Satellos Biosciences - Rebuilding Muscle From Within

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Ticker: MSCL (TSX) and MSCLF (OTC)

https://satellos.com

Market cap: 64.29MCAD

Canadian small/microcap Biotech company on the verge of human trials. Doesn’t that sound good?

Founded in 2018. Listed on the stock exchange (TSXV) in 2021 via a reverse takeover. I personally invested in this around that time and have increased my position over the years. I am not a medical expert!

The company has communicated that it will start Phase 1 human trials in the summer. It has cash for two years. Approx. 40M CAD.

Listing on Canada’s main stock exchange (TSX) happened recently. On the US side, listing on Nasdaq is the goal for this year.

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Latest presentation https://ir.satellos.com/files/doc_downloads/2024/02/14/Satellos-Deck_Feb-2024.pdf

In brief:

Developing an oral drug for Duchenne muscular dystrophy (Lead program). The prevalence of this genetic disease is globally consistent, with an incidence of approximately 30/100,000 male births. The disease currently leads to the death of boys at 20-30 years of age. (Duchennen lihasdystrofia – Wikipedia).

Lead Program: SAT-3247

https://ir.satellos.com/news/news-details/2024/Satellos-Presents-Positive-Preclinical-Efficacy-Data-for-SAT-3247-at-the-2024-MDA-Clinical--Scientific-Conference/default.aspx

Pipeline/Technologies

  1. The treatment of Duchenne muscular dystrophy via muscle regeneration.
  2. FSHD - Muscle function in FSHD mouse model improves with SAT-3247
  3. The treatment of other muscular dystrophies (LAMA2, Collagen-VI, Limb Girdle MD (LGMD##) and Dystroglycanopathies)
  4. MyoReGenX - discovery platform, two discoveries are undisclosed at this point, discovered the aged muscle
    treatment opportunity
  5. OralTrans - oral delivery of non-water soluble compounds, dozens of use cases
  • JDA with NW PharmaTech (Announced March 11, 2022 - news on the joint venture corporation to follow)
  • OralTrans delivery
  1. Drug development targeted to improve muscle quality, quantity, and function in aged muscle tissue
  2. Project Gamma

Competitors:

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Other companies approach the disease (Duchenne) through gene therapy. They aim to slow down the progression of muscle degeneration. Satellos’s approach (muscle regeneration with small-molecule therapeutics) is unique.

There’s a difference between regeneration and slowing down!

“Satellos is taking an entirely novel approach to the treatment of Duchenne by focusing on stimulating muscle regeneration as opposed to slowing muscle degeneration. While Sarepta and others focus on muscle fiber and dystrophin production, Satellos targets muscle stem cells and reinstates their ability to produce new muscle.”

Potential:

How do markets value an effective drug for this disease??

Sarepta Therapeutics, the largest company developing drugs for Duchenne muscular dystrophy, temporarily lost 5B (USD) of its market value when the drug it developed for Duchenne muscular dystrophy received poor results).

Founders:

Co-founder CEO: Frank Gleeson

Co-founder CDO: Michael Rudnicki

These gentlemen have a history:

Fate therapeutics and Verio Therapeutics

https://ir.fatetherapeutics.com/news-releases/news-release-details/fate-therapeutics-expands-stem-cell-modulator-pipeline

So, it’s not their first rodeo.

The stock is illiquid, with large daily fluctuations. The drug development sector is full of risks!

Insider ownership approx. 15%
Institutional ownership 50%

I would appreciate others’ views on the company.

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A few video clips to help you get to know the company.

2-year-old clip of CEO Frank Gleeson

2-year-old clip that provides a good overview of Dr. Rudnicki’s background.

One-year-old clip of CTO Phil Lambert https://youtu.be/OZAfLhS9WB4?si=rgLLVtHE5ihEcIVo

One-year-old clip of the CEO and CTO

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A more recent CEO interview.

