Sensorion S.A. (ALSEN.PA)

Transcription

1 Initiating Coverage January 3, 2017 Sensorion S.A. (ALSEN.PA) Initiation Report LifeSci Investment Abstract Sensorion (Euronext Paris: ALSEN.PA) is a biotechnology company focused on the treatment of inner ear disorders with unmet medical needs. The Company s lead candidate, SENS-111, is intended to treat acute vertigo crisis without the sedative effects associated with all existing therapeutic options. The Company recently initiated a global Phase II study and expects to begin dosing patients in the first quarter of Sensorion is also developing SENS-401, a 5- HT 3 antagonist with anti-inflammatory properties, for the treatment of sudden sensorineural hearing loss (SSNHL). The Company is in discussions with regulators in the US and Europe and expects to provide an update on plans for a Phase II program for SENS-401 in the nearterm. Key Points of Discussion Sensorion Recently Launched a Phase II Study for SENS-111. Sensorion completed a Phase Ib study focused on the safety, tolerability, pharmacokinetics, and pharmacodynamics of SENS-111 and has initiated a Phase II study in patients with acute unilateral vestibulopathy (AUV). Inclusion of the first patients is expected in the first quarter of The Company anticipates that demonstration of safety and efficacy in this indication and one other could be a sufficient dataset for the FDA to approve a broad label for the treatment of acute vertigo. Sensorion considers the AUV indication to be an ideal patient population to demonstrate proof-of-concept with SENS-111 for the treatment of severe vertigo episodes. Topline data from the trial are expected in the second half of Novel Treatments for Inner Ear Disorders. Sensorion is developing oral therapies for the treatment of acute vertigo crisis and sudden sensorineural hearing loss (SSNHL), two inner ear disorders with limited treatment options. The total global market for therapies to treat inner ear disorders is roughly $10 billion, reflecting the treatment of approximately 144 million patients. The Company has demonstrated proof-of-concept in preclinical models of vertigo and a Phase Ib study, indicating that SENS-111 can reduce the frequency and severity of vertigo symptoms. In addition, the Company plans to advance SENS-401 into Phase II development and expects to provide guidance on next steps in the near-term. Analysts David Sherman, Ph.D. (AC) (212) dsherman@lifescicapital.com Market Data Price $5.20 Market Cap (M) $33 EV (M) $25 Shares Outstanding (M) 6.4 Avg Daily Vol 51, week Range: $ $9.11 Cash (M) $8.9 Net Cash/Share $1.27 Annualized Cash Burn (M) $9.6 Years of Cash Left 0.9 Debt (M) $0.8 Financials FY Dec 2014A 2015A 2016A EPS H1 NA (0.74)A (0.75)A H2 NA NA NA FY NA NA NA Expected Upcoming Milestones Q Dosing of first patient in Phase II study for SENS-111 in acute unilateral vestibulopathy (AUV). H Clinical update on plan for SENS-401 in inner ear lesions Preclinical results in tinnitus Selection of drug candidate for drug-induced ototoxicity. H Topline results from Phase II trial for SENS-111 expected. For analyst certification and disclosures please see page 30 Page 1

2 SENS-111 Has a Novel Mechanism of Action. Histamine receptor antagonists are known to impact the central and peripheral portions of the vestibular system and are the most commonly prescribed class of drugs used to treat acute vertigo crisis. In the US, antagonists of the histamine 1 receptor (H1R) are used to treat vestibular disorders, but the strong sedative effects associated with these drugs limits their use. Sensorion s SENS-111 is a highly selective antagonist of the histamine 4 receptor (H4R), which is only expressed on peripheral vestibular neurons. This receptor is not expressed in central vestibular neurons and its expression in the CNS is low relative to other histamine receptors. Sensorion has demonstrated that SENS-111 has a more potent effect on vestibular neuronal firing than the H3R antagonist betahistine or the H1R antagonist meclizine, which are two histamine antagonists commonly used to treat severe vertigo episodes. Following a unilateral injury that compromises vestibular function, these drugs act by depressing vestibular neuronal firing in order to minimize the difference between the left and right vestibular systems. Unmet Medical Need for Non-Sedative Agents to Treat Acute Vertigo Episodes. Sedation, which is a side effect of all of the approved vertigo therapies, is thought to impair central compensation, the process by which plasticity in the brain allows for the rebalancing of neurocircuitry post-injury. Through central compensation, the neural circuits underlying vestibular processing adapt to the post-injury signals arriving from the left and right vestibular ganglia. Sedation blocks central compensation through direct inhibitory effects as well as incapacitating the patient so as deprive them of vestibular stimulation and exercise. For this reason, pharmacotherapy during the acute phase is usually limited to as short a duration as possible to facilitate the onset of central compensation mechanisms. While many histamine receptor types are co-localized in Scarpa s ganglion, there are no H4 receptors in any central vestibular nuclei and its expression is generally low in the CNS. This suggests that H4 antagonists like SENS-111 may affect peripheral causes of vertigo with limited CNS effects and no sedation. Sensorion Has Generated Proof-of-Concept Data with SENS-401/SENS-218. Sensorion is developing SENS- 401 as a potential therapy for sudden sensorineural hearing loss (SSNHL). SENS-401 is an enantiomer of SENS-218, which is marketed in Asia for non-otologic indications and was evaluated in a Phase I study in healthy volunteers. SENS-401 has an improved pharmacokinetic profile. In November, Sensorion presented preclinical data at the Society for Neuroscience (SFN) annual meeting in San Diego, California, demonstrating a positive effect on recovery in rats following noise-induced hearing loss. 1 Given the results with SENS-401 at SFN, Sensorion now plans to advance this drug into clinical development in place of SENS-218. The Company is in discussions with regulators in the US and Europe and expects to provide an update on plans for a Phase II program for SENS-401 in the near-term. The Company has received Orphan Drug designation in Europe for sudden sensorineural hearing loss (SSNHL). Financial Discussion First Half 2016 Financial Results. On October 13 th, Sensorion reported financial results for the first half of Sensorion had 5.4 million ($6.0 million) of operating expenses for the first half of 2016, compared with a 2.0 million ($2.2 million) for the same period in The Company reported a net loss of 4.3 million ($4.8 million) for the half year, increased from 1.5 million ($1.7 million) in the first half of As of June 30, 2016, Sensorion had cash and cash equivalents of 8.5 million ($9.2 million). 1 Dyhrfjeld-Johnsen, J, et al., Significantly improved recovery of severe noise-induced hearing loss by the orally available, clinical drug candidate SENS-401. Society for Neuroscience 2016 meeting, San Diego, CA, November 16, Page 2

