Applied Therapeutics, Inc. is a clinical-stage biotech company focused on developing treatments for symptoms of galactosemia in the central nervous system (CNS). Galactosemia is a rare condition where the body lacks an enzyme necessary for metabolizing galactose, leading to toxic accumulations that can cause severe adverse effects.
The company’s leading drug candidate, AT-007 (Govorestat), is designed to address these toxic accumulations, presenting a vital treatment option for patients suffering from this condition.
Business Overview
Founded in 2016 and based in New York, Applied Therapeutics specializes in developing drug candidates targeting molecular pathways that produce diseases with unmet medical needs.
The company’s science-based development strategies aim to shorten the time from drug discovery to approval. AT-007, designed for treating galactosemia, is nearing FDA approval, which is anticipated in late 2024.
This approval could significantly enhance the company’s market opportunities and transition it toward commercialization.
Aldose Reductase Inhibitor (ARI) Program
Applied Therapeutics’ ARI program is central to its strategy, focusing on rare diseases such as Galactosemia, Sorbitol Dehydrogenase (SORD) Deficiency, and Phosphomannomutase 2 Congenital Disorder of Glycosylation (PMM2-CDG).
Govorestat inhibits aldose reductase, which allows toxic substances to accumulate in these conditions. The primary target tissue is the CNS, where untreated conditions can lead to severe problems. Existing treatments only manage symptoms, but Govorestat aims to address the root causes.
AT-007 for Galactosemia
Galactosemia is caused by a deficiency in the enzyme galactose-1-phosphate uridylyltransferase (GALT), essential for metabolizing galactose. The condition leads to severe complications like liver damage, cataracts, kidney failure, and intellectual disability.
AT-007 has shown promise in treating galactosemia and is progressing through phase 3 clinical trials. The Marketing Authorization Application (MAA) was validated in Q4 2023, and the New Drug Application (NDA) was accepted in Q1 2024 under Priority Review, with a PDUFA date set for November 28, 2024.
Additional Potential Indications
AT-007 also shows potential for treating SORD Deficiency, a genetic disorder that prevents the conversion of sorbitol to fructose, leading to peripheral neuropathy, muscle weakness, and pain. Govorestat is currently in phase 3 trials for this indication.
Additionally, PMM2-CDG, caused by a mutation in the PMM2 gene, results in severe symptoms like intellectual disability and liver dysfunction. APLT is initiating phase 2 trials for AT-007 for this condition.
Regulatory Designations
Govorestat has received orphan medicinal product designation from the European Medicines Agency (EMA) and orphan drug and pediatric rare disease designations from the FDA for galactosemia and PMM2-CDG.
Other Drug Candidates
Apart from AT-007, Applied Therapeutics is developing Caficrestat (AT-001) for diabetic cardiomyopathy, currently in phase 3 trials. AT-003 is in early phase 1 clinical studies for diabetic retinopathy. However, AT-007’s near-term potential remains the primary focus.
Financial Health
As of Q1 2024, Applied Therapeutics has made significant progress with its NDA and MAA submissions for AT-007, supported by data from multiple clinical studies. The company’s financials are robust, with $146.5 million in cash and no debt, bolstered by a recent $100 million equity offering. The stock is currently trading at a modest market cap of $466.2 million.
Market Potential
Galactosemia affects approximately 1 in every 16,000 to 48,000 births, translating to about 6,943 to 20,830 people in the U.S. APLT estimates about 3,000 patients in the U.S. Orphan drugs typically cost around $32,000 annually, suggesting a yearly U.S. TAM of $222.2 million to $666.6 million for AT-007. If approved, AT-007 could significantly impact APLT’s revenue.
Valuation
APLT trades at a forward P/S ratio of about 10.2, reflecting a premium compared to the sector median of 3.6. However, the company’s expected revenue growth justifies this valuation. Assuming regulatory approvals, the company is poised to start generating significant revenues by early 2025, potentially turning EBIT positive soon after.
Risks
APLT faces several risks, including regulatory delays and execution challenges related to commercialization. If the company fails to secure FDA approval or effectively market its products, the share price could suffer.
Despite these risks, the potential for substantial growth and a strong balance sheet make APLT a compelling investment opportunity.
Big Potential Rewards
Applied Therapeutics is a promising late-stage biotech company with several drug candidates nearing regulatory approval. Its leading candidate, AT-007, could generate substantial revenues by 2025, supported by a robust financial position.
While there are inherent biotech risks, the potential rewards make APLT an attractive investment for those aware of these challenges.
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