UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
(Mark
One)
For
the fiscal year ended December 31, 2021
OR
Commission
File Number: 001-40544
Aerovate
Therapeutics, Inc.
(Exact
name of Registrant as specified in its Charter)
(Address of principal executive offices) (Zip Code)
Registrant’s
telephone number, including area code: (617)443-2400
Securities
registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common stock, par value $0.0001 per share AVTE The Nasdaq Global Market
Securities
registered pursuant to Section 12(g) of the Act: None
Indicate
by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes
☐ No ☒
Indicate
by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes
☐ No ☒
Indicate
by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes ☒ No
☐
Indicate
by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant
was required to submit such files). Yes ☒ No
☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company,
or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller
reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☒
Emerging growth company ☒
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒
Indicate
by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report. ☐
Indicate
by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
☐ No ☒
The
aggregate market value of the Registrant’s common stock held by non-affiliates of the Registrant was $185,087,806as of the closing of the Registrant’s initial
public offering on July 2, 2021 (based on a closing price of $19.94 per share as quoted by the Nasdaq Global Market as of such date).
In determining the market value of non-affiliate common stock, shares of the Registrant’s common stock beneficially owned by officers,
directors and affiliates have been excluded. This determination of affiliate status is not necessarily a conclusive determination for
other purposes.
The
number of shares of Registrant’s Common Stock outstanding as of March 29, 2022 was 24,410,393.
DOCUMENTS
INCORPORATED BY REFERENCE
The
registrant intends to file a definitive proxy statement pursuant to Regulation 14A relating to the 2022 Annual Meeting of Stockholders
within 120 days of the end of the registrant’s fiscal year ended December 31, 2021. Portions of such definitive proxy statement
are incorporated by reference into Part III of this Annual Report on Form 10-K to the extent stated herein.
Table
of Contents
Page
PART I
Item 1. Business 5
Item 1A. Risk Factors 41
Item 1B. Unresolved Staff Comments 89
Item 2. Properties 89
Item 3. Legal Proceedings 89
Item 4. Mine Safety Disclosures
PART II
Item 6. Reserved 91
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 98
Item 8. Financial Statements and Supplementary Data 99
Item 9A. Controls and Procedures 99
Item 9B. Other Information 99
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 99
PART III
Item 10. Directors, Executive Officers and Corporate Governance 100
Item 11. Executive Compensation 100
Item 14. Principal Accounting Fees and Services 100
PART IV
Item 15. Exhibits, Financial Statement Schedules 101
Signatures
SUMMARY
OF THE MATERIAL AND OTHER RISKS ASSOCIATED WITH OUR BUSINESS
Our
business is subject to numerous material and other risks and uncertainties that you should be aware of in evaluating our business. These
risks include, but are not limited to, the following:
The
material and other risks summarized above should be read together with the text of the full risk factors below and in the other information
set forth in this Annual Report on Form 10-K, including our consolidated financial statements and the related notes, as well as
in other documents that we file with the U.S. Securities and Exchange Commission, or the SEC. If any such material and other risks and
uncertainties actually occur, our business, prospects, financial condition and results of operations could be materially and adversely
affected. The risks summarized above or described in full under Item 1A of this Annual Report on Form 10-K are not the only risks that
we face. Additional risks and uncertainties not currently known to us, or that we currently deem to be immaterial may also materially
adversely affect our business, prospects, financial condition and results of operations.
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
Annual Report on Form 10-K contains express or implied forward-looking statements that are based on our management’s belief and
assumptions and on information currently available to our management. Although we believe that the expectations reflected in these forward-looking
statements are reasonable, these statements relate to future events or our future operational or financial performance, and involve known
and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different
from any future results, performance or achievements expressed or implied by these forward-looking statements. Forward-looking statements
contained in this Annual Report on Form 10-K include, but are not limited to, statements about:
● our clinical and regulatory development plans;
● the timing or likelihood of regulatory filings and approvals for AV-101;
● our ability to commercialize AV-101, if approved;
● the pricing and reimbursement of AV-101, if approved;
● regulatory developments in the United States and foreign countries;
● the rate and degree of market acceptance of AV-101;
● the success of competing therapies for PAH that are or may become available;
● our ability to attract and retain key scientific or management personnel;
● our financial performance;
In
some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expects,”
“intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,”
“potential,” “continue” or the negative of these terms or other comparable terminology. These statements are
only predictions. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties,
and other factors, which are, in some cases, beyond our control and which could materially affect results. Factors that may cause actual
results to differ materially from current expectations include, among other things, those listed above under “Summary of the Material
Risks Associated with Our Business” and under the section titled “Risk Factors” and elsewhere in this Annual Report
on Form 10-K. If one or more of these risks or uncertainties occur, or if our underlying assumptions prove to be incorrect, actual events
or results may vary significantly from those implied or projected by the forward-looking statements. No forward-looking statement is
a guarantee of future performance. You should read this Annual Report on Form 10-K and the documents that we reference in this Annual
Report on Form 10-K and have filed with the Securities and Exchange Commission, or the SEC, as exhibits hereto completely and with the
understanding that our actual future results may be materially different from any future results expressed or implied by these forward-looking
statements.
The
forward-looking statements in this Annual Report on Form 10-K represent our views as of the date of this Annual Report on Form 10-K.
We anticipate that subsequent events and developments will cause our views to change. However, while we may elect to update these forward-looking
statements at some point in the future, we have no current intention of doing so except to the extent required by applicable law. You
should therefore not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this
Annual Report on Form 10-K.