3 Initial Public Offering. On April 16, 2015, Sensorion announced the completion of an initial public offering (IPO) on the Euronext Paris exchange. The 1,800,000 new shares were priced at 4.54 ($4.89) per share, and the deal raised a total of 8.2 million ($8.8 million) in gross proceeds. Immediately following the IPO, Sensorion had a market capitalization of roughly 23 million ($24.9 million). Page 3

4 Table of Contents Company Description... 5 Acute Vertigo Crisis... 8 Causes and Pathogenesis... 8 Diagnosis Treatment SENS-111: A Histamine H4 Receptor Antagonist to Treat Acute Vertigo Crisis H4Rs Are Expressed in the Vestibular System H4R Antagonists in Preclinical Vertigo Model Mechanism of Action & Drug Delivery Safety Profile Disease Market Information Epidemiology Market Size Clinical Data Discussion Competitive Landscape Other Drugs in Development H4 Antagonists SENS-218/SENS-401: A 5-HT3 Antagonist to Sudden Sensorineural Hearing Loss Mechanism of Action Preclinical Data Sudden Sensorineural Hearing Loss (SSNHL) Causes & Pathogenesis Symptoms & Diagnosis Treatment Inner Ear Hearing Loss Market Information Epidemiology Market Estimates Clinical Data Discussion Intellectual Property & Licensing Management Team Risk to an Investment Analyst Certification Disclosures Page 4

5 Company Description Sensorion is a development-stage company focused on the development of novel orally-active treatments for inner ear disorders. The Company s lead program is SENS-111, a histamine 4 receptor (H4R) antagonist, in development for acute vertigo crisis. A global Phase II study testing SENS-111 in patients with acute unilateral vestibulopathy (AUV) was recently launched with dosing of the first patient expected in the first quarter of The Company considers AUV to be an ideal indication to demonstrate proof-of-concept with this drug. Establishing safety and efficacy in this indication and one other could be a sufficient dataset for the FDA to approve a broad label for the treatment of acute vertigo. SENS-111 is the only drug in development for acute vertigo crisis and has the potential to become the first non-sedative treatment option, if approved. Sensorion s development pipeline is shown in Figure 1. Figure 1. Sensorion s Development Pipeline Source: LifeSci Capital Sensorion is also developing SENS-218/SENS-401 for the treatment of sudden sensorineural hearing loss (SSNHL). SENS-401 is an enantiomer of SENS-218 that Sensorion believes has a superior pharmacokinetic profile. A Phase I study of SENS-218 in healthy volunteers and recently reported preclinical data for SENS-401 at the Society for Neuroscience (SFN) annual meeting have demonstrated potent effects on recovery in a noise-induced animal model of hearing loss. Sensorion has chosen to proceed with SENS-401 into further studies and is currently in discussions with regulators in the US and EU to determine next steps. In addition, the Company has a proprietary technology platform dedicated to inner ear disorders that can be used to select drug candidate programs. The platform encompasses in vitro, ex vivo, and in vivo models reproducing vestibular and cochlear dysfunctions, which may be useful for future pipeline expansion. Anatomy of the Inner Ear The basic anatomy of the ear is depicted in Figure 2. Sound from the external environment is funneled by the ear to the tympanic membrane, where three bones known collectively as the ossicles amplify and transmit sound to the oval window. The vibration of the stapes, which is the ossicle that connects to the oval window, causes movement of the fluid in the cochlea, the organ where sensory neurons convert the vibrations into neural signals. Neural signals from Page 5

6 the cochlea as well as the vestibule, which together make up the labyrinth of the inner ear, are transmitted to the brain via the vestibulocochlear nerve, which is also known as the auditory nerve or the 8 th cranial nerve. Figure 2. Anatomy of the Ear Source: Wikimedia Commons Figure 3 highlights the structure and key sensory components of the vestibular system. The vestibular system consists of 3 semicircular canals which can detect rotation in three-dimensional space, as well as the otolith organs, the utricle and saccule, which detect linear acceleration. Figure 3. The Vestibular System Source: LifeSci Capital Page 6

7 Each of these components contain hair cells that are responsible for detecting motion. Hair cells contain stereocilia on their apical end that alter neuronal firing based on their degree of deflection. The typical firing patterns of primary vestibular neurons modulated by input from hair cells are shown in Figure 4. Hair cells are arranged in each of the vestibular components to detect a specific kind of motion. As an example of this, consider the movement of an individual turning their head to the left. This motion of their head causes endolymph in the horizontal semicircular canal to flow past hair cells, causing the stereocilia on their surface to deflect. This deflection would be opposite in direction on either side of the head, resulting in an overall amplified difference in the vestibular input to the CNS from opposite inner ears, leading to the perception of rotational movement. The brain uses these changes in firing in the left and right vestibular system to coordinate head movement, eye movement, posture, and balance control. Figure 4. Neuronal Firing of Hair Cells in Response to Stereocilia Deflection Source: LifeSci Capital The cochlea is a spiral-shaped, hollow chamber with a repeating functional organization of neurons, known as the organ of Corti, detailed in Figure 5. Within this structure, fluid movement causes vibration of the basilar membrane, which in turns inducts stereocilia situated on top of inner hair cells (IHCs) to deflect as they press against the tectorial membrane. This deflection results in the opening of key ion channels and the depolarization of IHCs, and these electrical signals are transmitted to the brain via the auditory nerve. The IHCs are organized by sound frequency as a function of distance from the oval window, so that the IHCs closest to the oval window detect the highest frequencies and the furthest IHCs detect the lowest frequencies. The outer hair cells (OHCs) serve a complimentary function and act as preamplifiers. These cells are able to mechanically pull on the basilar membrane to tune the sensitivity at a given frequency range. Hearing loss can result from damage to IHCs, OHCs, and/or spiral ganglion neurons as well as their synaptic connections. Page 7

