking to pool global clinical data of favipiravir to support an US emergency use authorization (EUA) application shortly. If the FDA potentially grants the EUA by the end of CY2020, it could make favipiravir an eligible and competitive candidate for
US government stockpiling contracts. The Canadian government could follow suit to stockpile the drug,” Uddin wrote.

By the numbers, Uddin is calling for Appili to generate zero revenue and negative $0.32 per share in fully diluted EPS in fiscal 2021 (year end March 31) and $47.6 million in revenue and $0.45 per share in f.d. EPS in fiscal 2022. That should climb, says Uddin, to $214.4 million in revenue and $2.02 per share for fiscal 2023.

“Our target price of $1.60 is based on the sum of the four NPVs divided by Appili’s fully diluted share count (80.7 million),” Uddin said. “Investors should note several factors were not taken into consideration in our APLI valuation, including: the value of potential
[priority review vouchers] 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 per share target represented a projected one-year return of 19 per cent. Year-to-date, Appili’s share price is up 101 per cent.

Last week, Appili announced that investigators had enrolled and dosed the first cluster of participants in its CONTROL trial evaluating favipiravir’s effectiveness in preventing outbreaks of COVID-19 in long-term care homes. The company aims to conduct the research at 16 LTC centres in Ontario, with topline data expected next year.

Yoav Golan, MD, Chief Medical Officer at Appili, said the first dosing of participants is a an important milestone for the company’s program.

“Providing early access for vulnerable patients to antiviral therapy, particularly in a community setting, is a cornerstone of Appili’s COVID-19 clinical strategy. We believe favipiravir’s mechanism of action and oral tablet formulation will best serve patients in
these conditions,” said Dr. Golan in a press release. “Our clinical strategy has a strong potential to show a benefit in this population and truly differentiates Appili’s program from other approaches.”