This
Annual Report on Form 10-K also contains estimates, projections and other information concerning our industry, our business and the markets
for our product candidates. Information that is based on estimates, forecasts, projections, market research or similar methodologies
is inherently subject to uncertainties and actual events or circumstances may differ materially from events and circumstances that are
assumed in this information. Unless otherwise expressly stated, we obtained this industry, business, market, and other data from our
own internal estimates and research as well as from reports, research surveys, studies, and similar data prepared by market research
firms and other third parties, industry, medical and general publications, government data and similar sources. While we are not aware
of any misstatements regarding any third-party information presented in this Annual Report on Form 10-K, their estimates, in particular
as they relate to projections, involve numerous assumptions, are subject to risks and uncertainties and are subject to change based on
various factors, including those discussed under the section titled “Risk Factors” and elsewhere in this Annual Report on
Form 10-K.
PART
I
Item
1. Business.
Unless
the context requires otherwise, references in this Annual Report on Form 10-K to “Aerovate”, “we”, “us”
and “our” refer to Aerovate Therapeutics, Inc.
Overview
We
are a clinical stage biopharmaceutical company focused on developing drugs that meaningfully improve the lives of patients with rare
cardiopulmonary disease. Our initial focus is on advancing AV-101, our dry powder inhaled formulation of imatinib for the treatment of
pulmonary arterial hypertension, or PAH, a devastating disease impacting approximately 70,000 people in the United States and Europe.
Imatinib, marketed as Gleevec tablets, was originally developed for the treatment of multiple cancers. Oral imatinib also demonstrated
statistically significant improvement on the primary endpoint, six-minute walk distance, and multiple secondary hemodynamic endpoints
in PAH patients in an international Phase 3 trial conducted by Novartis but was poorly tolerated due to adverse events, or AEs, and never
approved for the treatment of PAH. AV-101, delivered using a dry powder inhaler, is designed to provide lung concentrations at or above
those observed with the oral dose while limiting systemic levels of the drug. We have completed a Phase 1 study in healthy volunteers
and AV-101 was generally well-tolerated with no serious adverse events reported. We announced the initiation of Inhaled iMatinib
Pulmonary Arterial Hypertension Clinical Trial (IMPAHCT), our Phase 2b/Phase 3 trial of AV-101 in PAH patients in December 2021,
and we have assembled a team with deep expertise in developing innovative PAH and inhaled therapies and commercializing novel drugs.
PAH
is an orphan disease with unmet medical need and is characterized by high pressure in the vessels transporting blood from the right side
of the heart to the lungs. This high pressure is caused by abnormal cellular proliferation, which over time results in narrowing of the
pulmonary vessels and forces the heart to work harder to pump blood through the lungs. The severe blood flow restriction and strain on
the heart becomes increasingly severe over time and ultimately leads to heart failure that is often fatal. We estimate there are between
30,000-40,000 patients treated with approved PAH therapies in the U.S. alone, many of whom are on two or more approved PAH therapies.
It is estimated that the combined global sales for PAH products in 2021 was $5.9 billion. Despite the availability of multiple
approved therapies, PAH has a five-year survival rate for newly diagnosed and prevalent patients between 61% and 65%. None of the approved
therapies directly address the abnormal cellular proliferation of the pulmonary vasculature that causes the increased resistance to blood
flow. We believe that novel treatments that primarily address abnormal cellular proliferation may provide therapeutic benefit to PAH
patients and lead to improved quality of life.
Our
focus on developing AV-101 is driven by historical results from the Phase 3 IMPRES clinical trial of oral imatinib for the treatment
of PAH patients. Oral imatinib is a well-characterized targeted kinase inhibitor and approved oncology treatment, but clinical trials
also supported its potential for the treatment of PAH. The Phase 3 IMPRES trial was a placebo-controlled clinical trial of oral imatinib,
conducted globally by Novartis, in 202 PAH patients whose disease was not adequately controlled by two or all three classes of approved
PAH therapies. After 24 weeks of treatment with oral imatinib, patients achieved on average an increase of 32 meters (p=0.002) compared
to placebo in the distance they could walk in six minutes, a measure known as the 6MWD. A key secondary endpoint in the IMPRES trial
was pulmonary vascular resistance, or PVR, which is an objective measure of hemodynamic disease severity in PAH patients. After 24 weeks
of treatment with oral imatinib, patients achieved an average PVR improvement (reduction) of 32% (p<0.001) compared to placebo with
a significant increase in cardiac output (p<0.001). The magnitude of improvement in both 6MWD and PVR is notable because no other
PAH drug has shown such an improvement in a Phase 3 trial on top of at least two background therapies. However, treatment with oral imatinib
was also associated with significant tolerability issues and adverse events, including nausea, edema, diarrhea and vomiting. Patients
taking oral imatinib also experienced serious adverse events, the most frequent of which were anemia (7%), worsening of pulmonary hypertension
(6%), dyspnea (6%), peripheral edema (6%), presyncope (5%), diarrhea (3%), device-related infection (3%), subdural hematoma (2%) and
syncope (1%). Despite the clinical effects of oral imatinib 26% of patients on oral imatinib, compared to 7% on placebo, discontinued
due to AEs by 24 weeks.