8 Figure 5. Functional Organization of the Cochlea Source: Fettiplace et al., Acute Vertigo Crisis Dizziness is a vague term used by patients to describe a range of symptoms. Vertigo is a specific form of dizziness involving a spinning or rotating sensation. In severe cases, individuals may appear ill from the nausea, vomiting, and dizziness, and may not be able to walk. 3 Vertigo can result from alterations to either the peripheral or central vestibular system. Patients presenting to the emergency department with dizziness and vertigo usually fit into one of the following categories: Acute severe dizziness sudden severe dizziness with no prior episodes. Recurrent attacks of dizziness spontaneous, recurring dizziness attacks. Recurrent positional dizziness dizziness attacks triggered by head movements. Causes and Pathogenesis. Acute severe dizziness is most commonly thought to result from inflammation, whereby an infection triggers an inflammatory response that blocks signaling from the ear to the central nervous system. Inflammation to the vestibular nerve is known as acute unilateral vestibulopathy, while inflammation to the inner ear itself is called labyrinthitis. Figure 6 highlights the most common causes of vestibular disorders. Vertigo is a common presentation in all of these conditions. Two-thirds of vertigo cases have a peripheral origin, while the remaining one third have a CNS cause. 2 Fettiplace, R, Active hair bundle movements in auditory hair cells. Journal of Physiology, 576(1), pp Kerber, KA, Vertigo and Dizziness in the Emergency Department. Emergency Medicine Clinics of North America, 27(1), pp Page 8

9 Figure 6. Common Causes of Peripheral and Central Vestibular Disorders Cause Description Category Peripheral Causes Acute Unilateral Vestibulopathy (AUV) Labyrinthitis Meniere s Disease Benign Paroxysmal Positional Vertigo Vestibular Schwannoma Perilymphatic Fistula Superior Semicircular Canal Dehiscence Syndrome Vestibular Migraine Trauma Central Causes Vertebrobasilar Ischemic Stroke Vertebrobasilar Insufficiency An inflammatory disorder of the vestibular nerve that results in unilateral nerve degeneration. An inflammatory disorder of the inner ear that results from infection; differentiated from AUV by presence of both vestibular and cochlear effects. An inner ear disorder associated with episodic vertigo, hearing loss, and tinnitus. Vertigo associated with head movements; results from free-floating densities in the semicircular canals activating hair cells. Typically resolves spontaneously. Vestibular schwannoma is the most common intracranial cancer producing vestibular symptoms. This is an abnormal connection between the perilymphatic space and middle ear, which can cause a variety of vestibular and cochlear symptoms. In this condition, an opening in the bone overlying the superior semicircular canal acts as a third window to the inner ear, transmitting sound and pressure into the vestibular system. Roughly 38% of migraine sufferers have episodic vertigo with varying durations, severities, and temporal relations to the headache. 4 Several forms of trauma, including blast, impact, penetrating, and barotrauma, can cause permanent damage to the vestibular system. Blockages to these arteries can result in vertigo through a range of CNS effects on cerebellum and medulla. Stroke must be ruled out in all acute vertigo cases. A transient ischemic attack (TIA) to the vertibrobasilar system can cause symptoms similar to a stroke but resolve within 24 hours. Left untreated, the TIA eventually progresses to stroke. Source: LifeSci Capital Acute Acute Recurrent Recurrent Recurrent Recurrent Recurrent Recurrent Acute Acute Recurrent 4 Neuhauser, H, et al., The interrelations of migraine, vertigo, and migrainous vertigo. Neurology, 56(4), pp Page 9

10 Independent of the underlying condition, vertigo symptoms are the result of an imbalance in signaling between the left and right vestibular systems. Under normal conditions, the left and right vestibular organs would generate equal resting-state firing rates of action potentials, transmitting position and acceleration information to the brain. When a pathology disrupts signaling unilaterally, the result is an imbalance in vestibular tone that can lead to the illusory perception of movement. For cases where the underlying cause cannot be identified or readily treated, Sensorion s SENS-111 may provide acute symptom relief by reducing the imbalance in the vestibular signaling between left and right sides of the brain. SENS- 111 may benefit patients independent of the underlying cause of their acute vertigo episode, since its intended function is to act on H4 receptors to reduce neuronal excitability. Diagnosis. Acute unilateral vestibulopathy, labyrinthitis, benign paroxysmal positional vertigo (BPPV), and Meniere s disease have distinct features, allowing for a diagnosis with physical examination and medical history. Figure 7 highlights a diagnosis algorithm for managing patients presenting with dizziness symptoms to the emergency department. 5 Whether the dizziness is acute or recurrent will shape the differential diagnosis. For severe acute cases, patients may first be evaluated for acute unilateral vestibulopathy (or labyrinthitis), followed by an assessment for stroke or transient ischemic attack (TIA). Unless a treatable condition like BPPV is diagnosed, patients found to have a peripheral origin to their condition and all patients where no central cause is identified may ultimately require symptomatic treatment for vertigo episodes. Figure 7. Diagnosis of Dizziness Symptoms Source: Kerber et al., Kerber, KA, Vertigo and Dizziness in the Emergency Department. Emergency Medicine Clinics of North America, 27(1), pp Page 10

