Noxopharm’s US biotech subsidiary Nyrada IPO successfully raises $8.5m

Australian biotech Noxopharm’s (ASX: NOX) US spin-off Nyrada Inc (ASX: NYR) experienced strong demand in its initial public offering and will now make its ASX debut today after successfully raising $8.5 million under the ticker ‘NYR’.

Nyrada was established by ASX-listed company Noxopharm to advance its non-oncology drug assets. Following the listing, Noxopharm now owns 30.51% of Nyrada.

It will list through the issue of CHESS depositary interests (CDIs), which are instruments through which shares of foreign companies can be traded on the ASX.

Nyrada will issue 42.5 million CDIs at an issue price of $0.20 each, indicating a market capitalisation of about $22 million.

What is Nyrada?

Nyrada is an early stage drug company that specialises in the discovery and development of novel small molecule treatments for cardiovascular, neurological and chronic inflammatory diseases.

Its majority owner Noxopharm has proprietary expertise in the design and delivery of a class of chemicals based on flavonoids and believes that flavonoids have significant potential for the development of novel drugs to treat many common human diseases.

In order to focus on oncology applications of its flavonoid technology platforms, the company established Nyrada in late 2017 to develop non-oncology applications for its technology.

Nyrada has since developed three drug candidates in its portfolio and an option to acquire a fourth candidate, which is a drug to treat auto-immune conditions.

R&D programs

Speaking with Small Caps, Nyrada chief executive officer James Bonnar said the company’s two leading research and development programs target large markets of unmet need.

Lowering cholesterol

The first program involves the development of a cholesterol-lowering drug named NYX-330. It is an oral PCSK9-inhibitor drug intended to be taken in conjunction with statin therapy and is aimed at potentially half of individuals with high cholesterol levels who do not respond adequately to statin therapy, or who cannot tolerate effective dosages of statins.

According to Mr Bonnar, other current treatments have to be taken as separate treatments to statin, including being injected.

“Our approach is to combine a PCSK9 inhibitor and a statin into a single pill, for convenience,” he said.

It should be noted that earlier this month, Swiss pharmaceutical company Novartis completed its US$9.7 billion acquisition of US-based The Medicines Company.

The Medicines Company has successfully completed late-stage studies of an anti-PCSK9 drug known as inclisiran, designed to lower cholesterol.

The Nyrada prospectus indicated heart disease as the single biggest cause of death in developed countries, with high cholesterol levels being a major risk factor.

It also mentions that statin drugs remain the standard of care for lowering unhealthy cholesterol levels, with global sales in 2017 of about US$19 billion, despite approximately half of these patients having a sub-optimal response to the therapy.

Treatment for brain injuries

The second program involves a neuroprotectant drug called NYX-242, designed to block secondary brain damage that occurs following a stroke or traumatic brain injury, such as severe head trauma from contact sports or a motor vehicle accident.

In the days following injury, brain cells continue to die, and the area of tissue damage expands by a process referred to as excitotoxicity. Currently, this secondary injury is untreatable and is believed to be a major contributor to long-term disability following brain injury.

Mr Bonnar said this program targets an area of unmet clinical need with a “large combined patient population of over 3.5 million people in the US each year”.

“Currently, there are very limited treatment options available for those patients, outside of surgery and supportive care. There is a treatment for stroke, however, it is only applicable to about 15% of patients who have a stroke because there’s a very short time window in which you have to administer it,” he explained.

The Nyrada prospectus notes that roughly two-thirds of patients who survive a stroke are left with a permanent disability requiring long-term assisted-living care. That, combined with the impact that repeated concussion is having in contact sports, has brought the need for a neuroprotectant drug to the community’s attention.

“With some 800,000 people expected to suffer stroke this year in the US, reducing the extent of long-term disability and the cost of rehabilitation services and long-term nursing care is a major community priority.”

Pain relief for nerve crush injuries

Nyrada’s third priority is a peripheral neuropathic pain program, which is developing an anti-inflammatory drug NYX-205 to provide non-addictive pain relief for peripheral nerve crush injury such as sciatica.

According to the company, sciatica is a common condition affecting up to an estimated 40% of individuals globally over a lifetime.

Peripheral neuropathy is also estimated to affect up to about two-thirds of cancer patients treated with cytotoxic chemotherapy drugs.

Nyrada chairman John Moore said that while each of the three programs are at an early stage, they have a “clear development path ahead” and the commercial opportunity of these therapies is “substantial”.

“We have what we believe is a realistic expectation of being ready to enter the clinic by late 2021 with at least one drug candidate, once we have completed all the necessary pre-clinical work-up,” he said.

Corporate strategy

Nyrada envisions itself as a drug discovery and early-stage developer and plans to pass its lead drug candidates onto bigger companies for the later stages of development and commercialisation.

“Where it makes sense, Nyrada is prepared to take the drugs through the clinical development process to marketing approval, but all of the disease markets outlined above are large, making the task of bringing a drug through to market both expensive and lengthy,” Mr Moore said.

“Nyrada therefore sees its opportunity in identifying and developing new drug opportunities, and then passing those opportunities onto other companies with the large infrastructure required to take drug candidates through late-stage development and the regulatory approval process.”

Mr Bonnar said the cholesterol-lowering drug, for instance, would require multiple, large studies once its development went beyond the initial proof-of-concept in humans.

“We see that as the domain of big pharma and we’d be looking to sell or licence our IP at the point where we maximise value for shareholders,” he said.

“That would probably be after a phase 2a, where safety is confirmed, and we have a clear efficacy signal in the target patient population.”

Mr Bonnar said this means the company can focus on discovering and developing drugs for potential areas of unmet clinical need, rather than “managing large and lengthy late-stage clinical studies”.

According to its prospectus, Nyrada will focus over the next two years on bringing each drug candidate to a point where they have achieved sufficient proof-of-concept to have the candidate sufficiently de-risked and identified as a prospective therapeutic.

Use of funds

The funds raised in the IPO are intended to accelerate the development of the company’s three leading research and development programs.

The company said it also planned to fund its operations with its existing cash reserves and through seeking non-dilutive funding through a range of granting bodies.

In June 2019, Noxopharm announced Nyrada had received a cash rebate of $486,338 under the Australian Government’s R&D tax incentive scheme, which reimburses companies for 43% of approved R&D expenditure.

In its prospectus, Nyrada said its current cash reserves plus the net proceeds of the proposed offer should be sufficient to fund the business objective for about two years.

This business objective is to have at least one drug candidate ready to enter a first-in-human phase I safety, tolerability and pharmacokinetic study by the end of 2021.

“Following the next two years, the company may need to raise further funds, but this will depend on the company’s financial position and the market conditions at the time,” it stated.

Mr Moore noted the board’s “proven track record in growing public companies, particularly drug development companies” and said Nyrada is “supported by a group of eminent scientists from around the world as consultants”.

“We have some key opinion leaders on our scientific advisory board in the areas of cholesterol-lowering drug development and also brain injury drug development … we’re very strong on a corporate governance side and we’re really strong on the scientific oversight side as well,” Mr Bonnar said.