Our
company was formed to develop an inhaled formulation of imatinib as a means of delivering therapeutically relevant drug concentrations
to the lungs while minimizing systemic exposure, which we believe is the source of the observed intolerability of oral imatinib. We have
brought together leaders both in the field of PAH drug development as well as in the area of inhaled drug formulation to invent AV-101,
a drug/device combination designed to deliver imatinib directly to the lungs. We have completed a Phase 1 trial of AV-101 in 82 healthy
adults. Repeat inhaled doses of up to 90 mg were well-tolerated and resulted in systemic plasma levels that were below those observed
with the 400 mg oral dose of imatinib (Gleevec) used in the IMPRES trial. According to pharmacokinetic models of lung exposure to imatinib
as applied to our Phase 1 dose range, the predicted lung concentrations of imatinib delivered by AV-101 overlapped or surpassed those
predicted from the 400 mg dose of oral imatinib in our Phase 1 trial. There were no serious adverse events associated with AV-101. The
most common adverse event was a transient cough primarily in the highest dose cohort, which was generally mild, and resolved within 30
minutes of dosing. There were no discontinuations due to cough. The intended Phase 2b dose range with AV-101 will only include doses
that use 40% or less of the amount of dry powder that was inhaled at the highest Phase 1 dose and, based on the results of our Phase
1 trial and our modeling, we expect lung concentrations of imatinib delivered by AV-101 in the 35 mg and 70 mg doses, both twice a day,
or BID, selected for the Phase 2b portion of our Phase 2b/Phase 3 trial to overlap or surpass the lung concentrations predicted with
the 400 mg oral dose in our Phase 1 trial, which was the same target dose used in the Phase 3 IMPRES trial.
In
December 2021, we announced the initiation of IMPAHCT, our global double-blinded, placebo-controlled, randomized Phase 2b/Phase 3 trial
of AV-101 in PAH patients taking at least two background therapies. The Phase 2b portion of this trial will enroll approximately 200
PAH patients and is designed to assess safety, tolerability and inform dose selection for the Phase 3 portion using changes in PVR, an
objective measure of the effect of AV-101 on hemodynamic function in PAH patients, as the primary endpoint. We will measure 6MWD as a
secondary endpoint in the Phase 2b portion of this trial. We anticipate that topline data from the Phase 2b portion of this trial will
be available in the middle of 2023. In the Phase 3 portion of the trial improvement in 6MWD will be the primary endpoint. If the results
of the Phase 3 trial show a statistically significant increase in 6MWD, we plan to submit a New Drug Application, or NDA, with the United
States Food and Drug Administration, or FDA, and Marketing Authorization Application, or MAA, with the European Commission for AV-101
for the treatment of PAH. These applications will leverage the existing safety data for Gleevec oral tablets allowing the company to
save time and money. If AV-101 is approved, we believe it has the potential to become an important addition to existing therapies for
PAH in both the United States and Europe.
We
are pursuing a clinical development program utilizing established endpoints for development of previous PAH drugs, as well as enrollment
criteria and dosing duration previously studied in oral imatinib PAH trials. At our April 14, 2021 end-of-Phase 1 meeting with the FDA,
we received regulatory guidance that our clinical program could support a NDA submission; however, the process of clinical development
is inherently uncertain and there can be no guarantee that we will obtain marketing approval. AV-101 has been granted orphan drug designation
by the FDA and the EMA for the treatment of PAH. We have filed for patent protection of the composition of the aerosol, drug product,
manufacturing and methods of use. We retain worldwide commercial rights to AV-101.
Our
Team
Our
executive management team has extensive experience in the clinical development and the commercialization of orphan drug indications.
Timothy P. Noyes, our Chief Executive Officer, was a senior executive at GelTex Pharmaceuticals, Inc., or GelTex, and Genzyme Corporation,
or Genzyme, where he headed all launch planning and the commercialization of Renagel, a treatment for hemodialysis patients that resulted
in Genzyme’s acquisition of GelTex for more than $1 billion. Benjamin T. Dake, Ph.D., our Founder, President, Chief Operating Officer
and Secretary, a cancer biologist, investor and entrepreneur, recognized the potential benefits of developing a lung-targeted imatinib
and secured multiple rounds of funding to build the team at Aerovate with experts like Ralph Niven, Ph.D., our Chief Development Officer,
who has over 30 years of expertise in translational medicine and inhalation dosage forms, and Hunter Gillies, M.B.Ch.B., our Chief
Medical Officer, who has led Phase 2 and Phase 3 PAH trials at Pfizer Inc., or Pfizer, and Gilead Sciences, Inc., or Gilead, and has
designed and executed PAH trials with several smaller biotechnology companies. George A. Eldridge, our Chief Financial Officer, has
served as CFO for several biotechnology companies, leading four of these companies to the public markets. Marinus Verwijs, our Senior
Vice President of CMC, has over 15 years of product development and manufacturing experience. He has worked on multiple commercial products,
leading them from clinical product development to NDA filing and commercial launch. Timothy Pigot, our Senior Vice President of Commercial, has over 25 years
of industry experience working to launch and commercialize a range of products over multiple therapeutic areas. Mr. Pigot gained significant
experience in PAH during his 12 years at Gilead and 11 years at Pfizer. where his responsibilities included the launches of Revatio and
Letairis for the treatment of PAH. Donna Dea, our Head of Regulatory Affairs, has over
30 years of global regulatory experience designing and implementing regulatory strategies resulting in the approval of treatments for
asthma, COPD, rhinitis and others, for which several of these drugs involved inhaled formulations.