11 Treatment. The types of symptoms experienced and the treatment ultimately depends on the identified cause of the vestibular disease and whether it is central or peripheral in nature. A deficit in only one ear can result in a severe vestibular imbalance and consequently vertigo crisis. Figure 8 shows the effect of a unilateral deficit on vestibular tone and highlights a treatment strategy focused on reducing the activity of the contralateral vestibular system. The figure shows 4 scenarios of the vestibular system: a healthy individual, a unilateral deficit, a unilateral deficit receiving treatment, and partial recovery post-treatment. The vestibular imbalance resulting from a unilateral deficit can be reduced by dampening contralateral activity through pharmacotherapy. This minimizes the extent of the imbalance falsely interpreted as movement. Most existing therapies rely on this strategy to minimize vertigo symptoms, but also have unintended sedative effects. Figure 8. Vestibular Imbalance Leads to Acute Vertigo Crisis Source: Corporate Presentation The following regimens highlight some of the shortcomings in the existing treatment landscape: Acute Unilateral Vestibulopathy These patients usually receive a brief regimen of anti-emetics or vestibular suppressants during the acute phase. This is withdrawn as soon as possible since the sedative effects of these drugs can impair central compensation mechanisms. Meniere s Disease Meniere s patients experiencing severe vertigo can undergo a chemical or surgical labyrinthectomy, a destructive procedure with the goal of creating a stable, non-fluctuating unilateral vestibular deficit. This can permit for central compensation. Vestibular Schwannoma Once diagnosed, treatment options include surgical excision, radiation therapy, or observation with serial magnetic resonance imaging (MRI). The lesion size, symptoms, and age and health of the patient factor into the treatment strategy. In untreated patients, vertigo is responsible for the greatest negative impact on patient quality of life. 6 Independent of cause, patients experiencing a severe vertigo episode may ultimately require pharmacological therapy. Figure 9 shows the most commonly used drugs to suppress vertigo during acute episodes. Meclizine, dimenhydrinate, and amitriptyline have anti-histamine effects, although mainly targeting the H1 receptor instead of the H4 receptor. 6 Myrseth, E, et al., Untreated vestibular schwannomas: vertigo is a powerful predictor for health-related quality of life. Neurosurgery, 59(1), pp Page 11

12 Figure 9. Treatments for Acute Vertigo Drug Company Drug Class Side Effects Meclizine Generic Anti-histamine, anti-cholinergic, anti-emetic Sedation Lorazepam Generic Benzodiazepine Sedation Clonazepam Generic Benzodiazepine Sedation Dimenhydrinate Generic Anti-histamine, anti-cholinergic, anti-emetic Sedation Diazepam Generic Benzodiazepine Sedation Amitriptyline Generic Tricyclic, Anti-histamine, anti-cholinergic Source: LifeSci Capital Sedation; cardiac arrhythmia in overdose All of the drugs presently available to treat acute vertigo episodes have sedative effects, which impairs central compensation mechanisms and the patient s ability to function normally while being treated. In addition to the drugs listed above, a wide-range of anti-emetics are often used to control nausea in these patients as well. Similarly, most of the anti-emetics prescribed have sedative effects. Benzodiazepines like lorazepam, clonazepam, and diazepam pose a dependency risk, impair memory, and increase the risk of falling. There is a clear need for a non-sedative therapeutic agent that can rapidly alleviate vertigo symptoms with a better safety and tolerability profile than existing therapies. SENS-111: A Histamine H4 Receptor Antagonist to Treat Acute Vertigo Crisis Histamine receptor antagonists are known to impact the central and peripheral portions of the vestibular system and are the most commonly prescribed class of drugs used to treat acute vertigo crisis. In the US, antagonists of the histamine 1 receptor (H1R) are used to treat vestibular disorders, but strong sedative effects associated with these drugs limit their use. Sensorion s SENS-111 is a highly selective antagonist of the histamine 4 receptor (H4R), which is also expressed on peripheral vestibular neurons. The Company aims to demonstrate that SENS-111 can achieve comparable or superior efficacy to other histamine receptor antagonists, but without the sedative effects associated with H1R antagonists. Sensorion has demonstrated proof-of-concept in preclinical models of vertigo and a Phase Ib study, indicating that SENS-111 can reduce the duration and severity of vertigo symptoms. The Company recently launched a global Phase II study for SENS-111 and expects to begin dosing in the first quarter of Sensorion has an open IND, which will allow for this study to include US sites. Topline results from the study are expected in the second half of 2018 with a potential interim analysis performed after the inclusion of at least 50% of the target enrollment. H4Rs Are Expressed in the Vestibular System. Investigators have shown that primary vestibular neurons express both H3Rs and H4Rs. 7 Figure 10 shows an immunostaining of neurons from Scarpa s ganglion, also known as the vestibular nerve ganglion, labeled for H4R (red) and neurofilament (green), which is a marker for axons. The figure 7 Wersinger, E, et al., Symptomatic treatment of vestibular deficits: therapeutic potential of histamine H4 receptors. Journal of Vestibular Research, 23(3), pp Page 12

13 reveals that H4Rs are broadly expressed on the somas of neurons in the vestibular system, highlighting the potential of drugs targeting H4R as treatments for acute vertigo crisis. It is important to note that the H4 receptor is not expressed in central vestibular neurons and its expression in the CNS in generally fairly low, which may help minimize off-target effects. Figure 10. Immunolabeling of Vestibular Neurons for H4 Receptor Source: Wersinger et al., 2013 The investigators confirmed that these receptors were functional by performing whole-cell patch-clamp recordings of cultured rat vestibular neurons. Application of H4R antagonists to primary vestibular neurons led to a dose-dependent reduction in neuronal excitability. Figure 11 shows the percent reduction in neuronal firing achieved at a range of concentrations of two H4R antagonists, JNJ and JNJ µm and 10 µm concentrations of JNJ and JNJ , respectively, achieved a 50% reduction in neuronal firing (IC 50). For comparison, the IC 50 of betahistine, an H3R antagonist used to treat acute vertigo, is 120 µm. This in vitro study clearly shows that H4Rs are localized to vestibular neurons and that H4R antagonists can dampen their activity. Given that aberrant excitation in vestibular neurons is thought to underlie acute vertigo crisis, these experiments provide a clear rationale for exploring the utility of H4R antagonists in this indication. Figure 11. Application of H4R Antagonists to Cultured Vestibular Neurons Dampens Excitability Source: Wersinger et al., 2013 Page 13

