COVID-19 therapy trial underway, RSV trial to follow
NanoViricides (NYSE-A:NNVC) (NV) has announced its first clinical study, a key milestone in the development of its novel and innovative anti-virus therapy, NV-CoV-2. The technology uses a sophisticated large polymer (NV-387) to trap and disrupt viruses in the blood. The therapy aims to reduce the viral load to prevent infection of healthy cells and to enable the immune system to clear viruses rapidly. Once the Phase 1 is complete, NV intends to advance NV-387 into a Respiratory Syncytial Virus (RSV) Phase 2 study after observing “strong effectiveness” in a preclinical model.
Although COVID-19 in developed counties is now a receding threat due to vaccination, it is possible or even probable that virulent new strains might emerge. Many developing countries have ongoing problems and need cheaper and more robust treatments. There are also many viral diseases with no direct effective therapy, so testing NV's therapeutic approach in the clinic could enable other developments against common infections.
The COVID-19 trial (see Exhibit 1 below) tests both an oral chewable “gummy” and a syrup as administration routes. Promising preclinical studies used intravenous administration to protect rats against lethal model coronavirus infections. In the trial, single and multiple doses of each format will be evaluated in both volunteers and mid-moderate COVID-19 patients. Finding the human plasma blood levels of NV-387 from the oral delivery systems being tested will be a key trial finding for COVID-19 and RSV trials.
The COVID-19 trial is focussed on safety. Preclinical data shows no obvious concerns. As there are only 36 COVID-19 patients and no control group, any efficacy indications will be interesting but anecdotal. However, mild-moderate patients are likely to be in the recovery phase so falling virus levels are likely regardless of treatment.
The next stage of NV-CoV-2 development would be a placebo-controlled Phase 2 in a major market like the US. Given low COVID-19 levels and high vaccination levels, this will be hard to recruit and to run. NV also plans to develop a combination therapy (NV-CoV-2-R) with remdesivir (Gilead), an approved COVID-19 anti-viral agent. This has good preclinical model data.
RSV is a lung infection mainly hospitalizing older people and young children. Therapies are emerging as a major market with two prophylactic adult vaccines now approved in the US. There is one, toxic FDA approved acute therapy and one prophylactic antibody. Over 58,000 children are hospitalized with RSV in the US each year. A Phase 2 in RSV could quickly follow on from the current COVID-19 Phase 1.
At the Q3 point (31 March 2023), NV had US$9.7mln in cash which management views as covering costs till March 2024. This implies a 12-month cash use of about US$10mln. We estimate Y/E cash (30 June) as US$8mln with a rise in costs in FY24 to fund clinical trials. Accordingly, NV will probably require US$17-20mln to fund itself to 31 December 2024 and therefore needs to raise a further US$7.5mln from debt or equity.
We note that a Phase 2 studies for COVID-19 and RSV in the US or Europe would be potentially expensive. We would then expect each indication to need two Phase 3 placebo-controlled studies for FDA regulatory review.
Financials
Year end Jun 30 · 2021 · 2022 · 2023 · 2024
Underlying PBT (USD) · (8.7) · (8.1) · (7.0) · (10.0)
The trial is structured as in Exhibit 1. An initial cohort of 36 healthy volunteers will participate in a single rising dose study for each formulation: gummy or syrup. This will give valuable information about how NV-CoV-2 is absorbed and processed by the body. These volunteers will then be able to enter a multiple-dose stage with six doses (the first day uses a double-loading dose). Doses are given on alternate days. This will be run in a hospital unit.
In parallel to the multiple-dose volunteers study, a further 36 mild to moderate COVID-19 patients will be recruited. These would not normally be hospitalized and do not require extra care — unless they deteriorate — but they will be housed in a hospital unit for the trial. NV plans to measure SARS-CoV-2 levels in the plasma of patients using a form of RT-PCR.
The trial is run by Karveer Meditech, a small Indian Pharmaceutical company under an agreement dated 27 March 2023. Karveer will be reimbursed for the trial costs by NV. On approval, Karveer will sell NV-CoV-2 in India and will pay NV 70% of its sales as a royalty.