Our
Strengths
We
believe that our company and AV-101 possess the following attributes that may potentially increase the likelihood that we will be successful
in developing and commercializing AV-101:
●
Significant efficacy of oral imatinib. In the global Phase 3 IMPRES trial, oral imatinib demonstrated
statistically and clinically significant efficacy following 24 weeks of treatment on top of PAH standard of care. These results were
notable for achieving statistically significant improvements in the study’s primary efficacy endpoint, 6MWD, and a key secondary
endpoint, PVR, but also for hitting statistical significance on other clinically relevant efficacy endpoints on top of standard of care,
which included at least two background PAH therapies. The primary endpoint of the Phase 2b portion of our Phase 2b/Phase 3 trial is the
change in PVR following 24 weeks of treatment. The primary endpoint of the Phase 3 portion of our Phase 2b/Phase 3 trial is the change
in 6MWD following 24 weeks of treatment. Our Phase 2b/Phase 3 trial is designed to treat a similar patient population to the IMPRES trial,
patients in WHO Functional Classes II-IV taking at least two background PAH therapies.
●
Distinct PAH treatment mechanism. Unlike all approved treatments for PAH, which act primarily through
vasodilation, AV-101 is designed to directly address the abnormal cellular proliferation in the pulmonary vasculature that causes the
increased resistance to blood flow and heart failure. We believe AV-101’s mechanism uniquely positions our product candidate, if
approved, for combination therapy with existing vasodilator treatments.
●
Adaptive development path. We have planned an innovative Phase 2b/Phase 3 clinical trial based on
an adaptive design that could lead to a potential NDA filing. Our development plan also benefits from our ability to leverage prior toxicology
work done with oral imatinib.
●
Improved tolerability based on route of administration. Our inhaled administration is designed to minimize systemic exposure and
limit the safety and tolerability concerns observed in the IMPRES trial of oral imatinib in PAH. Our Phase 1 results in healthy volunteers
demonstrated that plasma levels of imatinib were lower than those observed with the 400 mg oral dose of imatinib used in the IMPRES trial.
●
Expected comparability of concentrations of drug delivered. Based on the results of our Phase 1
trial and our modeling, we expect lung concentrations of imatinib delivered by AV-101 in the 35 mg and 70 mg doses, both BID, selected
for the Phase 2b portion of our Phase 2b/Phase 3 trial to overlap or surpass the lung concentrations predicted with the 400 mg oral dose
in our Phase 1 trial, which was the same target dose used in the Phase 3 IMPRES trial.
●
Powerful barriers to entry. We have generated strong intellectual property claims and other barriers
to entry. We own one issued U.S. patent and several U.S. and foreign patent applications to protect our proprietary imatinib formulation,
our drug product and methods of use. In addition, we have obtained exclusive access to a commercially available dry powder delivery device
which we believe will create a substantial competitive advantage.
●
Substantial and readily addressable market opportunity. If AV-101 is approved, we believe there
is a substantial medical need and market opportunity for combining AV-101 with existing standard of care, which is often two or three
background agents. Beyond this base case, we also believe that AV-101, if approved, could benefit a larger group of PAH patients with
earlier-stage disease such as those patients receiving only one other PAH therapy.
●
Strong leadership in PAH. Our executive management team has extensive experience in the clinical
development of treatments for PAH, including Dr. Gillies who has been developing drugs for PAH for more than 20 years and recently
ran the AMBITION trial that established the current first-line PAH combination therapy and Dr. Niven’s experience in manufacturing
and development for inhaled small molecules. In addition, our Clinical Advisory Board includes several of the premier thought leaders
in PAH who have extensive experience developing drugs and caring for patients suffering from PAH.
Our
Strategy
Our
strategy is to develop and commercialize AV-101 for patients suffering from PAH. Key elements of our strategy include our plans to:
●
Complete regulatory discussions for AV-101 in the United States and Europe. At our April 14, 2021
end-of-Phase 1 meeting with the FDA, we received regulatory guidance that our Phase 2b/Phase 3 trial, if successful, could support a
NDA submission using the change in 6MWD compared to placebo as the primary endpoint in the Phase 3 portion of the trial; however, the
process of clinical development is inherently uncertain and there can be no guarantee that we will obtain marketing approval even if
we successfully achieve our primary endpoint. We have been granted orphan designation for PAH from the FDA and from the European Commission
in the European Union. We completed the formal process of seeking scientific advice and regulatory guidance from the European Medicines
Agency, or EMA, regarding its requirements for regulatory approval and we believe that, if successful, our existing clinical program
could support a marketing authorization application, or MAA submission for regulatory approval in Europe.
●
Advance AV-101 through NDA submission. In December 2021, we announced initiation of IMPAHCT, our
Phase 2b/Phase 3 trial of AV-101 in PAH patients taking at least two approved PAH therapies. The Phase 2b portion of this trial will
be a dose-ranging trial in which PVR will be the primary endpoint. The Phase 3 portion of the trial will be based on the optimal dose
selected in the Phase 2b portion and 6MWD will be the primary endpoint.
●
Commercialize AV-101 directly in the United States. If AV-101 is approved by the FDA, we intend
to commercialize it ourselves in the United States with a specialty sales force focused primarily on pulmonologists and cardiologists
treating adult patients suffering from PAH. We will consider entering into collaborations for the development and commercialization of
AV-101 in Europe, Asia or other geographic regions, if approved by foreign regulatory authorities.
●
Pursue additional indications for AV-101. We believe that AV-101 could have clinical applications
in other groups of PAH patients, such as those with earlier-stage disease who may be receiving only one other PAH therapy. We also may
consider the potential use of AV-101 in other types of pulmonary vascular disease.