14 H4R Antagonists in Preclinical Vertigo Model. Investigators tested the effects of histamine receptor antagonists in an ototoxically-induced vestibular disorder rat model. 8,9 Based on prior reports, a single unilateral intratympanic injection of arsanilate was used to selectively damage the vestibular organs to create a rat model of vestibular disease. 10 Figure 12 shows the change in vestibular deficit score in lesioned rats following the administration of JNJ (n=18), JNJ (n=13), betahistine (n=14), or vehicle. The graphs show data from behavioral tests conducted hourly for 7 hours following drug administration. Treatment with either H4R antagonist resulted in a rapid and statistically significant reduction in vestibular deficit score of roughly 25% relative to administration of vehicle. This effect is shown in Figure 12a. As shown in Figure 12b, treating lesioned rats with betahistine did not have a statistically significant effect on vestibular deficit score. The results confirm that H4R antagonists can have a positive effect on vestibular disorders in animal models and highlight the potential of using this drug class to treat vestibular disease in humans. Figure 12. Change in Vestibular Deficit Score Following Administration of H3 and H4 Antagonists Source: Wersinger et al., 2013 Mechanism of Action & Drug Delivery. SENS-111 is a highly selective antagonist of H4R, so it is able to dampen the excitability of neurons contralateral to the inner ear injury, reducing the imbalance between left and right vestibular systems thought to underlie acute vertigo crisis. Sensorion has demonstrated that SENS-111 has a more potent effect on vestibular neuronal firing than JNJ , the H3R antagonist betahistine, or the H1R antagonist meclizine. 11 Sensorion also conducted a preclinical study to evaluate the inner ear concentrations of SENS-111 following systemic 8 Desmadryl, G, et al., Histamine H4 receptor antagonists as potent modulators of mammalian vestibular primary neuron excitability. British Journal of Pharmacology, 167(4), pp Wersinger, E, et al., Symptomatic treatment of vestibular deficits: therapeutic potential of histamine H4 receptors. Journal of Vestibular Research, 23(3), pp Vignaux, G, et al., Evaluation of the chemical model of vestibular lesions induced by arsanilate in rats. Toxicology and Applied Pharmacology, 258, pp Desmadryl, G, et al., Histamine H4 receptor antagonists as potent modulators of mammalian vestibular primary neuron excitability. British Journal of Pharmacology, 167(4), pp Page 14

15 administration. Figure 13 shows the inner ear concentration over time following dosing. The IC 50 observed in in vitro studies is depicted with a red line. The data clearly show that SENS-111 reaches therapeutic concentrations in the inner ear within 1 hour of administration. This confirms that systemic routes of administration can be used with SENS-111 to treated inner ear disorders, which importantly avoids the need for direct intratympanic drug delivery. Figure 13. Inner Ear Concentration Following Systemic Administration Source: Company Presentation Safety Profile. SENS-111 has been evaluated in a Phase Ib study and was safe and well-tolerated with no serious or severe adverse events. No maximum tolerated dose (MTD) was identified in the study. In the trial, 16% of subjects receiving SENS-111 had treatment-emergent adverse events (TEAEs), which was substantially lower than the 36% rate of TEAEs in placebo-treated subjects. To date, 200 healthy volunteers have been dosed with SENS-111, suggesting a favorable safety profile, which will be explored further in the recently launched Phase II study. Disease Market Information Epidemiology. Figure 14 highlights the estimated patient populations based on the reported incidence and prevalence data for each disease. Patients affected by acute unilateral vestibulopathy (AUV), vestibular schwannoma, benign paroxysmal positional vertigo (BPPV), or Meniere s disease represent the majority of vertigo cases with a peripheral origin, which is Sensorion s targeted patient population. In total, within these 4 indications, there are 2.6 million patients in the US and 4.1 million patients in Europe. The Phase II study will focus enrollment on AUV patients, but the Company plans to pursue a clinical development path that could support a broad vertigo label. Thus, the patient groups highlighted below are all included in the Company s stated target population. Page 15

16 Figure 14. Estimated Patient Population for Common Peripheral Etiologies of Vertigo Condition Incidence Prevalence Estimated Patient Population US Europe BPPV M 3.1 M Acute Unilateral Vestibulopathy ,000 79,000 Meniere s Disease , ,000 Vestibular Schwannoma 1.9-6,000 10,000 Total 2.6 M 4.1 M Note: Incidence and prevalence per 100,000 people. Source: LifeSci Capital Market Size. In 2011, there were roughly 3.9 million visits to US emergency departments for dizziness or vertigo. 12 Given a mean treatment cost of approximately $1,000 per patient, dizziness and vertigo are thought to reflect total annual healthcare expenditure of $3.9 billion. In Figure 15, we approximate the total market size of treatable vertigo patients in the US and Europe for Sensorion s SENS-111 by focusing on 4 indications BPPV, vestibular schwannoma, acute unilateral vestibulopathy, and Meniere s disease that represent the most readily accessible patient populations. Within these 4 indications, we estimate that there are 1.7 million treatable vertigo cases in the US annually and an additional 2.7 million cases in Europe. Our estimate of the vertigo market is based on the following assumptions: Population We use a 2016 population estimate of million for the US and million for the EU. Incidence/Prevalence We estimate an incidence for acute unilateral vestibulopathy (AUV), vestibular schwannoma, and benign paroxysmal positional vertigo (BPPV) of 15.5, 1.9, and 600 per 100,000 people, respectively. 13,14,15 We assume a prevalence of Meniere s patients of 190 per 100,000 people. 16 Cases Treatable with SENS-111 We assume that 10% of BPPV patients are not addressed with existing therapies and that only 50% of patients with a vestibular schwannoma will not undergo surgical or radiological treatment. Episodes/Patient We assume an average of 2 vertigo episodes per patient per year. 12 Saber Tehrani, AS, et al., Rising annual costs of dizziness presentations to U.S. emergency departments. Academic Emergency Medicine, 20(7), pp Adamec, I, et al., Incidence, seasonality and comorbidity in vestibular neuritis. Neurological Sciences, 36(1), pp Stangerup, SE, et al., True incidence of vestibular schwannoma? Neurosurgery, 67(5), pp von Brevern, M, et al., Epidemiology of benign paroxysmal positional vertigo: a population based study. Journal of Neurology, Neurosurgery, and Psychiatry, 78(7), pp Harris, JP and Alexandar, TH, Current-day prevalence of Ménière's syndrome. Audiology & Neuro-otology, 15(5), pp Page 16