Phase 1 trial design
Exhibit 1 - Phase 1a and 1b design
Source: ProActive from NV sources
NanoViricides (NYSE-A:NNVC) operates as the top, public company for two separate private companies that hold the IP. The President and CEO, Dr Diwan, according to the 2022 10k filing, owns 90% of Theracour Pharma. Theracour carries out work for NV and is reimbursed. As of 31 March, NV owed Theracour US$709k offset by prepayments of US$465k. Dr Diwan also founded Karveer Meditech (see trial details); there is a local general manager.
Corporate structure
Chemistry considerations
NV-387, a large polymer synthesized by bonding up to eight monomer units together (Exhibit 2) is the active agent in NV-CoV-2, and could also be used in an RSV indication. The polymer repeat unit (the monomer) is synthesized from different molecules to give the structure its potential therapeutic properties. The core concept was patented in 2006 by Dr Diwan. There are three parts: long, water-loving carbon-oxygen chains (polyethylene glycol, or PEG) typically 22 units long, linker node molecules using sulfur bonds to join the PEG chains and then added water-hating (hydrophobic) groups attached to the nodes. The water-loving chain, PEG, is a well-known component of many approved biopharmaceuticals used to protect an active molecule. In NV-387, the water-hating side chains are of hexadecylamine, a 16 carbon hydrogen chain (called hexadecylamido) bound through nitrogen to the linker molecule. Node sulfur bonds with PEG are chemically useful but might be labile in human blood. Management observes that NV-387 mimics sulfated proteoglycans and attaches to the virus. SARS-CoV-2 is known to bind weakly to heparan sulfate proteoglycans on cell surfaces before entry via ACE2 (Liu et al (2021)).
If extended out, the NV-387 chain would look similar to a chain of festive lights — a long cord with shorter “arms” at regular intervals at right angles at each node. At each node, there could be up to two hexadecylamido arms. In water, the PEG chains will be looped and outward and the hexadecylamido arms will be clustered tightly together inside — it would look, we assume, like a fluffy pom-pom. This type of conformational structure is called a micelle (water loving outside, water hating inside). Micelles are well known; for example, they are used to package mRNA COVID-19 vaccines. NV has also used the water hating section to improve the delivery of known antiviral agents like the anti-viral COVID-19 agent remdesivir (Gilead); this combination is not yet a clinical development product but has shown good preclinical promise, see below.
Management believes that 20 to 25 NV-387 molecules probably associate in the blood into bigger, looser micelles. These are estimated to be large enough to engulf and disrupt a virus particle.
Exhibit 2 - NV-CoV-2 schematics of structure
Source: ProActive based on literature
Action on coronavirus
Although the NV-CoV-2 molecule is “heavy” in molecular terms relative to most pharmaceuticals (which may be about 400 molecular weight), it is very small in comparison to the SARS-CoV-2 virus (Bar-On et al (2020)). The virus is 100nm in diameter with an estimated mass of 1000mln MWt. The virus has an outer membrane composed of lipids (like a micelle) stabilized by about 2,000 M-proteins of about 50,000 MWt each, 20 E-proteins (about 10,000 MWt each) and about 300 S proteins — the infamous “spike” arranged as trimers of about 600,000 MWt and largely protruding. The surface is covered in chemically bound, sugar molecules (glycans) that enable the virus to disguise itself from the immune system and travel in the blood. The spike protein binds to the blood pressure regulating protein ACE2 to gain entry to cells.
The proposed mechanism of action by NV-CoV-2 against SARS-CoV-2 is physical not biochemical. It is suggested by NV management that multiple NV-387 molecules bind the outside of the virus, with the hexadecylamido water hating arms penetrating the virus lipid membrane. If enough NV-CoV-2 binds, then the membrane is disrupted and the inner core of the virus, the capsid, containing the RNA genome (made of 1,000 capsid proteins) is revealed. The core alone cannot enter cells and would be scavenged by the immune system.
