Zacks Small Cap Analysis – GRCE: Initiating Protection – From Confusion to Infusion – Cyber Tech

By John Vandermosten, CFA

NASDAQ:GRCE

READ THE FULL GRCE RESEARCH REPORT

We’re initiating protection of Grace Therapeutics, Inc. (NASDAQ:GRCE) with a valuation of $12.50 per share. This worth is predicated on our estimates for the profitable growth and commercialization of GTX-104 in sufferers being handled for aneurysmal subarachnoid hemorrhage (aSAH) in the USA and in developed areas all through the globe, together with China and Europe. About 40,000 individuals per 12 months endure from an aSAH in the USA, and so they obtain a regular of care following surgical procedure that presents a number of shortcomings which may be addressed with Grace’s lead candidate.

GTX-104 is an intravenous (IV) formulation of nimodipine that may be a higher different to the oral model for treating sufferers who’re unconscious or unable to swallow, which is frequent for these affected by an aSAH. Nimodipine is authorised for subarachnoid hemorrhage on account of its capacity to stop vasoconstriction following an aneurysm. In a number of research, the drug has demonstrated that it may possibly enhance neurological outcomes and increase restoration in aSAH sufferers. Regardless of its advantages, the drug presents a number of shortcomings on account of its oral formulation, which makes it tough to ship to unconscious sufferers. Low bioavailability and different drug traits contribute to extremely variable blood plasma ranges. The variability can result in hypotension.

Nimodipine is a calcium channel blocker that’s particularly categorised as a dihydropyridine calcium channel antagonist. The drug is very lipophilic which permits it to simply cross the blood mind barrier however prevents it from dissolving in answer for use in IV administration. Grace has patented a formulation of nimodipine that captures the drug inside micelles permitting it to solubilize in an aqueous answer and be administered by IV.

Grace has accomplished two Section I pharmacokinetic (PK) and PK bridging research and has accomplished enrollment in its Section III STRIVE-ON trial. Section I demonstrated that GTX-104 is 100% bioavailable in comparison with 7.2% of the drug reaching the drug plasma within the oral formulation. Grace’s model produces decrease dose variability, which has been related to hypotension, and it has an improved security profile with no critical hostile occasions.

STRIVE-ON is a 100-patient trial evaluating hospitalized aSAH sufferers in a randomized, open-label comparability between oral nimodipine and GTX-104. The first endpoint is security and is measured as comparative hostile occasions, together with hypotension, between the 2 teams. The Section III STRIVE-ON trial is now full, and we count on to see topline ends in early 2025. GTX-104 will subsequently be submitted in a brand new drug software (NDA) by way of the 505(b)(2) pathway. Assuming regular FDA evaluate instances means that approval may come by early 2026 with commercialization to comply with shortly after.

Whereas nearly all of Grace’s funding and administration are centered on the GTX-104 program, the corporate has two different merchandise in its pipeline with recognized indications. The primary, designated GTX-102, is prepared for a Section III program in Ataxia-Telangiectasia, which is a uncommon inherited childhood neurological dysfunction that impacts the a part of the mind that controls motor motion and speech. The second program is named GTX-101, which has accomplished Section I research and is concentrating on Postherpetic Neuralgia, a typical complication of shingles related to ache on the pores and skin. We don’t embody these belongings in our valuation.

aSAH impacts as much as 40,000 people in the USA yearly and has a worldwide incidence starting from 9 to 11 per 100,000 individuals. Girls are extra probably than males to endure the rupture and the very best incidence happens round an individual’s sixth decade. Signs of the situation embody a sudden, extreme headache, neck stiffness, nausea, and vomiting, amongst others. The affected person ought to instantly go to the emergency room the place she or he might be triaged to find out if they’ve suffered an aSAH and to move them to a specialised heart resembling a neurointensive care unit (Neuro-ICU) staffed by neurosurgeons and neurointensivists. After prognosis, remedy contains surgical clipping or endovascular coiling. After the affected person is stabilized with an emphasis on strict blood stress management, she or he is run oral nimodipine to stop vasospasm over the following two or three weeks. This permits ample blood movement within the mind to guard mind tissue and permit for efficient therapeutic.