17 Figure 15. Total Market for Acute Vertigo Crisis in US and EU Drug US EU Population M M BPPV Cases Eligible for Pharmacotherapy 194, ,000 Acute Unilateral Vestibulopathy Cases 50,000 79,000 Meniere s Disease Cases 616, ,000 Eligible Vestibular Schwannoma Cases 3,000 5,000 Total Treatable Patient Population 864,000 1,363,000 Episodes/Patient Total Number of Treatable Vertigo Episodes 1.7 M 2.7 M Source: LifeSci Capital A non-sedating drug that does not interfere with central compensation processes could achieve broad adoption in the market. The 4 indications shown above represent 4 particularly accessible patient populations if Sensorion is able to secure a broad label for the treatment of vertigo, since there are limited treatment options for these patients. Clinical Data Discussion Sensorion has completed a Phase Ib study focused on the safety, tolerability, pharmacokinetics, and pharmacodynamics of SENS-111 and recently launched a global Phase II study in patients with acute unilateral vestibulopathy (AUV). The Company expects that demonstration of safety and efficacy in this indication and one other could be a sufficient dataset for the FDA to approve a broad label for the treatment of acute vertigo. Sensorion expects to begin dosing patients in this trial in the first quarter of 2017, with topline data expected in the second half of Phase Ib Trial Sensorion conducted a Phase Ib study to test the safety, tolerability, pharmacokinetics, and pharmacodynamics of SENS-111 in healthy volunteers. This randomized, double-blind, placebo-controlled Phase Ib trial enrolled 100 healthy volunteers. In Part 1 of the study, 40 subjects were enrolled into one of five cohorts (n=8 per cohort) and were randomized to receive a single-dose of SENS-111 or placebo. The trial tested 100 mg, 200 mg, 300 mg, 400 mg, and 500 mg of SENS-111. This part of the study focused on the rates of treatment-emergent adverse events (TEAEs) occurring in each group. In Part 2 of the study, 60 subjects were randomized into 5 cohorts (n=12) to receive SENS- 111 at doses of mg or placebo for 4 or 7 days. In each cohort, 9 patients received treatment and 3 patients were given placebo. The following regimens were evaluated in Part 2 of the study: Page 17

18 50 mg/day of SENS-111 or placebo for 4 days. 100 mg/day of SENS-111 or placebo for 4 days. 150 mg/day of SENS-111 or placebo for 4 days. 200 mg/day of SENS-111 or placebo for 7 days. 250 mg/day of SENS-111 or placebo for 7 days. Subjects treated in part 2 were evaluated daily for nystagmus and vertigo symptoms 2 hours after dosing. This assessment included the use of video nystagmography, questionnaires, intensity Visual Analog Scale (VAS), and the European Evaluation Vertigo Scale. These results were compared to baseline values taken before treatment. The investigators conducted a pharmacokinetics and pharmacodynamics analysis comparing the changes in values to drug exposure. The data was stratified by patients exposed to greater than or less than 500 ng/ml of SENS-111. Trial Results. In this Phase Ib study, SENS-111 was safe and well-tolerated. There was a lower rate of TEAEs in subjects treated with SENS-111 (16%) than with placebo (36%). In addition, no serious or severe adverse events were reported. In Part 2 of the study, subjects with exposures at 500 ng/ml or less experienced a statistically significant increase in the latency to vertigo symptoms (p=0.0367). 17 However, at higher concentrations, subjects experienced a decreased latency to vertigo symptoms. In addition, subjects with drug exposures up to 500 ng/ml also had significantly shorter durations of vertigo (p=0.0455), although the duration of vertigo episodes increased at doses over 500 ng/ml. The trial demonstrated significant improvements in vertigo symptoms for patients with drug exposures of SENS-111 under 500 ng/ml. The worsening of symptoms observed at drug exposures in the range of 500 1,000 ng/ml suggest that such high concentrations may result in off-target effects. Phase II Trial Sensorion has launched a Phase II study to evaluate the safety and efficacy of two doses of SENS-111 administered for 4 days to patients with acute unilateral vestibulopathy (AUV). The trial is designed to identify optimal dosing regimens to advance into pivotal studies and will provide important quality of life and pharmacoeconomic data on patients treated with SENS-111. The Company expects that demonstration of safety and efficacy in this indication and one other could be sufficient data for the FDA to approve a broad label for the treatment of acute vertigo. Sensorion plans to begin dosing patients in the first quarter of 2017 with topline data expected in the second half of Trial Design. This randomized, double-blind, placebo controlled Phase II trial is testing the safety and efficacy of SENS-111 in 207 AUV patients. Enrolled subjects are randomized to a 4 day oral treatment course with 100 mg of SENS-111, 200 mg of SENS-111, or placebo administered once-daily. Depending on the country, subjects may be treated in the hospital setting or sent home with treatment. Treated patients electronically record their daily assessments during treatment and undergo follow-ups on day 5 after the end of treatment and on day 28 at the end of the study. 17 Attali, P, et al., The Effects of SENS-111, A New H4R Antagonist, On Vertigo Induced by Caloric Test in Healthy Volunteers (HV) is Related to Plasma Concentrations. Clinical Therapeutics, 38(10 supp), e4. Page 18