●
Expand our pipeline by accessing additional product opportunities. We plan to search for additional
product opportunities available for license or acquisition that could be supported by the commercial infrastructure we build to successfully
launch AV-101 in the United States if it is approved for marketing.
PAH
Background and Limitations of Current Treatments
PAH
is a progressive, life-threatening orphan disease characterized by increased pressure in the pulmonary arteries, vessels responsible
for carrying deoxygenated blood from the heart to the lungs. This increased pressure is caused by narrowing of these blood vessels as
a result of dysregulation of cells of the arterial wall, leading to excessive growth and proliferation. Over time, blood flow worsens
as inflammatory cells are recruited and inflammatory cytokines further stimulate the proliferation of blood vessel cells. This ultimately
leads to tissue scarring, fibrosis and blood vessel remodeling, resulting in severe restriction of blood flow (as illustrated in the
figure below) and increased risk of developing blood clots and heart failure.
Figure
1. Increased pulmonary resistance is caused by cell proliferation that obstructs blood flow.
This
severe restriction of blood flow also causes the heart to work harder to circulate blood through the lungs causing abnormal strain on
the right ventricle of the heart resulting in PAH symptoms that worsen over time; these commonly include breathlessness, fatigue, chest
pain, fainting or light headedness, as well as abdominal distension. Four PAH functional classes categorize patient symptom severity
and ability to carry out physical activity. Higher numbered functional classes indicate worsening symptoms and are associated with higher
mortality. The four functional classes established by the World Health Organization, or WHO, are detailed in the figure below.
FIGURE
2. WHO PAH FUNCTIONAL CLASSES
FUNCTIONAL CLASS DESCRIPTION
Prevalence
of PAH and Unmet Need
Based
on third-party estimates, the number of PAH patients diagnosed is between 30,000 and 40,000 in the United States with an average age
at diagnosis of 53 years old and 65% to 80% of those diagnosed being women. The exact prevalence of PAH worldwide is not known but it
has been estimated to be between 10 to 52 cases per million. Many drugs have been developed and made commercially available for the treatment
of PAH, such as vasodilators, and it is estimated that the combined global sales for PAH products in 2021 was $5.9 billion.
While advances in the treatment of PAH using vasodilatory agents over the last two decades have markedly improved survival, PAH patients
still face significant disease burden and premature death. The five-year survival rate for newly diagnosed and prevalent patients is
between 61% and 65%. Clearly there is unmet need for new therapies beyond the standard of care.
Limitations
of Current Therapies for PAH
The
current standard of care in PAH consists of drugs that act primarily as pulmonary vasodilators, which relax the muscles in the pulmonary
arterial walls, thereby reducing the degree of blood vessel constriction. Although the current standard of care provides some benefit
to patients, it is clear from the pathology of PAH that abnormal cellular proliferation causes progressive narrowing of the pulmonary
vasculature. This abnormal proliferation is not addressed by therapies currently used to treat PAH.
Three
classes of pulmonary vasodilators are currently used to treat PAH: endothelin receptor antagonists, nitric oxide pathway modulators and
prostacyclins.
●
Endothelin Receptor Antagonists. Some treatments currently approved for PAH work by blocking the action of endothelin-1, a potent
vasoconstrictor, and are referred to as endothelin receptor antagonists, or ERAs. These drugs include bosentan, macitentan and ambrisentan.
All three of these drugs are orally administered and improve blood flow to the lungs as determined by measures of hemodynamics such as
pulmonary vascular resistance and cardiac output, which translates to improvements in exercisability as measured by the distance that
patients can walk in a fixed period of time (6MWD).
●
Nitric oxide pathway modulators such as PDE5 inhibitors and sGC’s. Nitric oxide is a naturally occurring molecule that is
widely recognized as important in a number of biological processes. It causes blood vessels to relax and widen via the second messenger
cGMP, resulting in an increase in blood flow. Two common modalities utilize the nitric oxide pathway to result in vasodilation: Phosphodiesterase
type 5, or PDE5, inhibitors prevent the breakdown of cGMP and soluble guanylate cyclase stimulators, or sGC’s, increase the production
of cGMP independent of nitric oxide. Several oral PDE5 drugs are available, such as sildenafil and tadalafil. Additionally, riociguat
is the only sGC approved for PAH.
●
Prostacyclin pathway modulators. Patients with PAH have been shown to have reduced levels of prostacyclin,
a naturally occurring lipid that has the effect of relaxing the smooth muscles surrounding arteries, resulting in vasodilation. Prostacyclin
analogues, such as iloprost and treprostinil, are approved therapies for PAH. Selexipag is an oral prostacyclin-like drug approved for
PAH. In addition to the challenges associated with dosing, prostacyclin therapy can be difficult to tolerate. In clinical trials subcutaneous
infusion of these agents has shown severe infusion site adverse events requiring narcotics for these symptoms. The oral prostacyclins
also have a high incidence of headache and diarrhea, nausea, vomiting, and flushing, which can lead to discontinuations.
PAH
patients are often treated with more than one of these drugs and new therapies are typically added to existing therapies rather than
replacing drugs that are providing insufficient benefit. Based on both primary research and third party sources, we estimate that a majority
of patients are taking two or three FDA approved drugs for the treatment of PAH. Oral therapies are commonly prescribed first-line, typically
consisting of an ERA and PDE5 inhibitor. As patients progress in their disease severity, a prostacyclin can typically be added as a third
agent. Although these therapies have been shown to improve exercise capacity, quality of life, pulmonary pressure and short-term survival,
none of the current treatments are curative and patients remain on life-long therapy with poor long-term prognosis.