NV has shown (working with AllExcel) in a recent PLOS One paper (Chakraborty et al (2022)) that incubating a model coronavirus (not SARS-CoV-2 for technical reasons) with NV-CoV-2 inactivates virus after an hour. The inactivation was measured by adding the mixture of virus and NV-CoV-2 to cultured cells and measuring cell survival. In a preclinical experiment, injection of repeat doses of NV-CoV-2 protected rats against a lethal challenge from a model coronavirus. We note that oral delivery is less efficient than injection and NV management expects bioavailability to be in the 20% -40% range.
Ultimately, the dosing should be resolved in the current trial. There are multiple complex factors involved, such as the drug dispersion around the body and NV-387's absorption, metabolism and excretion.
Remdesivir addition
NV has conducted preclinical studies combining NV-387 with remdesivir, an approved COVID-19 anti-viral therapy from Gilead. Remdesivir can be packaged inside the water-hating core of NV-387 so enabling it to have a more prolonged delivery. This was very promising in a preclinical rodent model when injected. Remdesivir has a different mode of action to NV-387 as it acts inside cells against the virus replication system. The two therapeutics therefore act in combination but in different ways and NV-387 aids cellular delivery of remdesivir. The combination, called NV-CoV-2R is not in clinical development, but NV management is seeking a route for expedite its development.
IP aspects
Theracour is reported to have filed two further patents covering NV-CoV-2: PCT/US21/39050 (June 25, 2021) and PCT/US22/35210 (June 28, 2022). If granted, they would give cover into the 2040's. The IP is licensed to NV on an exclusive basis.
Theracour licenses core intellectual property filed in 2006 from AllExcel, founded by Dr Diwan in 1992. We have no further information. We note that AllExcel staff were co-authors with NV staff on a 2022 paper on NV-CoV-2 and NV-CoV-2-R.
Other viruses
The hypothesis developed by Theracour, as licensed to NV, is that NV-387 can have a broad spectrum anti-viral action. Hence, management has carried out successful preclinical work with NV-387 on RSV (see below). The type of polymer structure underlying NV-387 can also be adapted to other viral types.
Because the action is physical disruption, not a biochemical or antibody binding response, it should be difficult for a virus to evade through mutation. However, although an attractive concept, this hypothesis has yet to be clinically validated. Various viral targets have been evaluated in early preclinical studies. RSV has already been noted and is discussed below. A further project (on-hold) is for varicella-zoster virus in shingles,
NV-387 for RSV, a major new opportunity
One preclinical project is respiratory syncytial virus (RSV). RSV is a member of the Paramyxoviridae family so different to SARS-CoV-2. However, NV has good preclinical data using both injected and oral delivery routes that NV-387 is effective against this virus type as well. Animals given a lethal RSV dose survived for 7 days. Given either NV-387 or ribavirin (a therapy, see below), animals survived 15 and 16 days respectively. This indicates that NV-387 is equivalent in this model to ribavirin but without ribavirin's known toxicities. This would be a second indiction for NV-387.
On July 11 2023, NV announced that it plans to advance NV-387 into a Phase 2 to treat RSV infection once the current Phase I studies of NV-CoV-2 are completed. Management notes that this will significantly speed up the development of the RSV drug, save costs, and improve return on investments (ROI).
RSV markets and therapies
RSV is an infectious lung condition which is very dangerous in older people and has a high incidence in the winter cough and cold season. According to the US CDC, RSV leads to approximately 60,000-120,000 hospitalizations and 6,000-10,000 deaths among those aged 65 or older. There are now effective adult vaccines against the virus with Arexvy (GSK) approved by the FDA in May 2023 and Abrysvo (Pfizer) approved shortly after. Arexvy is also EMA-approved (June) and Abrysvo could be EU approved by the end of 2023. However, these need to be given prophylactically so there may be a significant ongoing role for an acute therapy. The RSV market is projected by others as growing to several billion USD per year. Abrysvo has also been trialed for maternal immunization during pregnancy to given protection to neonates. A decision is due from the FDA in August. Older children are still at risk however (McAleese (2023)).
