Active Biotech Q4 2022: Laquinimod Ready for Phase II

Research Update



Redeye comments on Active Biotech's report for the fourth quarter and discusses events and the status of the clinical programs.


Richard Ramanius

Phase I with laquinimod completed

In January, Active Biotech reported that the new eye drop formulation was safe and well tolerated at single doses and repeated doses for up to 21 days. We consequently raise the likelihood of approval to 24% (22%). The full data from the trial will be published in H1 2023. The next step will be a phase II trial in which laquinimod is tested on patients. We await information about the design and funding of this trial.

Other projects

Active Biotech is approaching other catalysts in the near term. The phase I part of the combination trial of taquinimod + ixazomib, lenalidomide, dexamethasone is set to be completed in H1 2023, after which an expansion cohort at the selected dose will begin. The myelofibrosis proof-of-concept with tasquinimod study will start in H1 2023. And, finally, phase Ib data from the phase I/IIa trial (n=59) conducted by NeoTX with naptumomab and durvalumab in solid tumours is expected in early 2023, after which the phase II part can be initiated.


Redeye raised its Base Case to SEK3.0 (2.8) as it raised the likelihood of approval of laquinimod after the successful phase I trial. The Q4 report does render any changes. The cash position was SEK42m at the end of the quarter, which, according to the company, should finance continued operations through 2023.

Revenue Growth-100%nm.nm.nm.
EBIT Marginnm.nm.nm.73.3%
Net Income-49.9-58.4-42.0106.9


Three drug candidates with clinical data readouts and new trial initiations in 2023 will drive the share

Tasquinimod is developed as a blood cancer treatment. The combination arm of tasquinimod (with ixazomib, lenalidomide, and dexamethasone) in multiple myeloma (MM) is ongoing. We expect to see results from the dose-escalation part in early 2023, after which the from the expansion arm (phase IIa) will initiate recruitment. A proof-of-concept study with tasquinimod in myelofibrosis funded by the Oncode Institute will start in early 2023. The tasquinimod trial is already externally funded. Laquinimod's new eye drop formulation was proven safe in a phase I trial in early 2023. Active Biotech will seek external funding for the planned phase II trial with laquinimod in 2023. The indication will be an inflammatory eye disease. The third candidate, naptumomab, a cancer drug, is outlicensed to NeoTX in a deal worth up to USD 71m with favourable royalty rates. Data from two clinical trials are expected: phase IIa data from the trial in NSCLC in combination with docetaxel (a chemotherapy) is expected in 2023. Phase I data from the phase I/IIa trial with naptumomab and a checkpoint inhibitor (durvalumab) in solid tumours is expected in H1 2023. A phase II readout might then be possible later in 2023 or 2024. An advantage of Active Biotech over similar companies has been its ability to obtain external financing, or licensing deals, for its projects, leading to substantially lower costs than would otherwise be expected.


Repurposed, well-studied compounds reduce risks

The projects have undergone unsuccessful phase III trials, but have demonstrated some level of clinical efficacy. Its internal projects are first-in-class, have well-documented safety profiles, and generally allow for easy administration. Data from previous trials come from several hundred to more than a thousand patients, which can be referenced in the upcoming clinical trials, reducing the clinical risk and potentially cutting costs. Ophthalmology indications historically have a high likelihood of approval. Tasquinimod has orphan drug designation in MM and myelofibrosis.


Diluation risk

Although the company uses its cash effectively and has external financing for many of its projects (including tasquinimod and naptumomab), the present cash position will likely only last the company through 2023. The current environmnent for raising cash is highly challenging, though the strong ownership and good historical perfromance in the recent issues argue that Active Biotech should be able to find funding next year, if necessary as long, as the projects develop according to plan.


Early-stage projects

Active Biotech's project portfolio is still at an early stage of development. Consequently, there is a high risk of attrition, and timelines are still uncertain. Moreover, Active Biotech and its partner NeoTX are targeting competitive markets in cancer treatment. The probability of success of each clinical phase is low in cancer.


Large upside, risk spread over three projects

Our Base Case is SEK 3.0 and includes the valuation of three projects. Our Bull Case of 4.4 SEK assumes positive outcomes with tasquinimod and naptumomab in 2023.


The most important event since our Q3 update was the successful completion of laquinimod's phase I trial. During the fourth quarter, Active Biotech was also granted a US patent related to use of laquinimod as treatment of eye diseases associated with excessive vascularization that lasts until 2040. There has also been some progress with tasquinimod. Active Biotech (through partners) is investigating tasquinimod in three indications. It is or will be testing tasquinimod in clinical trials in multiple myeloma and myelofibrosis. MD Anderson is also performing preclinical tests with tasquinimod in myelofibrosis. Furthermore, Active Biotech is performing pre-clinical testing in myelodysplastic syndrome together with the University Hospital in Dresden. Tasquinimod is believed to work as an inhibitor of S100A9, which is an alarmin that activates inflammation. New data were presented at ASH in Q4 2022, which showed that tasquinimod reprogrammed mesenchymal stromal cells (MSCs) in the bone marrow to support haematopoiesis (i.e. the formation of blood) and reduced inflammatory signalling.  Malfunctioning MSCs are believed to be the cause of myelodysplastic syndrome. This supports further development of tasquinimod in this indication and is further confirmation of its mechanism of action.

Financial results

The company had no revenues in Q4. Operating costs were slightly higher than the previous quarter at SEK 15.2m (the Q3 figure was 13.3m). The cash position at the end of the quarter was SEK42m.

According to the financial discussion of the Q4 report, Active Biotech can fund continued operations through 2023. This would mean slightly less spending compared to 2022 (that had operating costs of -SEK57.9m)). This assumes that external financing for laquinimod's phase II trial can be found. Active Biotech has a slim organization with 9 employees, so fixed costs are low.


Redeye raises its Base Case slightly to 3.0 (2.8) compared with our Q3 update due to an increase in the LOA of laquinimod to 24% (22%). We have also made some minor alterations to our cost forecasts, but these do not have an impact on the Base Case. Our Bull Case is SEK 4.4 while our Bear Case is SEK 1.7.

People: 3

Business: 3

Financials: 0

Income statement
Cost of Revenue0.
Operating Expenses49.957.842.039.0
Shares in Associates0.
Interest Expenses0.000.700.000.00
Net Financial Items0.00-0.600.000.00
Income Tax Expenses0.
Net Income-49.9-58.4-42.0106.9
Balance sheet
Non-current assets
Property, Plant and Equipment (Net)
Intangible Assets0.
Right-of-Use Assets0.900.000.000.00
Other Non-Current Assets0.000.400.000.00
Total Non-Current Assets0.906.96.56.5
Current assets
Accounts Receivable0.
Other Current Assets2.70.000.0011.7
Cash Equivalents53.141.8-0.23108.1
Total Current Assets55.844.10.97131.5
Total Assets56.751.07.5138.0
Equity and Liabilities
Non Controlling Interest0.
Shareholder's Equity47.934.5-7.599.4
Non-current liabilities
Long Term Debt0.
Long Term Lease Liabilities0.
Other Non-Current Lease Liabilities0.
Total Non-Current Liabilities0.
Current liabilities
Short Term Debt8.70.000.0010.9
Short Term Lease Liabilities0.
Accounts Payable0.000.000.0017.5
Other Current Liabilities0.0012.112.17.3
Total Current Liabilities8.712.112.135.7
Total Liabilities and Equity56.649.57.5138.0
Cash flow
Operating Cash Flow-46.2-54.9-42.0108.4
Investing Cash Flow0.00-
Financing Cash Flow74.

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