19 The primary endpoint is vertigo intensity measured as the area under the curve (AUC) of the visual analog scale (VI- VAS) score when standing. Secondary endpoints include worst spontaneous vertigo intensity, Romberg test on day 5 and 28, peak slow-phase velocity of spontaneous nystagmus, nausea intensity measured as the AUC of the nausea intensity VAS score, functional disability assessed by the dizziness handicap inventory (DHI) functional subscale score, and vestibular disorders activities of daily living scale (VADL). The study is also evaluating time to unassisted walking, impact on work productivity with the Work Productivity and Activity Impairment (WPAI-SH) questionnaire, pharmacokinetics, and safety. Competitive Landscape Currently Used Drugs Have Sedative Effects that Impair Central Compensation Mechanisms. Sedation, which is a side effect of all of the approved vertigo therapies, is thought to impair central compensation. For this reason, pharmacotherapy during the acute phase is usually limited to as short a duration as possible to facilitate the onset of central compensation mechanisms. Drugs like meclizine and dimenhydrinate targeting histamine 1 receptors (H1Rs) and benzodiazepines like lorazepam and clonazepam have sedative effects intrinsic to the targeted receptors. In the case of meclizine and dimenhydrinate, blocking H1 receptors produces a well-characterized sedative effect resulting from the disinhibition of neurons in the ventrolateral preoptic area (VLPO), the main sleep switch in the brain. 18,19 In addition, H1 and H3 receptors are broadly expressed in the CNS, so drugs targeting them may induce a wide range of central effects. While many histamine receptor types are co-localized in Scarpa s ganglion, there are no H4 receptors in any central vestibular nuclei or the VLPO. In general, expression of H4 receptors is low in the CNS. This suggests that H4 antagonists may affect peripheral causes of vertigo with limited CNS effects and no sedation. Thus, using H4 antagonists instead of other histamine receptor antagonists may provide comparable efficacy with an improved tolerability profile that permits a faster return to one s feet and start to compensation mechanisms in the brain. Other Drugs in Development There are no other treatments in development for acute vertigo crisis. Otonomy (NasdaqGS: OTIC) is developing OTO-104, a sustained-release formulation of the glucocorticoid dexamethasone, as a potential therapy for individuals with Meniere s disease or cisplatin-induced hearing loss. Otonomy is currently testing OTO-104 in two pivotal Phase III studies, the AVERTS-1 and AVERTS-2 trials, and expects to report topline results in the second half of If both drugs were approved, these two assets would not directly compete, but lowering the frequency of vertigo episodes with OTO-104 could reduce the need for acute medication among Meniere s patients. H4 Antagonists. As shown in Figure 16, Johnson & Johnson (NYSE: JNJ) and Pfizer (NYSE: PFE) both have clinical programs developing H4R antagonists for non-vestibular indications. Johnson & Johnson has completed Phase II studies in asthma and psoriasis for toreforant (JNJ ), 20,21 and Pfizer is currently evaluating ZPL Sherin, JE, et al., Activation of ventrolateral preoptic neurons during sleep. Science, 271(5246), pp Lu, J, et al., A putative flip-flop switch for control of REM sleep. Nature, 441(7093), pp Page 19

20 in a Phase II study for the treatment of psoriasis. 22 These programs are more advanced than Sensorion s SENS-111, but there are no expectations at present for either company to move into the inner ear space. Figure 16. Other H4R Antagonists in Development Drug Company Indications Stage toreforant (JNJ ) Johnson & Johnson Asthma, psoriasis II ZPL-389 Pfizer Psoriasis, allergies II Source: LifeSci Capital SENS-218/SENS-401: A 5-HT3 Antagonist to Sudden Sensorineural Hearing Loss Sensorion is developing SENS-401 as a potential therapy for sudden sensorineural hearing loss (SSNHL) resulting from lesional damage in the inner ear. SENS-401 is an enantiomer of SENS-218, which is marketed in Asia for nonotologic indications and was evaluated in a Phase I study in healthy volunteers. SENS-401 has an improved pharmacokinetic profile, making it an attractive candidate for further development. In November, Sensorion presented preclinical data at the Society for Neuroscience (SFN) annual meeting in San Diego, California, demonstrating a positive effect on recovery in rats following noise-induced hearing loss. 23 Given the results at SFN with SENS-401, Sensorion now plans to advance this drug into clinical development in place of SENS-218. The Company is in discussions with regulators in the US and Europe and expects to provide an update on plans for a Phase II program for SENS-401 in the near-term. The Company has received Orphan Drug designation in Europe for SENS-401 in sudden sensorineural hearing loss (SSNHL). Mechanism of Action. SENS-401 and SENS-218 are antagonists of the serotonin 5-HT 3 receptor. This receptor is broadly expressed in the central nervous system (CNS), as well as in peripheral locations including the gastrointestinal (GI) tract and immune system. 5-HT 3 receptors are found on mast cells, platelets, and T cells. In vitro and in vivo studies have shown that 5-HT 3 antagonists have anti-inflammatory properties. In liposaccharide-stimulated human monocytes, 5-HT 3 antagonist administration led to a dose-dependent decrease in tumor necrosis factor alpha (TNFα), interleukin-1β (IL-1β), and interleukin-2 (IL-2). 24 Given its potential anti-inflammatory properties, a 5-HT 3 antagonist like SENS-401 may offer therapeutic benefit to patients suffering from a variety of inflammatory conditions. For SSNHL patients, treatment with SENS-401 may reduce degeneration, loss of connectivity, and longterm deficit following an insult to the inner ear. The goal of treatment is the preservation of cochlear or vestibular hair cells as well as their synapses stressed by a lesional insult Dyhrfjeld-Johnsen, J, et al., Significantly improved recovery of severe noise-induced hearing loss by the orally available, clinical drug candidate SENS-401. Society for Neuroscience 2016 meeting, San Diego, CA, November 16, Fiebich, BL, et al., Antiinflammatory effects of 5-HT3 receptor antagonists in lipopolysaccharide-stimulated primary human monocytes. Scandinavian Journal of Rheumatology, 33(supp. 119), pp Page 20