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Elijah Stacy, founder of Destroy Duchenne, and Dr. Michael Rudnicki, co-founder of Satellos Bioscience and Royal Society inductee, discuss Satellos’ novel approach to muscle regeneration, focusing on stimulating the body’s internal stem cells rather than using external transplants. This pioneering work has the potential to transform the future of treatment for Duchenne Muscular Dystrophy.

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Informative interview with the CEO & CFO

  • Human trials begin in July in Australia.
  • Nasdaq
  • The next 12 months will be a busy time.
  • Funds will last until the end of 2025.
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Press release from a week ago:

https://finance.yahoo.com/news/satellos-presents-preliminary-data-showing-110000797.html

SAT-3247 treatment in a canine model of Duchenne muscular dystrophy (DMD or Duchenne).

  • After four months of SAT-3247 treatment, skeletal muscle displayed an approximate four hundred and fifty percent (450%) increase in Regenerative Index; and
  • After two months of SAT-3247 treatment, skeletal muscle displayed up to a one hundred percent (100%) increase in muscle force.

Brand new press release:

https://finance.yahoo.com/news/satellos-announces-submission-regulatory-filing-110000636.html

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https://finance.yahoo.com/news/satellos-receives-rare-pediatric-disease-110000531.html

Another box checked.

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The market size makes me wonder. If about 30 out of 100,000 male children are affected by Duchenne, and women do not get this disease, then we can assume the figure is 30/200,000, or 150/1,000,000.

So in the USA, there would be about 333 * 150 = 49,950 patients. Globally, roughly calculated, there are about 1,200,000 patients to be treated.

If Satellos were to be very successful and capture, say, 2% of the market, the number of patients would still be a mere 24,000.

If the drug developed by Satellos were also effective against other muscle diseases, then in that case the market size could already be quite substantial.

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” We are pleased to announce our Q2 2024 financial results as well as provide updated data from a canine model of #Duchenne #musculardystrophy. These data show further increased improvement in muscle force over baseline of 195% at four months after oral treatment with SAT-3247. We are on track to initiate our Phase 1 clinical trial with SAT-3247 in Q3 2024.”

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The market size is indeed difficult to grasp.

A few thoughts.

CEO Gleeson has previously stated that, in principle, their drug could also be used alongside gene therapy treatments. So they are not mutually exclusive.

  • If Satellos’ drug works and eventually enters the market, patients will likely have to take it for the rest of their lives.

  • Other muscular dystrophy diseases?

  • Other applications for the drug? (Muscle injuries, Aging?)

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https://finance.yahoo.com/news/satellos-announces-acceptance-regulatory-filing-123000904.html

The company is starting clinical trials.

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CEO in an interview with Destroy Duchenne. A good hour-long session that briefly covers the company’s history and current situation.

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  • The first healthy volunteer has been dosed in the first component of the Phase 1 study

  • Initial safety and pharmacokinetic data expected in Q4 2024

  • Initiation of the second component of the Phase 1 study, in adult DMD patients, expected in Q1 2025

Mielenkiintoinen loppuvuosi tulossa…

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The company announced a poster/more detailed data earlier this week from a preclinical study conducted on dogs with DMD, which will be presented in Prague next week at the 2024 World Muscle Society Annual Congress.
https://ir.satellos.com/news/news-details/2024/Satellos-Demonstrates-Treatment-of-DMD-Canines-with-SAT-3247-Improved-Measures-of-Strength-to-Near-Normal-Levels/default.aspx

I listened to the Radius Research webinar live yesterday. The interviewees from Satellos were CEO Frank Gleeson and CFO Liz Williams. Here are a few highlights from the interview that stuck in my mind.

  • Gleeson explained for the first time very clearly in layman’s terms how their drug differs from other approaches on the market (Gene therapy and Exon Skipping). The most significant difference is that if Satellos’ drug works as it has in mice and dogs, it will increase patients’ muscle mass and endurance, unlike other approaches that, at best, stop or slow the progression of the disease. In other words, there is a chance for a truly effective treatment and a revolution in patients’ lives!!

