Aimmune Therapeutics (NASDAQ: AIMT) Betting on Phase 3

Aimmune Therapeutics Inc. (NASDAQ: AIMT), is currently developing therapies for peanut and other food allergies using its Characterized Oral Desensitization Immunotherapy (CODIT) system. The company’s lead biologic candidate for peanut allergies, AR101, completed a Phase 2 study a couple years ago with surprisingly positive results

The Phase 2 study, which consisted of 23 patients (both children and adults) who completed the treatment regimen, were desensitized to a clinically meaningful level of peanut protein (at least 443 mg). The study’s level of desensitization was well above the accidental encounter level of 100 mg (½ of a peanut kernel). 18 of the 13 patients were desensitized to a dose of 1,043 mg of peanut protein, which is the equivalent of four peanut kernels.

In early 2016, AIMT began a 554 patient Phase 3 trial for AR101. For this trial, the primary endpoint was set at a cumulative desensitization of 1,043 mg of peanut protein with a secondary endpoint set at 2,043 mg.

Based on a recent update, AIMT reported compliant up-dosing for more than 97% of the patients in the Phase 3 trial. In comparison, AIMT had only reported successful up-dosing of 80% of the patients in the Phase 2 study. Thus far, Phase 3 results seem to be promising.

The Phase 3 trial known as PALISADE, is a double-blind (placebo-controlled) trial that is designed to investigate the safety and efficacy of AR101 in patients (ages 4-49). With the majority of patients already showing positive results, management estimates that the Phase 3 trial will be completed by year-end 2017 with its results made publicly available by 1Q18.

Provided the Phase 3 trial results are strong, AIMT will have a viable product candidate that ultimately fulfills the needs of a large, underserved market. Between the U.S. and Europe, over 30 million people have a food allergy, with peanut allergy being the most prevalent and life-threatening (effecting over 5 million people). In the U.S. alone, 40-50% of people with a peanut allergy are sensitive to an exposure of 100mg or less. Currently, there are no over-the-counter (OTC) drugs available to prevent reactions. The only treatment available is epinephrine (EpiPen, Twinject, and Auvi-Q), which is used as a rescue medication.

Based on management expectations, AIMT is anticipated to achieve a minimum 16% adoption rate, which is under the assumption that most children and severe adults will take the medication. However, this minimum adoption rate may be revised higher over the near-term as the company’s primary competitor, DBV Technologies failed to meet its primary endpoint during its Phase 3 trial of Viaskin Peanut. This gives AIMT more runway to capture market share.

Overall, AIMT is a solid biotech stock choice for medium-term capital appreciation. The company is expected to release the results of the Phase 3 (PALISADE) trial by 1Q18. If the results are strong, investors should expect a significant increase in stock performance.

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