Our
Approach, AV-101
We
are developing AV-101 as a drug/device combination product that delivers imatinib directly to the lungs via inhalation. The product consists
of capsules of particulate imatinib that will be used in conjunction with a dry powder inhaler device. We believe that delivery of imatinib
directly to the lungs will maximize the amount of drug in the targeted tissues while minimizing systemic exposure. Furthermore, we believe
that delivering imatinib in this way may improve the tolerability of treatment while maintaining imatinib’s known effects on exercise
capacity and hemodynamics. AV-101 has been granted orphan drug designation by the FDA and the European Commission for the treatment of
PAH.
Potential
of Imatinib to Treat PAH
The
molecule in AV-101, imatinib, has demonstrated improvement on the primary and multiple secondary endpoints in a global Phase 3 trial
(IMPRES) conducted by Novartis in PAH patients on top of at least two standard of care PAH drugs. However, when administered orally,
serious adverse events, and discontinuations were high and the oral version was never approved for PAH. We believe imatinib is unique
amongst tyrosine kinase inhibitors for its specificity and potency. At pharmacologically achievable levels, it inhibits only a handful
of kinases, such as PDGFR, KIT, DDR and ABL, which have been implicated in PAH disease processes. Other tyrosine kinase inhibitors that
target the same binding pocket are more promiscuous. Recent academic focus on kinase inhibition in PAH has been on PDGFR. However, other
kinase inhibitors that hit PDGFR also inhibit the closely related SRC and VEGFR kinases. These drugs have been shown to induce
or exacerbate PAH. Thus, we believe clinical success with kinase inhibition in PAH is not dictated by inhibiting PDGFR
alone, but rather by the kinase inhibition. We are encouraged that imatinib, the molecule in AV-101, has shown clinical effects
in the IMPRES trial, and we believe inhaled delivery of AV-101 limits systemic exposure and may mitigate the tolerability issues observed
with oral imatinib.
Kinase
inhibitors have been approved for the treatment of various cancers. Case reports of improvements in PAH in patients receiving oral imatinib,
marketed as Gleevec by Novartis, led to several clinical trials designed to test the efficacy of imatinib for PAH. The IMPRES trial was
a randomized, double-blind global Phase 3 trial conducted by Novartis that enrolled 202 PAH patients. Most of these patients had Functional
Class II or Class III PAH and were already on at least two background therapies. Patients were randomized to receive oral imatinib or
placebo for 24 weeks.
Patients
enrolled in the IMPRES trial had reduced exercise capacity compared to healthy adults as measured by the six-minute walk distance, or
6MWD, a simple test that has been used as a primary endpoint for the approval of multiple drugs to treat PAH. The mean baseline 6MWD
for patients in this trial was 361 meters, whereas for healthy adults it has been reported to be approximately 600 meters The baseline
6MWD values in these patients upon enrollment was below normal for healthy adults despite the fact that they were all on treatment with
at least two PAH therapies and 41% were on triple therapy, the maximal standard of care for PAH. Patients remained on their respective
pre-trial PAH therapies throughout the trial.
The
target dose of oral imatinib in the IMPRES trial was 400 mg/day which is an approved dose of oral imatinib for the treatment of cancers
such as chronic myelogenous leukemia, or CML, and metastatic malignant gastrointestinal stromal tumors, or GIST, containing specific
genetic alterations. Treatment of PAH patients with 400 mg oral imatinib led to a significant improvement in 6MWD over baseline compared
to placebo. This difference was significant at 12 weeks with significance observed at all consecutive timepoints through the end
of the trial at 24 weeks, at which point the oral imatinib-treated patients achieved an average improvement of 32 meters vs placebo in
the 6MWD (p=0.002). The magnitude of this improvement is notable because no other PAH drug has shown such an improvement in a Phase 3
trial on top of at least two background therapies. The most recently approved oral PAH drug, Uptravi (Selexipag), showed a 12-meter treatment
effect in the Phase 3 GRIPHON trial. The patients in this trial were not as heavily treated as those in the IMPRES trial, with one third
on double therapy and none on triple therapy. The figure below shows the improvement over time in 6MWD of PAH patients treated with oral
imatinib on at least two standard of care therapies as compared to the placebo group in the Phase 3 IMPRES trial.
Figure
3. Imatinib led to a significant increase in 6MWD on top of at least two standard of care therapies
The
improvement in 6MWD with oral imatinib treatment was observed across all patient subgroups regardless of treatment with other PAH therapies
(as seen in the figure below). We believe this observation suggests that oral imatinib improved 6MWD through a mechanism that was independent
of patients’ background therapies.
