1.5 million people (particularly those with compromised immune systems such as cancer patients, diabetes patients, organ transplant recipients and HIV/AIDS patients) die each year due to fungal infections – both in the West and in the rest of the world – even though USD 16.7 billion is spent annually on antifungal drugs. Biosergen is developing an antifungal drug that is significantly more effective and with a significantly better side effect profile than the existing drugs developed 40-70 years ago. Biosergen therefore has blockbuster potential (annual sales of more than USD 1 billion) for its drug, which is expected to be launched in 2026.

The main problems with the existing antifungal drugs for serious (fatal) fungal infections on the market are:

1) They do not kill the fungi, but only inhibit them

2) They cause incurable kidney damage

3) They increase the resistance of the fungi

Biosergens, on the other hand, are 1) fungicidal, 2) do not cause kidney damage and 3) do not give rise to resistance in the fungi. In addition, it is significantly more effective/kills several different types of fungi. Biosergen therefore expects that their product will be used as the primary product (first line), which is why the market potential for Biosergen’s product is large.

In Q1 2023, Biosergen has presented positive topline data in a phase 1 study with the drug BSG005. The study has confirmed that the drug is safe and very important without the same serious side effects as existing medical drugs. Although the results so far indicated that the study would be successful, the results are a significant price trigger event. The next step is discussions with the FDA about the phase 2 study, where the drug BSG005 will show its efficacy in sick patients (rather than healthy patients in the phase 1 study).

Price triggers:

• Q2 2023: Presentation of data to FDA and discussion of Phase II study for BSG005
• 2023: Start of Phase II study for BSG005

Risks:

The risks of an investment in Biosergen are, like all other biotech companies, related to the development and results of the studies and the authorities’ (in particular the FDA’s) assessment of the products. In addition, Biosergen, like other biotech companies, has a financial risk, as the company has a negative cash flow that requires ongoing financing.

Biosergen’s drug has the potential to save lives – a lot of lives, and very soon

1.5 million people (especially those with compromised immune systems, such as cancer patients, diabetes patients, organ transplant recipients and HIV/AIDS patients) die every year due to fungal infections – both in the West and in the rest of the world – even though USD 16.7 billion is spent annually on antifungal drugs.

The biotech company Biosergen is developing an antifungal drug that is potentially significantly more effective as it kills the fungi instead of just inhibiting the infection, can treat many different fungal infections and has a significantly better side effect profile (does not cause kidney damage/failure) than the existing drugs developed 40-70 years ago.

Approximately 90% of people infected with an aggressive fungal infection die within the first 2 weeks. As the exact type of fungal infection is typically not known, it is essential to treat patients quickly (within 4-5 days) with an agent that kills as many different fungi as possible and does not have significant negative side effects.

Biosergen’s product has been shown to meet these requirements, and it is therefore expected that Biosergen’s product will be used as the primary product and therefore has significant market potential. The market is growing at around 6-7% annually, so there is blockbuster potential (annual sales of more than USD 1 billion) for Biosergen’s drug, which is expected to be launched in 2026.

Paradigm shift from inhibiting to treating dangerous fungal infections

Biosergen is developing BSG005, a breakthrough and innovative antifungal drug for the treatment of invasive fungal infection, an area of very high unmet medical need. Invasive fungal infection of the lungs, liver, kidneys or brain is a serious condition that can be fatal, affecting around 1.5 million people annually. The infection mainly affects people who have a weakened immune system for various reasons, such as transplant recipients, people with HIV or diabetes, or patients undergoing treatment for cancer. The mortality rate is 20-80% depending on the fungus causing the infection.

BSG005 has shown better efficacy and fewer side effects compared to competing antifungal agents and is active against a wider range of fungal spores.

BSG005 has the potential for a paradigm shift in the treatment of invasive fungal infections

Unlike most existing products on the market that only inhibit fungal infection (fungistatic), BSG005 (fungicide) kills the fungi causing the infection. A fungistatic treatment allows for the development of resistance and thus increases the risk of lack of efficacy, not only in the individual patient but also in the general patient population. In contrast, a fungicide treatment does not lead to the development of resistance and is therefore a more effective long-term treatment option for all these patients.

Unlike BSG005, other drugs in the same class (polyenes) have serious side effects that often limit the duration of treatment or the uptake of treatment. Existing treatments with current polyenes lead to renal toxicity (poisoning of the kidneys), potentially causing the patient to stop treatment of their invasive fungal infection. BSG005 does not cause renal toxicity, as shown in toxicology studies.

The fact that BSG005 kills the fungi, is not kidney toxic and is effective against a wide range of fungi may mean that patients with invasive fungal infections will be treated with BSG005 earlier during treatment. Not only as an alternative to other antifungal agents, but also as a substitute for antifungal agents to avoid the spread of resistant fungal spores, which in turn can lead to increased pressure on healthcare systems worldwide. We therefore believe that BSG005 has the potential for a paradigm shift in the treatment of invasive fungal infections.

Phase 1 top-line data in Q1’2023 has shown positive data – next step is discussions with the FDA on a phase 2 study

Biosergen went public in June 2021 and has followed the plans presented to investors at that time. The first (top-line) results of the Phase 1 study were presented in Q1 2023 with positive results confirming that the drug is safe and very important without the same serious side effects as existing agents. Although the results to date indicated that the study would be successful, the results are a significant price trigger event. The next step is discussions with the FDA about the phase 2 study, where the drug BSG005 will show its efficacy in diseased patients.

The study included Single Ascending Dose (SAD), where the dose was gradually increased for each new group of subjects, and Multiple Ascending Dose (MAS), where the subjects received the drug intravenously every 7 days with a gradually increasing dose. The study showed that SGN005 had no adverse effects on either kidney or liver.

The successful Phase 1 study supports progression of the pipeline towards a potential approval in 2026/27.

he total global market for all antifungal drugs is USD 16 billion. It is expected that Biosergen will be able to address the part of the market for invasive fungal infections that today includes the treatment categories: Polyenes (10%), Azoles (42%) and Echinocandins (32%). With a market size of USD 16 billion, this is a very lucrative market where only a small market share is required to be commercially attractive.

BSG005 is expected to be priced at a premium

The main competing agent Amphotericin B is an old product that is available in cheap copy versions. Assuming good data, Biosergen expects that BSG005 could enter the market at a premium price due to its significantly better efficacy in killing the fungus rather than just inhibiting it and especially if, as expected, there is a better safety profile, particularly in the kidneys.

The US is likely to be the main market

BSG005 has patent protection until 2033 in the US and Japan, and until 2028 in the EU and China, but is working on several new patents on the base molecule BSG005’s production and formulation processes. Patent applications have already been filed for new special nano formulations.  We therefore see a small risk of competition from copycat producers in the EU and China already 2 years after the potential launch of the initial finished product, and thus a good opportunity for Biosergen in these markets to maintain a premium price after 2028. Biosergen is also developing other formulations of BSG005 and new production processes, which could potentially extend patent protection further. The US will probably be Biosergen’s most important market, but with the effect on resistant and difficult-to-treat indications, other parts of the world (China, India, South America) will also be interesting markets.

Pipeline

The most advanced formulation of BSG005 is intravenous, similar to the competing products on the market for severe fungal infections. In addition, BSG005 Nano, targeting severe fungal infections of the lungs, and BSG005 Oral, which is pill-based and therefore has a broad use, including as a follow-up treatment after e.g. surgery, are being developed.