NervGen Pharma delivers “gold standard” in clinical trial, says iA Capital

The stock just got a big boost from new clinical results, and that bodes well for fans of NervGen Pharma (NervGen Pharma Stock Quote, Charts, News, Analysts, Financials TSXV:NGEN), according to iA Capital Markets analyst Chelsea Stellick. In a new report on Friday, Stellick reiterated her “Speculative Buy” rating on NGEN, saying the company could have over a $10 billion annual market ahead of it for its lead drug candidate.

Vancouver-based NervGen shot up 28 per cent in trading on Thursday as the company announced a new research paper published in the peer-reviewed journal Cell Reports. The paper shows that administration of NervGen’s NVG-291 after ischemic stroke promotes functional recovery in mice as measured by locomotor function, limb sensorimotor function and memory and cognitive function. Researchers found that the positive effects were observed even when treatment began seven days after stroke. The study found that NVG-291 helped promote axonal sprouting and migration of neuroblasts into the stroke lesion epicentre.

“This is a very important development for NervGen, as for the first time in a peer-reviewed publication, NVG-291-R demonstrated improvements in memory and spatial learning which may be relevant for other indications affecting cognition, such as Alzheimer’s disease, where it might improve cognition rather than simply slowing cognitive decline,” said Paul Brennan, NervGen President & CEO, in a press release. 

“While we remain committed to developing NVG-291 in our core indications of spinal cord injury, Alzheimer’s and multiple sclerosis, this paper provides a very strong argument to undertake a stroke study with NVG-291. Given this compelling new preclinical data, we believe there is a solid opportunity to secure non-dilutive funding to advance the program through a partnership, either with industry or government,” Brennan said.

Commenting on the findings, Stellick pointed to the three current top therapeutics drugs on the market for treating patients with stroke and said due to NVG-291’s focus on regenerative therapy the drug has no direct competitors. 

First, there is tissue plasminogen activator (tPA), also known as alteplase and marketed as Activase by Roche. Stellick said it’s the only stroke drug current that can break up a blood clot and it’s commonly used during emergency stroke treatment, with the greatest impact from the drug coming early on and declining after the first 4.5 hours after a stroke. tPA has worldwide sales in 2022 pegged at US$2.5 billion, Stellick said.

Next are statins, which help lower high cholesterol levels and thereby reduce the risk of a clogged artery, with global sales this year estimates at US$2.7 billion.

Last is ticagrelor, an anti-platelet drug marketed by AstraZeneca with a US$1.4 billion estimate in 2022 sales.

Stellick says that since NVG-291 acts as a regenerative therapy, healing the damaged area caused by a stroke, the drug effectively stands on its own as “completely unique with a novel treatment paradigm for stroke,” according to Stellick, who has estimated the potential market for NVG-291 to be well above US$10 billion annually.

“NVG-291 could potentially become an excellent complement to existing therapies due to its direct benefits for the central nervous system following a stroke event. The landmark study announced yesterday showed that NVG-291 promoted the growth and recovery of neurons in a mouse model of stroke which can provide emergency physicians with an arsenal for undoing damage at the cellular level whereas tPA works merely to counter the blood clots,” Stellick wrote.

“Statins and anti-platelet drugs are used as preventive measures against stroke risk, lowering but not eliminating risk of stroke. The long treatment window shown by this research could mean patients receiving intravenous tPA after some damage has been caused, or not receiving tPA in time, could have a method to restore healthy neuron structure and motor and cognitive functions subsequent to the initial stroke event,” she said.

The ongoing Phase 1 trial is in the final dose cohort, with Stellick saying expectations are for the trial to be completed by this summer and leading to Phase 1b/2 trials in Alzheimer’s Disease and Silent Cerebral Infarction (SCI) to begin around the end of the year and then in MS in 2023. 

With the update and maintained “Speculative Buy” rating, Stellick is also sticking with her $6.00 target price on NervGen, which at the time of publication represented a projected one-year return of 164.3 per cent.

Stellick said the new results are the “gold standard” for preclinical data as they show not only improvement at the molecular level but statistically significant behavioural improvement against placebo.

“We also see these data as suggestive of a mechanism for AD because the damage in the brain already exists by the time diagnosis occurs in AD, just as in stroke. This additional confirmation of the regenerative capacity of NVG-291 in vivo is a reminder of the unparalleled preclinical scientific evidence for NVG-291’s efficacy in functional and behavioural healing of neurodegenerative diseases, which provides multiple shots on goal for NervGen including AD, MS, SCI, and stroke,” Stellick wrote.