By David Bautz, PhD

NASDAQ:MNOV

READ THE FULL MNOV RESEARCH REPORT

Business Update

Monetary Damages Due from Sanofi/Novartis Litigation Settlement

On November 11, 2024, MediciNova, Inc. (NASDAQ:MNOV) announced a settlement in the patent litigation brought by Genzyme Corporation, a subsidiary of Sanofi, against Novartis. The litigation included a claim for infringement of U.S. Patent No. 9,051,542, which was assigned to Genzyme following an assignment agreement signed between Genzyme and Avigen, which was acquired by MediciNova. The plaintiffs alleged that the defendants infringed on certain U.S. patents through the unauthorized manufacture, use, and sale of recombinant adeno-associated virus vectors for their gene therapy drug Zolgensma^®. MediciNova is entitled to receive a portion of any monetary damages collected by Genzyme as a result of the litigation. While there are no details available yet regarding the size of the settlement or what percentage MediciNova is entitled to, we anticipate an update from the company in the coming weeks.

Update on ALS Program

MediciNova is currently evaluating MN-166 as a treatment for amyotrophic lateral sclerosis (ALS) through two separate trials:

• The company is conducting the Phase 2/3 COMBAT-ALS trial, which is a company-sponsored 12-month study of MN-166. It is a multi-center, two-arm, randomized, double blind, placebo controlled trial that is expected to enroll approximately 230 patients (NCT04057898). Participants in the trial are being randomized 1:1 between placebo and 100 mg/day of MN-166. The primary endpoint of the trial is the mean change from baseline in ALS functional rating scale-revised (ALSFRS-R) (Cedarbaum et al., 1999) at month 12 and survival time. The ALSFRS-R consists of a series of 12 questions on basic tasks (speech, salivation, swallowing, handwriting, cutting food, dressing and hygiene, turning in bed, walking, climbing stairs, dyspnea, orthopnea, and respiratory insufficiency) that are rated on a five-point scale where 0 = can’t do and 4 = normal ability. The individual items are summed to produce a score of between 0 = death and 48 = best. The ALSFRS-R score is utilized to keep track of the health of all ALS patients, and is a common outcome measure in ALS clinical trials as well as an established FDA-approvable endpoint. Secondary endpoints in the trial include the mean change from baseline in muscle strength and quality of life, responders, time to survival, and safety and tolerability. Important inclusion criteria include onset of ALS no more than 18 months prior to screening, the use of riluzole for at least 30 days prior to initiation of the study drug, slow vital capacity or forced vital capacity of at least 70% of predicted, and an ALSFRS-R score of at least 35 at screening. We anticipate the trial completing enrollment in 2025.

• In September 2024, MediciNova announced that MN-166 will be evaluated in an Expanded Access Protocol (EAP) trial to evaluate its efficacy in patients with ALS. The EAP is being supported through a $22 million grant from the National Institutes of Health (NIH) – Neurological Disorders and Stroke (NINDS) to an academic group lead by the Mayo Clinic. MediciNova will provide MN-166 drug product, regulatory support, and safety monitoring support.

Approximately 200 ALS patients will be enrolled and treated with MN-166 for six months with the primary outcome being an evaluation of its effect on blood levels of neurofilament light (NfL), which is a biomarker of neuron damage that has previously been shown to be prognostic of ALS disease progression (Gaiani et al., 2017).

Support for this program derives from the Accelerating Access to Critical Therapies for ALS Act (ACT for ALS), a bill signed into law by President Biden in December 2021. The bill called for a research grant program at NIH that utilizes the U.S. Food and Drug Administrations (FDA) EAP to evaluate experimental drugs for individuals that are not eligible for ALS clinical trials.

Financial Update

On November 12, 2024, MediciNova filed Form 10-Q with financial results for the third quarter of 2024. As expected, the company did not report any revenues in the third quarter of 2024. R&D expenses in the third quarter of 2024 were $1.9 million compared to $0.8 million in the third quarter of 2023. The increase was primarily due to an increase in ALS related expenses. G&A expenses in the third quarter of 2024 were $1.5 million compared to $1.4 million in the third quarter of 2023. The increase was primarily due to an increase in performance-based stock option expense and professional fees.

MediciNova exited the third quarter of 2024 with approximately $42.3 million in cash and cash equivalents. We estimate the company has sufficient capital to fund operations at least through the end of 2025. As of November 5, 2024, the company had approximately 49.0 million shares outstanding and when factoring in stock options a fully diluted share count of approximately 57.4 million.

Conclusion

We will be very interested to see the settlement outcome and what monetary damages MediciNova is entitled to as well as how the company plans to utilize the capital infusion. We expect an update from the company as details of the settlement become available. The ALS program is proceeding according to plan and the two trials of MN-166 show how MediciNova’s business plan of utilizing both company and external resources can maximize the number patients in which MN-166 is being evaluated while maintaining fiscal discipline. With no changes to our model our valuation remains at $10 per share.

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