In the US alone, 58,000-80,000 children a year suffer severe RSV infections and are hospitalized (CDC estimates). The rate varies each year, is monitored, and is very seasonal (CDC Dashboard); 2022-23 was severe after low lockdown rates. There are two FDA-approved treatments. Ribavirin was approved in 1985. It can be given by nebulizer to younger children (Ventre and Randolph (2007)); doubts have also been expressed on the effectiveness. Supportive care is preferred due to long-term toxicity (mutagenicity, carcinogenicity, and teratogenicity, (FDA 2017)). Oral ribavirin used in immunocompromised adults is not FDA approved and can cause anemia (Marcelin et al (2014)). Palivizumab (a monoclonal) is used in very young, at-risk cases as a prophylactic. It reduces hospitalization rates in this group.
In Europe, RSV causes over 270,000 hospitalizations and about 20,000 deaths in people over 60 (GSK press release). In the EU, an estimated 245,244 children under 5, most under 1 year of age, are admitted to hospital each year with RSV infection (Ricco et al 2023)).
Shingles - a topical potential product
The other interesting project, not a current priority, is a topical skin cream for use against shingles (NV-HHV-1). Shingles occurs when varicella-zoster virus (usually acquired in childhood with chickenpox) which has been dormant inside nerve cells, becomes active. This causes a rash with blisters, usually on the torso. The main problem is pain which can persist after the rash has cleared. A cream using NV's technology might help resolve the rash by clearing virus. Its effect on pain is unknown. An IND was due to be filed but was moved to a low priority by November 2020.
GSK has a successful prophylactic vaccine, Shingrix, with 2022 sales of £2bln (US$2.5bln). GSK trial data from 2022 indicates 10 year protection.
Financial projections
NanoViricides (NYSE-A:NNVC) is in effect the public company for two related but separate private research operations: Theracour and AllExcel. No private company accounts are disclosed. Theracour invoices NV and will gain a 15% royalty on sales. Karveer invoices NV for the Phase 1 trial costs and gains a 30% revenue share on future Indian sales; Karveer is stated to sell a variety of generic pharmaceutical products in India.
The financial projections cover the remainder of FY 2023 (to 30 June) and FY24. NV management has stated that 31 March 2023 cash (US$9.7mln) is sufficient to fund the business to March 2024. This implies a burn rate of around US$10mln a year. We have therefore assumed the NV raises sufficient cash in late calendar 2023 to sustain operations till at least December 2024, that is about 18 months from now. This implies a funding need of at least US$7.5mln in either debt or equity. If NV runs two Phase 2 trials, these costs could be much higher. Running any US trials is also more costly.
Table 1 shows the revenue statement (Profit and Loss). Table 2 shows cash flows. Table 3 shows the Balance Sheet.
Table 1 - Profit and Loss
Source: Nanoviricides reports, ProActive estimates
Table 2 - Cash flow forecast
Source: Nanoviricides reports, ProActive estimates
Table 3 - Balance Sheet
Source: Nanoviricides reports, ProActive estimates
Value aspects
We are reviewing our valuation projections and will update following Phase 1 data and the FY23 results. The current enterprise value based on our Y/E cash estimate of US$8mln is only about US$4-5mln. Against this, NV will need fresh capital or loans of at least US$7.5mln implying equity dilution of a further 40%. (Note there are also 1.7mln preference shares but these only convert if there is a change of control.)
The market for a COVID-19 therapy is difficult to assess. In developed, high-priced countries, vaccination is widespread, organized and relatively low cost. In other countries, a low-cost, easily distributed acute oral therapy would be very useful. Some indication of Phase 2 efficacy is needed to assess the product with more confidence. NV-CoV-2-R is an interesting preclinical combination iteration of this approach.
In other viruses, RSV seems to be the current preclinical lead for NV-387 with a fast track possible to Phase 2. It would be a late, acute entrant into a market with two established adult prophylactic vaccines from major companies and a possible maternal indication. The vaccines do not appear perfect and there seem, as always, to be some side effects which could limit their general use. Hence, NV-387 acute therapy could have an important role, but the timeline is still unclear. Nonetheless, it provides the most tangible and quantifiable current market opportunity.
The shingles opportunity looks more focussed and lower risk (as a topical cream) but has a more limited market and there is a successful vaccine. The IND expected in 2020 does not appear to have been filed and the project is on hold.