Cereno Scientific is currently in the clinical phase of developing a new drug with the potential to redefine thrombosis prevention without causing an increased risk of bleeding. This is widely known as the ‘holy grail’ of anticoagulation therapy and has historically caused significant commotion in the investment and Big Pharma community. Today, all marketed treatments are limited by the bleeding side-effects that they cause. Preventive treatments presently on the market (e.g. Warfarin; non-vitamin K oral anticoagulants or NOACs) act directly by intervening in the coagulation cascade, while Cereno Scientific’s candidate CS1 is aimed at preventing thrombosis by strengthening the body’s own defense against blood clots, as it strikes a balance between the clotting and the anti-coagulant factors.
This balance is key not only for preventing blood clots from forming, but also for managing excessive bleeding, which is a major side effect of treatments currently on the market. This would make CS1 a safer and more effective treatment overall. Furthermore, Cereno Scientific believes that the unique mechanism of action of its candidate could make it a valid treatment for patients who are already taking other anti-coagulant drugs, meaning that CS1 has the potential to reach a larger patient group compared to NOACs or Warfarin, thus increasing its market potential.
The active ingredient in CS1 is valproic acid (VPA), which has long been used, at a higher dose than CS1, in the treatment of epilepsy and has a well-documented safety profile in humans. This arms Cereno Scientific with a solid foundation for the product’s expected safety profile, while reducing the risk of safety being an obstacle standing in between CS1 and a market approval. Market uncertainties about CS1 are thus more related to efficacy. An epidemiological study published in 2011 showed a strong association between VPA treatment and the reduced risk of myocardial infarction, in more than 100 000 patients, which explains why Cereno Scientific has a keen interest in this compound. In addition, there is in vivo data from animals supporting the company’s anticoagulation theory of VPA. Overall, this is a good basis for Cereno’s product strategy, which will involve low drug development risks compared with a new class of substances, thereby enabling a faster route-to-market.
Indeed, the company has been moving forward quickly with CS1: a phase I study showing positive data was completed in June of this year, and a phase II study has been planned and is set to begin during the second half of 2019, with results expected to come in 2020. The trials will be performed by the OCT Group, which have recently signed an agreement with Cereno Scientific. Patients from 20 clinics throughout Russia and Bulgaria who have undergone orthopaedic surgery, which increases the risk of developing blood clots, are expected to participate in the study.
Cereno is following a regulatory path with high resemblance to current market leaders, such as Xarelto and Eliquis. In essence, this involves achieving a clinical proof of concept in a small and well-defined patient population before addressing the larger population that has made these two products into blockbusters. The choice of preventing thrombosis in the deep veins of the legs and in the lungs of patients undergoing planned orthopaedic surgery as study population for the phase II trials is considered very cost effective. Not only does this strategy allow CS1 to reach a statistical significance based on a smaller number of patients compared to an indication like stroke or myocardial infarction, it also shortens the required follow-up study period, thus shortening the total timeline while lowering overall costs.
In effect, this provides a good basis for its regulatory strategy, which involves CS1 achieving market approval for venous thromboembolism (VTE) first. This enables Cereno Scientific to focus on widening its market either as a sequential or a parallel track with the intent to include preventive treatment for stroke and myocardial infarction on the same product label. This reflects the paths taken by other anti-coagulant sellers in terms of regulatory strategy.
The market potential for CS1 is significant. According to IMS Health, thrombosis preventative drugs were worth an estimated 23,5 BUSD in 2013, and this number is expected to increase to 25,9 BUSD in 2018. This gives Cereno a solid basis for its future sales prospects. Moreover, a patent for CS1 was recently approved in the US, thus increasing the candidate’s future commercialisation possibilities as the US constitutes almost half of the global market. Not to mention, China is also expected to be a main market for anticoagulant drugs as the sales in the country exceeded 12,4 BUSD in 2014 and are expected to grow even further. In addition, there is currently an endemic underuse of anticoagulant therapies in China because of a fear among physicians to increase the risk of causing bleeding. This both indicates that the Chinese market has tremendous growth potential and that an agent without the associated bleeding risk may address an unmet clinical need perceived as highly important.
The most significant challenge facing the company at this point is actually its declining stock price. Cereno Scientific signed a convertible loan agreement worth 82-106 MSEK with the European High Growth Opportunities Securitization Fund (EHGO) in April of this year. While the agreement secured financing for the upcoming phase II study, Cereno’s stock price has fallen by just over a third thanks to EHGO selling its converted shares, a phenomenon commonly referred to as death spiral financing.
This move has put Cereno’s market cap at a mere 40 MSEK, or approximately 4.5 million USD, which is likely a significant underestimation considering the multibillion-dollar market potential and CS1’s current phase of clinical development. This could of course be seen as good news for any party interested in investing or acquiring Cereno Scientific. A quick glance on deal values and valuations of investment rounds in the same space, as Cereno Scientific, indicates that a 4.5 million USD market cap may be a temporary anomaly. In fact, investors will probably take note of the fact that if Cereno Scientific should get a positive data readout from its phase II trials, the likelihood of striking a significant partnership deal will increase substantially, thus bringing a lot of attention to the company and increasing its value.
Overall, while Cereno Scientific indeed faces a number of challenges and risks related to communicating its value to shareholders and applying for and achieving statistical significance in its upcoming phase II study, the company has a solid scientific base and has secured financing from which to move forward with confidence. Firstly, CS1 is based on an already approved active compound with a strong safety profile that could possibly enable it to quickly enter the market; secondly, the collaboration with OCT Group adds important knowledge and experience which will prove useful in the upcoming phase II study; thirdly, Cereno has established a patent estate around its proprietary formulation and the medical use of VPA that ensures substantial exclusivity on the market.
If CS1 can come out of the phase II trials with positive results, it has the potential to lower costs, improve health and generate significant health-economic benefits, thus becoming a First-in-Class drug representing a paradigm shift for thrombosis prevention. This could make it a dominant treatment, in health-economics terms, when compared to available treatment alternatives, seeing that the alternatives would no longer be economically justified. With such potential, CS1 has high prospects of achieving a significant share of the market.
A full status report on Cereno Scientific can be viewed here.
Image: Cereno Scientific team