By Dr. David Bautz
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Business update
SAT-3247 improves muscle repair in the DMD model in dogs
On August 12, 2024, Satellos Biosciences Inc. (OTC:MSCLF) announced new results from a canine model of Duchenne muscular dystrophy (DMD). The figure below provides an overview of the study, which included two eight-month-old dogs with genetically confirmed Duchenne disease. Canine muscular dystrophy matches the progressive course of patients well and is more severe than the mdx mouse model (Kornegay, 2017; McGreevy et al.2015).
The following slide shows the histology of muscle from a healthy control animal, a Duchenne dog (DMD control animal), and samples from the same animal before and after SAT-3247 treatment. The DMD control samples and the pre-SAT-3247 samples show dead/dying muscle fibers (colored red) with abnormal muscle architecture, while the sample taken after SAT-3247 treatment shows fewer dead/dying muscle fibers and a muscle architecture similar to that of the healthy control animal.
To quantify the improvement in animals treated with SAT-3247, Satellos calculated the regeneration index (RI) based on histological staining, as shown in the figure below. The index is calculated by dividing the number of new or newly formed muscle fibers by the number of dead or dying muscle fibers. Embryonic myosin heavy chain (eMHC; blue staining) was used as a marker for new or newly formed muscle fibers because it is expressed in newly formed muscle fibers. Immunoglobulin G (IgG; red staining) was chosen as a surrogate marker for dead or dying muscle fibers because IgG is unable to enter a muscle fiber unless it is degraded. The results show an increase in RI after treatment with SAT-3247. In addition, the table to the right shows a decrease in inflammatory cytokines and an increase in anti-inflammatory cytokines, indicating an overall decrease in inflammation in the animals.
Finally, the company conducted limb strength measurements to quantify any functional changes in the muscle. The graphs below show the increase in hind limb flexion strength (normalized to body weight) after four months of dosing (each line corresponds to one of the two animals in the study). The company reported that all strength measurements had improved by an average of approximately 111% after 2 months and 195% after 4 months.
Although there were no control animals in this study and direct comparison of results from different studies is very difficult, we were able to identify studies that used the Golden Retriever Muscular Dystrophy (GRMD) model and reported strength measurements to put the above data into context.
birch et al., 2023: In this study, AAV microdystrophin gene therapy was tested in the GRMD model. Body weight-corrected tetanic flexion torque increased by 80% in medium/high dose animals compared to 17% in control/low dose animals.
Kornegay et al., 2014: This study tested the Nemo Binding Domain (NBD) protein in the GRMD model as a means to inhibit NF-κB signaling and promote muscle healing. The results for tetanic flexion force showed no change in animals treated with NBD.
Liu et al., 2004: This study investigated the effect of prednisone in GRMD dogs aged 2 to 6 months. A dose-dependent reduce A reduction in maximum isometric flexion forces was observed in GRMD dogs treated with prednisone.
As can be seen from the references above, there appears to be a wide range of results for flexion strength measurements in studies of GRMD dogs. What we find most encouraging about the Satellos data, in addition to the significant increase in strength measurements, is the fact that the animals were older than those typically used in these studies (animals were enrolled in the Satellos study at approximately 8 months of age), an age at which, to our knowledge, no spontaneous improvement has been seen. We understand that skepticism is warranted given that only two animals participated in the study, but the fact that positive results were obtained in a study conducted simply to investigate the safety of SAT-3247 in a larger animal model further strengthens our confidence in the drug.
SAT-3247 receives classification as a rare pediatric disease
On August 8, 2024, Satellos announced that the U.S. FDA granted Rare Pediatric Disease designation to SAT-3247 for the treatment of DMD. SAT-3247 had previously received Orphan Drug designation from the FDA. An important aspect of obtaining Rare Pediatric Disease designation is that if SAT-3247 is approved, Satellos will be eligible for a Priority Review Voucher (PRV) that can be sold to another company. PRVs have been sold for about $100 million each in recent years.
Financial update
On August 12, 2024, Satellos announced financial results for the second quarter of 2024. Net loss for the second quarter of 2024 was CAD$6.0 million, or CAD$(0.05), compared to CAD$4.1 million, or CAD$(0.04) for the second quarter of 2023. The increase in net loss was primarily due to higher R&D costs related to SAT-3247, as well as higher G&A costs due to higher personnel and professional fees. R&D costs for the second quarter of 2024 were CAD$4.9 million, compared to CAD$1.6 million for the second quarter of 2023. The increase was due to higher salary and administrative fees, higher preclinical and pre-IND enablement costs, and higher CMC costs. General and administrative expenses were $1.8 million in the second quarter of 2024 compared to $1.5 million in the second quarter of 2023. The increase was primarily due to higher salary and administrative fees and higher non-cash stock-based compensation.
As of June 30, 2024, Satellos had cash, cash equivalents and short-term investments of approximately $27.7 million. As of August 12, 2024, Satellos had approximately 112.8 million shares issued and, taking into account options and warrants, a fully diluted share count of 179.3 million.
Diploma
While we believe the data presented by Satellos for SAT-3247 have consistently demonstrated the potential to make a real difference in the progression of DMD, we are not surprised by the continued skepticism of investors. To date, all attempts at therapeutic intervention in DMD have focused on delivering a functional form of the dystrophin protein into muscle cells, the idea being that it is required for proper muscle function. The approach Satellos is taking is completely different and requires a new perspective and way of thinking about how to treat DMD patients. Satellos is not trying to replace dystrophin, but instead is changing the way muscle cells regenerate without dystrophin. Muscle fibers without dystrophin are functional but cannot be properly repaired. SAT-3247 could enable proper repair and regeneration. As a small molecule therapy, it must be taken for life and, conversely, unlike gene therapy products, can be stopped at any time if needed. The positive results from the dog study are remarkable. While we recognize that only two animals were tested, we believe it is quite unlikely that these results occurred by chance. Based on these data, we are increasing the probability of approval for SAT-3247 in our model, which has increased our valuation to $1.50. We look forward to the first data from healthy volunteers for SAT-3247 later in 2024.
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