Figure
4. Imatinib led to improvements in 6MWD compared to placebo regardless of patients being treated concurrently with at least two approved
PAH therapies
In
addition to improvements in 6MWD, patients treated with imatinib had greater improvements in multiple secondary endpoints, including
measures of hemodynamics. Importantly, there was a significant improvement at 24 weeks in PVR (p<0.001), a measure of how difficult
it is for blood to circulate through the lungs. Damaged pulmonary blood vessels make it more difficult for the heart to pump blood through
the lungs, leading to increased pulmonary arterial pressure, increased workload on the heart, and if not resolved, heart failure. PVR
is frequently used as a quantitative measure in PAH Phase 2 trials to determine the appropriate dose for registrational Phase 3 trials
that directly measure changes in patient exercise capacity, such as 6MWD. Patients treated with imatinib had a significant reduction
in PVR at 24 weeks, as noted in the blue box in the figure below. PVR was virtually unchanged compared to baseline in placebo treated
patients. Consistent with the improvements in PVR, significant improvements compared to placebo treated patients, as shown in the figure
below, were also observed in mean pulmonary artery pressure, or mPAP, which was decreased by 5.2 mm Hg; cardiac output, or CO, which
was increased by 0.88 liter/min; and right arterial pressure, or RAP, which was decreased by 1.7 mm Hg. An echocardiography sub-study
of 74 IMPRES patients showed that patients randomized to oral imatinib showed significant improvements in certain measures of right ventricle
function after 24 weeks compared with placebo. Significant and consistent changes across hemodynamic and echo measures suggest a benefit
of imatinib for the treatment of PAH with the potential to result in long-term improvements in pulmonary and cardiac function.
Figure
5. Imatinib treatment led to significant improvements across multiple secondary endpoints including PVR (highlighted), an endpoint frequently
used in Phase 2 dose-finding trials (Patients included in analyses of hemodynamic parameters include those who completed the study
plus those who discontinued early but had a right heart catheterization performed at discontinuation.)
Long-Term
Extension Study
Patients
who completed the 24 week trial were eligible to be enrolled in an open label long-term extension study. The improvements in 6MWD achieved
at 24 weeks were sustained during this extension and the mean difference in 6MWD compared to baseline improved up to 144 weeks in patients
that were able to tolerate the treatment. Although these results were very encouraging, data from the extension trial also highlighted
the major limitation in using oral imatinib to treat PAH, which was drug tolerability. Of the 103 patients originally randomized to the
imatinib arm of the core trial, only 21 remained on therapy after 180 weeks of dosing. The patients who were able to tolerate the drug
long term showed a durable continued improvement in 6MWD.
Safety
and Tolerability
The
relatively poor tolerability of oral imatinib poses challenges for the potential use in PAH patients. The AEs observed in the IMPRES
trial were consistent with the AE profile observed in cancer trials, with the exception of subdural hematoma, and led to a significant
number of discontinuations, which limited oral imatinib’s potential as a therapy for PAH. Specifically, 44% of patients treated
with oral imatinib in the IMPRES trial experienced fluid retention, which is of particular concern in PAH patients who suffer from
heart failure. The figure below lists the AEs reported in the 24-week Phase 3 IMPRES trial of oral imatinib in PAH patients on two
or more standard-of-care therapies.
Figure
6. Adverse events reported in >10% of the Imatinib group in the 24-week IMPRES trial, not including the trial extension
In
the IMPRES trial, there were 45 serious adverse events reported in imatinib treated patients, including some that were of particular
concern for PAH patients, who already have compromised cardiac function. These included worsening of PAH; anemia; dyspnea, or shortness
of breath; peripheral edema; and presyncope, or lightheadedness. Of note, subdural hematoma occurred in eight patients (two in the core
study (1.9%), six in the trial extension (4.2%)) receiving imatinib and anticoagulation.
Figure
7. Serious adverse events reported in the IMPRES 24-week trial publication, not including the trial extension
Patients
enrolled in the IMPRES trial that were not able to tolerate 400 mg/day of imatinib did not see a significant improvement in 6MWD after
24 weeks. As shown in the figure below, those patients who were not dosed with 400 mg/day for more than half of the time did not achieve
the improvements in 6MWD that were significantly distinguished from those achieved by placebo treated patients. These results suggest
that addressing the adverse events and tolerability of imatinib in PAH patients cannot be achieved by lowering the oral dose without
sacrificing this improvement. Further development of oral imatinib for the treatment of PAH was discontinued by Novartis.
Figure
8. Patients who were dosed with 400 mg/day for less than half of the duration of the trial did not achieve a significant improvement
in 6MWD
AV-101,
an inhaled formulation of imatinib
AV-101
is designed to deliver imatinib directly to the lungs to maximize the amount of drug in the targeted tissues while minimizing systemic
exposure. We believe that delivering imatinib in this way may maintain imatinib’s potential therapeutic benefits while improving
the tolerability of treatment. The oral version of imatinib, marketed as Gleevec, is delivered as tablets containing imatinib mesylate
which is a salt of imatinib. Imatinib mesylate is not readily amenable to being used in an inhaled formulation because it absorbs water
from the atmosphere if not stored in a rigorously controlled environment. Moisture uptake would lead to potential stability concerns
and a high likelihood of poor delivery performance when inhaled from any dry powder inhaler device. We also believe mesylate salt would
be a poor choice for an inhaled PAH therapy for additional reasons: (i) the mesylate group introduces a genotoxic risk; (ii) it increases
the formulation risk due to the existence of multiple crystal forms; and (iii) delivery using the mesylate salt has the potential to
release the acidic mesylate upon deposition on the lung surface which could lead to transient irritation and increase the propensity
for cough. We therefore explored other salt and polymorphs of imatinib to identify a more suitable formulation for an inhaled therapy
without altering the active molecule. We discovered a form that exhibited what we believe to be almost ideal physical chemical properties
for development as a dry powder for inhalation using capsules in a simple dry powder inhaler, or DPI.
