Nanologica

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Redsense Medical

AroCell

Alzinova

* Pre-revenue stage with no proven business model, currently generating no profits and negative cash flow, increasing investment risk.
* High dependence on a single product (ALZ-101) for future revenue, limiting revenue diversification.
* Vulnerability to regulatory interference typical in the pharmaceutical industry, potentially impacting development and commercialization timelines.
* Reliance on key personnel and continued dependence on capital markets for funding, increasing operational and financial risks.
* Binary outcome risk associated with clinical trials, where failure in upcoming Phase II/III trials could significantly impact the company's viability.

* Strong growth potential in the expanding Alzheimer's disease market, with ALZ-101 positioned to benefit from increased interest in disease-modifying treatments.
* Asset-light business model typical of pharmaceutical companies, allowing for efficient scaling once products are approved.
* Intellectual property protection and market exclusivity for ALZ-101, providing a competitive advantage for at least a decade post-approval.
* Potential for diversification through the AβCC peptide technology platform and second candidate ALZ-201, offering growth optionality.
* Product (ALZ-101) contributes to the greater good by aiming to improve Alzheimer's patients' health, aligning with ethical investment considerations.

* Lack of profitability across multiple metrics, including gross profit margin, operating margin, and return on equity.
* Absence of consistent revenue and earnings growth, potentially signaling challenges in market penetration or product demand.
* Poor cash flow conversion and lack of dividend payments, indicating limited ability to generate sustainable cash profits.
* High likelihood of needing to raise capital in the near future, potentially leading to shareholder dilution.

* Strong short-term liquidity with current assets 1.5 times greater than current liabilities, indicating robust working capital management.
* Sufficient cash and short-term investments to cover expected cash burn for more than two years, demonstrating financial resilience.

* Short tenure of top management team (less than five years), potentially limiting institutional knowledge and proven teamwork.
* History of postponing clinical trials, raising concerns about consistent delivery on promises and timely execution of strategic plans.
* Lack of long-term incentive programs and sustainability-related performance incentives for executives, potentially misaligning long-term interests.
* Limited gender diversity on the board, with only 1 out of 6 board seats held by a woman, potentially missing out on diverse perspectives.
* Pre-revenue status necessitating share dilution, coupled with weak commitment to sustainability reporting, which may concern some investors.

* Strong leadership with CEO Tord Labuda bringing extensive pharmaceutical industry experience and a clear long-term vision for Alzinova's innovative Alzheimer's treatment.
* Lean, decentralized organization promoting efficiency and accountability, with a consistent focus on innovation and cost-effective clinical development.
* Transparent and timely communication with investors, maintaining consistent long-term goals and strategies while being candid about challenges and shortcomings.
* Significant insider ownership (over 18%) and presence of a controlling owner with long-term commitment, aligning management interests with shareholders.
* Business-savvy board with diverse expertise relevant to the company's strategy, capable of effectively evaluating CEO performance and understanding the value creation process.

Background 
This week, Eli Lilly reported phase 2 results from donanemab, a passive Abeta (Aβ) immunotherapy. We expect more data from this trial, but a first glimpse suggests that the results came out positive. The study, encompassing 272 Alzheimer patients, met its primary endpoint, which was the composite scale; integrated Alzheimer&#8217;s Disease Rating Scale (iADRS) at 76 weeks of treatment. iADRS combines two validating measures; the cognitive scale ADAS-Cog13 and the functional scale ADCS-iADL. According to Eli Lilly, donanemab also reported consistency on prespecified secondary endpoints regarding cognition and function, but not every secondary endpoint reached statistical significance.
The Alzinova perspective 
Donanemab has been on our radar, but not more. Donanemab targets a modified glutamate form of Aβ found in plaques. It is differentiated compared to other anti-Aβ monoclonal antibodies, which often targets various forms of soluble and soluble species. We intend to dig deeper into this glutamate form of Aβ and the mechanism of action with donanemab to grasp a better understanding of this scientific approach.
As we have stated earlier, it isn&#8217;t easy to foresee the disease-modifying landscape in Alzheimer&#8217;s eventually. The passive and active (e.g., vaccines) immunotherapy approach could rather become complimentary. The vaccine approach holds several advantages as a disease-modifying therapy, such as:
&#8211; Potentially preventive 
&#8211; Cost-effective 
&#8211; Administration-friendly (long-lasting and with few injections) 
&#8211; Competitively not very crowded
Explicitly compared to anti-Aβ monoclonal antibodies, there is a lesser risk for amyloid-related imaging abnormalities (ARIA) in the form of edema and hemorrhage with vaccines. In the phase 2 trial with donanemab, ARIA was observed.
If we allow ourselves to zoom out into the vaccine landscape, and in Aβ specifically, we note that UB-311 should now be in phase 3 development. A study design was presented at CTAD 2020. We regard, for now, UB-311 as the most important peer to Alzinova’s ALZ-101. It is further advanced than ALZ-101, but the latter could benefit clinically from being more specific towards the neurotoxic oligomers.
Concluding Remarks 
Alzinova is progressing according to the plan to start its phase 1b trial in Q2&#8217;21. We see room for a more favorable valuation once in the clinic. Alzinova would then be a clinical biotech case with a vaccine candidate that distinguishes in the pipeline, in an indication (Alzheimer) which perhaps holds the largest unmet medical need at present.