IPO Eliem Therapeutics: fighting stress, depression and even epilepsy

Elim Therapeutics (ELYM) is a clinical-stage American biotechnology company that develops drugs to treat increased nervous excitability and associated disorders: chronic pain, epilepsy, and other peripheral and central nervous system conditions.

Elim’s ​​two leading drug candidates are ETX-810 and ETX-155. ETX-810 is a prodrug (PEA) developed initially for the treatment of diabetic peripheral neuropathic pain (DPNP) and pain associated with (LSR, also called sciatica).

 ETX-810 is in two-phase 2a clinical trials, which will provide initial data in the first half of 2022. 

ETX-155 is a modulator (PAM) initially developed for the treatment of the major depressive disorder (MDD), depression (PMD), and focal seizures (FOS).

 The most Eliem plans to initiate two phases 2a clinical trials for ETX-155 in the treatment of patients with MDD and PMD, which to provide data in the first half of 2023, and a phase 1b clinical trial in the treatment of patients with photosensitive epilepsy (completion in the first half of 2022).

Market

Despite the enormous global market for prescription drugs for chronic pain, which will reach about $ 27 billion in the next decade, less than half of patients achieve a 50 percent reduction in pain intensity. 

Despite these challenges, chronic pain medications such as Lyrica and Cymbalta have achieved significant commercial success and ranked among the top-selling pharmaceutical products worldwide, both reaching more than $ 5 billion in annual sales before losing their exclusive patent rights. 

Thus, the use of (PEA), which plays a vital role in regulating neuroinflammation and pain signaling, represents a promising potential mechanism for treating multiple chronic pain conditions.

PEA is an endogenous bioactive lipid that has for various pain conditions in over 30 clinical studies involving over 2,500 patients. Fifteen of these studies were randomized controlled trials (RCTs) in approximately 1500 patients, with 13 of these RCTs showing statistically significant improvement. Unfortunately, despite promising clinical precedent, there are currently no FDA-approved PEA-based therapies in global markets, the European Medicines Agency (EMA), or similar regulatory bodies. As a result, PEA is presently only available as a dietary supplement. As a prodrug of PEA, ETX-810 thus holds significant potential in the event of further progress and successful clinical trials.

The second clinical program, ETX-155, is an oral steroid NCE that acts as a positive allosteric modulator of the GABAA receptor (GABAAR) and for treating patients with depression and epilepsy.

Depressive disorder affects approximately 35 million people worldwide and about 19 million in the United States. Despite the availability of treatments for patients with depression, there is significant variability in patient response. Only about one-third of patients benefit from first-line therapy. 

There is an urgent need for safe, well-tolerated, and fast-acting antidepressants that reliably provide clinical improvement in up to six weeks. Epilepsy, as the second test indication for ETX-155, affects approximately 4.7 million people in the United States, Europe, and Japan, with about 1 million of these patients experiencing uncontrolled OP that is refractory to anticonvulsants. Despite a saturated market, approximately 30% of patients with epilepsy fail to achieve adequate seizure control.

Elim’s financial condition is inherent in early-stage biotech companies: no revenue and operations through the issuance of additional convertible preferred shares. The accumulated deficit in equity at the end of March 2021 amounted to $ 46.7 million: its absolute value, therefore, is 87% of the balance sheet total. Among the positive aspects of the balance sheet structure, we note the complete absence of debt obligations.

Risk factors

Among the key risk factors for investing in an IPO of Eliem Therapeutics, we highlight the following:

– A precarious financial condition may force a company to stop research programs in the absence of adequate external funding. Although the company’s most recent financial statements believe that Elim will continue to operate, PwC, the company’s auditor, noted significant financial risks arising from systematic losses and negative cash flows. In this regard, PwC reports that “there is considerable doubt as to whether Eliem Therapeutics will be able to continue operating.”

– The company’s drugs are in clinical trials and, according to Elim Therapeutics’ estimates, will most likely not be launched on the market until 2023;

– The pain relievers market is one of the most competitive in the healthcare industry, posing significant risks to the future “adoption” of Eliem Therapeutics by consumers;

– Other risks related to the regulatory environment, legal and tax obligations, etc.