We
also believe that dry powder inhalation is the most convenient mode of delivery to the lungs for patients. The prospective advantages
of dry powder inhalation include that such formulations (i) can be delivered via a convenient, portable and easy-to-use delivery system;
(ii) avoid the cords or batteries or bulky equipment that may be needed with nebulizers; (iii) carry less risk of microbial contamination
due to the low moisture content powder; (iv) have better anticipated shelf stability of the drug product compared to a solution dosage
form; and (v) can potentially improve lung retention of the powder imatinib compared to an aqueous nebulizer formulation, which may result
in reduced dose, dose frequency and peak exposure in the circulation.
AV-101
Phase 1
We
have completed a placebo-controlled, randomized, double-blinded, single ascending dose and multiple ascending dose Phase 1 trial of AV-101
in 82 healthy volunteers. Doses tested in the single ascending dose, or SAD, portion ranged from 1 to 90 mg of AV-101. A 400 mg dose
of oral imatinib was included as a comparator. The multiple ascending dose, or MAD, portion tested 10 mg, 30 mg and 90 mg BID for seven
days. The purpose of the trial was to establish safety and tolerability of AV-101 and to demonstrate that systemic levels of AV-101 were
lower than oral imatinib.
All
doses resulted in lower systemic plasma levels of imatinib compared to those observed following a single 400 mg oral dose. In the figure
below, the blue dashed line shows simulated steady state levels of oral imatinib in the blood extrapolated from the 400 mg cohort in
the SAD potion of our Phase 1 trial. These levels are consistent with multiple publications on oral imatinib pharmacokinetics. The other
lines show the blood concentrations following the final dose of AV-101 in the MAD portion of our Phase 1 trial, on day 7, when steady
state concentrations had been achieved. The dotted part of the 90 mg dose shows a simulated representation of an additional dose twelve
hours later to illustrate steady state BID dosing.
Figure
9. Phase 1 systemic exposure of AV-101 vs 400 mg oral imatinib.
We
also predicted lung exposures using a physiologically based pharmacokinetic, or PBPK, model built from a published method to extrapolate
lung exposures from blood levels, which was informed by our Phase 1 plasma data. Although there is inherent uncertainty associated with
all models that extrapolate data, we expect the exposures of imatinib obtained in the lungs at the dose range we intend to use in the
Phase 2b portion of our Phase 2b/Phase 3 trial of 10 mg, 35 mg and 70 mg, all BID, to overlap or surpass lung levels predicted from 400
mg oral imatinib. The dashed blue line in Figure 11 shows lung exposures extrapolated from published steady state PK data and informed
by our Phase 1 plasma data for oral imatinib at 400 mg. The solid lines show extrapolated lung levels of AV-101 doses using our PBPK
model.
Figure
10. Predicted Phase 2b lung exposures from dosing of 10, 35 and 70 mg AV-101. We expect the lung exposures of imatinib delivered by AV-101
in the dose range to overlap or surpass the predicted lung exposures from 400 mg oral imatinib
Safety
and Tolerability in Phase 1 trial
There
were no serious adverse events reported in our Phase 1 trial. There were no changes in vital signs including pulmonary function testing
and oxygen saturations. Of the less severe adverse events, there was one discontinuation at the highest dose due to vomiting and the
most frequent adverse event was a cough that was reported in 55% of volunteers at the highest 90 mg dose. This cough was transient, predominantly
mild in nature, resolved on its own within 30 minutes and did not lead to any discontinuations. We believe that the cough may be a function
of the total amount of powder delivered in the high Phase 1 dose. The intended dosing for the Phase 2b/Phase 3 trial will use less than
40% of the amount of powder that was inhaled at the highest Phase 1 dose. The figure below shows the adverse events reported in our Phase
1 MAD trial of AV-101 in healthy volunteers.
Figure
11. Adverse events reported in the Phase 1 MAD trial of AV-101 in healthy volunteers
We
submitted to the FDA summaries of the safety and tolerability findings from our Phase 1 trial along with the systemic plasma levels for
the participants from the trial. We also submitted information on our drug substance and drug product. At our April 2021 meeting, we
reached alignment with the FDA that our Phase 2b/Phase 3 trial design was acceptable and could, if successful with strong results, support
a NDA submission using the change in 6MWD compared to placebo over 24 weeks as the primary endpoint in the Phase 3 portion of our trial.
AV-101
Phase 2b/Phase 3 IMPAHCT: Inhaled iMatinib Pulmonary Arterial Hypertension Clinical Trial
In
December 2021, we announced the initiation of IMPAHCT, our global, Phase 2b/Phase 3 trial in Functional Class II through Class IV PAH
patients with inadequate disease control on at least two approved PAH therapies. This clinical trial will establish the target dose in
the Phase 2b portion then continue into a Phase 3 efficacy trial using the selected dose. The Phase 2b portion of this double-blind,
placebo-controlled randomized trial is designed to assess safety and tolerability using change in PVR, an objective measure of the effect
of AV-101 on hemodynamic function in PAH patients, as the primary endpoint to inform the selection of the appropriate dose for the Phase
3 portion of the trial. Change in 6MWD compared to placebo will be a secondary endpoint, and all efficacy endpoints will be measured
following 24 weeks of treatment. The Phase 3 portion of the trial will use the change in 6MWD compared to placebo at 24 weeks as the
primary endpoint. Secondary endpoints in the Phase 2b/Phase 3 trial will include N-terminal pro B-type natriuretic peptide, or NT-proBNP,
a biomarker associated with heart failure; hemodynamic parameters; clinical worsening; clinical improvement; change in functional class;
change in risk score; and quality of life measures. All patients completing the Phase 2b or Phase 3 portions will be invited to enter
a long-term extension trial of AV-101.
Phase