  • The results of the study conducted on dogs (canine model) were described as “groundbreaking.” Such results have never been obtained before in preclinical trials for this disease. (See link above)

  • The market size for DMD alone is estimated at $20B USD.

  • The muscle trauma market was estimated at around $150B USD.

  • They were puzzled by the stock’s valuation and were not satisfied with it. They again presented a table where competitors’ valuations start at $200M USD and go up to $5.7B USD. This table doesn’t even include Sarepta, whose valuation is currently just under $12B USD. Satellos’ market cap today before the market open is $41M USD.

  • The first patient group of the Phase 1 trials has been completed. They also provided more details about the progress of the trials and their plans.

  • They discussed how their progress in clinical trials is significantly faster than normal. Usually, these phases can take years.
    Gleeson mentioned that by the end of 2026, the drug could already be on the market, assuming the nature of the disease and the urgency of the need for treatment.

  • At the end of the webinar, Williams took the floor.
    The Nasdaq listing will take place in H1 2025.

  • US pharmaceutical investment firms that have invested in the company are pleased with its progress and are ready to provide further funding. The funding round will occur either before, during, or after the Nasdaq listing. All cards are on the table.

  • There is interest from Wall Street.
    If all goes well, Phase 2 in children with DMD will begin next summer. For the first time, they explicitly stated that at that stage, the company is ready for a partnership or to be acquired.

The interviews will be posted on YouTube later. I will link it here when it becomes available. It’s a very good one-hour session that is worth listening to if you are at all interested in the company.

My own musings: If you look at the company’s current valuation and the potential of their SAT-3247 oral pill, and compare it to competitors (valuation levels) and their approach to this disease, I would say that if the clinical trials yield positive results, this stock will head for new orbits, quite a few levels higher than where it is currently.

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Here is the interview by Radius Research.
A very good deep dive into the company!

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https://finance.yahoo.com/news/satellos-reports-q3-2024-financial-120000061.html
So far, no issues regarding Phase 1.

Another webinar.

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On Wednesday December 4th, 2024 PropThink hosted a live webinar with 3 incredible Key Opinion Leaders (“KOLs”) to discuss Duchenne Muscular Dystrophy (“DMD”) and learn about a small Canadian Company – Satellos Bioscience (OTC: MSCLF; TSX: MSCL.TO) – that is testing a novel oral small molecule drug targeting the muscle stem cell in order to regenerate muscle cells – a first-in-class approach to this terrible rare disease. Below is a recording of that live event, featuring DMD patient and patient-advocate Elijah Stacey , muscle stem cell expert Dr. Rudnicki and clinical & regulatory development expert Dr. Dubow.

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https://finance.yahoo.com/news/satellos-announces-first-participant-duchenne-120000714.html

  • First DMD patients have received the drug.

  • Healthy volunteers who were administered SAT-3247 in the SAD cohort and the first MAD cohort of the study experienced no adverse side effects and the drug was well tolerated.

  • Phase 1 results will be presented in Q1/2025

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Before Christmas, 40 million USD in additional cash from the offering. Dilution, of course, at the same time.

Phase 1 data will be released in a couple of weeks.

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Initial results from Phase 1 were obtained last week.

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-Phase 1a data showed that SAT-3247 was safe and well-tolerated in all groups of healthy volunteers. At predicted human effective dose levels, SAT-3247 did not cause adverse clinical findings in any measured parameter, including clinical laboratory results, vital signs, ECG, and physical examination. No moderate or more severe drug-related adverse events were reported at any dose level studied.

-Phase 1a pharmacokinetic (PK) data were consistent with the company’s preclinical study results. These PK results confirm that SAT-3247 plasma concentrations after dosing are maintained at levels and for periods that, based on observations, are most likely to produce a therapeutic effect on muscle regeneration and strength.

Satellos expects to report complete Phase 1a and Phase 1b data during the second quarter of 2025.

Link to MDA 2025 conference presentation: https://s203.q4cdn.com/439234936/files/doc_presentation/2025/03/Satellos-MDA-2025.pdf

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