21 Preclinical Data SENS-401 in Noise-Induced Injury Model Sensorion conducted a preclinical study to evaluate the potential of SENS-401 as a treatment following noise-induced injury to the inner ear. These results were presented at the Society for Neuroscience (SFN) annual meeting in San Diego. 25 Following baseline audiometry measurements, the Company generated an acoustic trauma model of hearing loss by exposing rats to 2 hours of 120 db band noise (8-16 khz). Rats were then randomized into one of four groups to receive 5, 10, or 20 mg/kg of SENS-401 or placebo daily for 14 days. Figure 17 presents a comparison of data from the groups treated with 10 mg/kg or placebo. In rats with severe initial hearing loss, defined as a shift in the acoustic brainstem response (ABR) of greater than 55 db, treatment with SENS-401 was associated with a significant improvement in recovery from 24 hours after the noise-induced trauma to day 14 (right panel). This effect was considered to be dose-dependent. Figure 17. Treatment with SENS-401 Facilitates Recovery Following Noise-Induced Trauma Source: Dyrhfjeld-Johnson et al., 2016 There was a slight decrease in the ABR threshold shift induced by the injury, although this did not reach statistical significance for the frequencies tested (left panel). The ABR threshold recovery reached by day 14 was db in the rats treated with either 10 or 20 mg/kg of SENS-401, compared with a recovery of db in the placebo group. The results suggest that SENS-401 may facilitate recovery following inner ear injury and support advancing this molecule into clinical development. Sudden Sensorineural Hearing Loss (SSNHL) Hearing loss is a reduced sensitivity to sounds heard in the external environment. Inner ear, or sensorineural hearing loss is the most common cause of deafness. Sensorineural hearing loss can be caused by trauma, excessive noise, infections, ischemia, and ototoxins. These types of stress lead to the death of hair cells in the cochlea, resulting in reduced sensitivity to sound. Sensorineural hearing loss can range in severity from mild to total deafness. There are 25 Dyhrfjeld-Johnsen, J, et al., Significantly improved recovery of severe noise-induced hearing loss by the orally available, clinical drug candidate SENS-401. Society for Neuroscience 2016 meeting, San Diego, CA, November 16, Page 21

22 no approved treatments or established standard-of-care, leaving a major unmet need for these patients. Management usually consists of supportive measures such as corticosteroids, which can lead to adverse effects and whose use is not supported by randomized clinical trials. Causes & Pathogenesis. Inner ear hearing loss can result from a number of causes, including trauma, excessive noise, inner ear infections like labyrinthitis, ischemia, and ototoxic agents. Acute hearing loss may be due to trauma, acute inflammation, or ischemic stroke, whereas gradual loss may result from the aging process or a slow-growing tumor. According to the American Hearing Research Foundation, excessive noise exposure is likely the most common cause of hearing loss worldwide. Loud noise exposure can result in a temporary decrease in hearing acuity, known as a temporary threshold shift (TTS). Usually this effect is not permanent, and with auditory rest, the hair cells recover to their normal level of functioning, although synaptic alterations may persist. However, with persistent or daily exposure to TTS-inducing noise or by intense acute trauma such as with impulse noise, the damage sustained becomes permanent as hair cells fail to recover. This can lead to a permanent threshold shift (PTS). Hair cells that fail to recover eventually undergo apoptosis, leaving fewer sensory neurons behind to process auditory signals. Symptoms & Diagnosis. Depending on the underlying cause, the hearing loss may have either had a sudden onset or developed gradually over a long period of time. Hearing loss is also commonly associated with tinnitus at certain frequencies. Depending on the cause, patients may also present with pain or fever. Hearing loss is diagnosed and classified using pure tone audiometry (PTA), a method for detecting an individual s hearing threshold by playing tones of varying volume across a broad range of sound frequencies. Hearing loss is also usually assessed with speech discrimination tests, which determine an individual s functional hearing capacity for either live or recorded speech. Speech discrimination is measured as score of the percentage of words comprehended and is often compared to PTA results to assist in the diagnostic process. The frequency pattern associated with hearing loss may be suggestive of a cause, but this is not always the case. Further tests are often performed to determine whether the loss is conductive or sensorineural in nature. With conductive loss, the transmission of sound waves from the external environment to the inner ear is impaired, whereas sensorineural loss results from damage to the neurons in the cochlea, the brain, or the axons connecting the two. Treatment. There is no standard of care of treating individuals with severe hearing loss. Unless a treatable cause is identified, treatment typically entails symptom management. Pharmacological agents that may be used include corticosteroids, antivirals, vasodilators, or blood thinners. In severe cases, hearing aids or cochlear implants may improve hearing for an individual, however both of these therapies have shortcomings and many individuals are averse to their use. Both the FDA and EMA consider a 10 db hearing improvement to be clinically relevant, which may provide some guidance for evaluating potential treatments in development. Inner Ear Hearing Loss Market Information Epidemiology. According to the National Institute on Deafness and Other Communication Disorders (NIDCD), roughly one in eight people in the US over the age of 12 have some level of detectable hearing loss in both ears, amounting to approximately 40 million people. 26 Within this group, the prevalence of occupational or recreational 26 Lin, FR, et al., Hearing loss prevalence in the United States. Archives in Internal Medicine, 171(20), pp Page 22