Whereas oral nimodipine is related to higher outcomes for aSAH sufferers in comparison with placebo, it has quite a lot of shortcomings. The first weak point is that the oral formulation is tough to manage to sufferers which can be unconscious or have a tough time swallowing. Many aSAH sufferers are semi-conscious or unconscious. Oral nimodipine must be administered each 4 hours on account of its brief half-life, and it shouldn’t be taken with meals as this reduces its already low bioavailability. Blood plasma ranges can fluctuate broadly as over 85% of the drug is misplaced on account of breakdown within the abdomen and in depth first-pass metabolism within the liver. Increased blood plasma ranges may cause hypotension, which is related to neurological impairment, organ injury, lowered kidney operate, and different dangers. In Europe, there may be an IV formulation of nimodipine branded Nimotop; nevertheless, the product solubilizes the drug with excessive ranges of ethanol and propylene glycol. These excipients have quite a few detrimental results and prevented the product from being authorised by the FDA. Grace’s IV formulation makes use of excipients usually acknowledged as protected (GRAS), and supplies a product which is ready to enhance upon the ethanol-based European model and the oral formulation’s main weaknesses.

Grace affords a median stability sheet with $19 million in money and equivalents as of June 30, 2024 (FY1Q:25) and roughly one-third warrant protection. We anticipate that money ranges are ample to help operational actions till the submission of the brand new drug software. Administration estimates that there’s ample money to help operations till spring 2026. Now that almost all of the work for the STRIVE-ON trial has been accomplished, money burn ought to decline to about $2 million per quarter as we transfer into 2025.

Grace might internally commercialize nimodipine following approval, given the comparatively much less intense advertising effort required for a uncommon illness. However we see extra worth in partnering with a longtime pharmaceutical firm. We base our mannequin and valuation on the latter method, given the efficiencies and decrease capital depth obligatory if a associate is discovered. With the ultimate technique of use patent expiring in 2042, we see a pretty runway of gross sales starting in calendar 12 months 2026 that may rise to over $100 million within the US and developed world product gross sales within the first few years after launch.

Key causes to personal Grace’s shares:

➢ Aneurysmal Subarachnoid Hemorrhage (aSAH) represents an unmet medical want

o  Annual incidence of ~40,000 in the USA

➢ Authorised oral remedy has quite a few shortcomings addressed by GTX-104

o Oral model doesn’t work for sufferers unable to swallow

o Current workaround requires capsule crushing and feeding tube administration

o Excessive first-pass metabolism makes correct dosing tough

o Slim therapeutic index for oral nimodipine requires exact dosing

➢ Lead candidate GTX-104 supplies enhancements over oral administration

o Predictable drug focus

o Efficient hypotension administration

o Lowered drug consumption

o No meals results and fewer drug-drug interactions

➢ Supply platform primarily based on non-ionic surfactant micelles overcomes solubility limitations

➢ Pipeline affords different medical belongings

o GTX-102 for Ataxia-Telangiectasia

o GTX-101 for Postherpetic Neuralgia

➢ Strong mental property

o Patent for proprietary hydrophobic drug supply platform

o  All pipeline candidates granted orphan drug designation by FDA

In our initiation, we describe aSAH, the way it happens, and its implications on well being and mortality. The report examines the mechanisms of harm and the way typically the situation happens in the USA and around the globe. Threat components for aSAH, its signs, prognosis, customary of care, and prognosis are detailed within the report. The next part describes the drug nimodipine, its chemical composition, and its drug class. We take a look at the authorised formulations of the drug in the USA and in Europe and establish the associated shortcomings, together with unintended effects and why an oral capsule will not be the easiest way to ship the drug to an aSAH affected person.

Our initiation summarizes the corporate’s pipeline, together with the lead candidate GTX-104 and its associated pharmacokinetic and Section III security trial. We additionally evaluate Grace’s different candidates GTX-102 and GTX-101 adopted by a graphic of the corporate’s pipeline and stage of growth for every. One other part evaluations Grace’s mental property and summarizes a number of of its most vital patents. The report explores friends and opponents highlighting different firms with assorted nimodipine administration strategies. That is adopted by current milestones, a quick company historical past, and monetary outcomes for Grace Therapeutics. We then introduce key administration crew members and spotlight the dangers confronted by the corporate. The closing part supplies our valuation dialogue and particulars the assumptions behind our goal value. Our work generates a valuation of $12.50 per share for Grace Therapeutics, Inc.

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