Quoin Pharmaceuticals Ltd. (NASDAQ:QNRX) - A Promising Rare Disease Specialist Advancing Towards Potential Approval

Published on September 24, 2024 | Ticker: QNRX

Quoin Pharmaceuticals Ltd. (NASDAQ:QNRX) is a clinical-stage specialty pharmaceutical company dedicated to the development and commercialization of therapeutic products that treat rare and orphan diseases. The company's initial focus is on the development of products, using proprietary owned and in-licensed drug delivery technologies, that could help address rare skin diseases.

Business Overview

Quoin's lead asset, QRX003, is currently in late-stage clinical development in the U.S. under an open Investigational New Drug (IND) application with the FDA. Five clinical sites in the U.S. have been opened for the initial study, with patients actively being screened and recruited, and dosing commenced in December 2022. This study was originally designed as a randomized, double-blinded assessment of two different doses of QRX003 versus a placebo vehicle in 18 adult Netherton Syndrome (NS) patients. However, based on discussions with the FDA, the company has since submitted protocol amendments to increase the number of subjects from 18 to 30, modify the dosing frequency from once-daily to twice-daily, and lower the age of eligibility for participation from 18 years and older to 14 years and older. These amendments have now been cleared by the FDA and implemented.

In addition to the blinded study, Quoin is also conducting an open-label study in 10 adult NS patients who are currently receiving, and will continue to do so throughout the study, off-label systemic therapy, primarily systemic biologic therapy. This open-label study has also been expanded, with the number of subjects increased from 10 to 20 and the dosing frequency changed from once-daily to twice-daily.

Product Pipeline

Quoin is focused on the development of QRX003, a once-daily, topical lotion comprised of a broad-spectrum serine protease inhibitor, formulated with the proprietary in-licensed Invisicare® technology, as a potential treatment for Netherton Syndrome (NS), a rare hereditary genetic disease. The company is also developing QRX004 as a potential treatment for Recessive Dystrophic Epidermolysis Bullosa (RDEB). Additionally, Quoin has entered into Research Agreements with the Queensland University of Technology (QUT), which include an option for global licenses to QRX007 for the potential treatment of NS and QRX008 for the potential treatment of scleroderma.

Strategy

Quoin's strategy is to develop and seek marketing approvals from the FDA and other worldwide regulatory bodies for rare and orphan diseases. To achieve this, the company plans to complete the late-stage clinical testing of QRX003 and, if successful, file for marketing approval in the United States and other territories. The company also intends to prepare for the commercialization of QRX003 by establishing its own sales infrastructure in the U.S. and Europe and entering into distribution partnerships in other territories.

Recent Developments

The company released positive initial clinical results obtained from the first six evaluable subjects in the open-label study in October 2023. As a result of this positive data and the absence of any safety concerns from both studies, Quoin submitted further protocol amendments to the FDA in November 2023, which were subsequently cleared for implementation in December 2023. These amendments included lowering the age of eligibility for participation in both studies to 14 years and older.

Financials

Quoin's financial position has been strengthened through a successful $6.5 million public offering completed in March 2024, as well as the entry into an $8 million equity line of credit arrangement earlier this year. As of March 31, 2024, the company had cash and cash equivalents of $1.8 million and investments of $12.9 million, providing funding into the second half of 2025. The proceeds from the equity line of credit will further extend the company's cash runway into the second half of 2026.

For the full year 2023, Quoin reported a net loss of $8.7 million, compared to a net loss of $9.4 million in 2022. The decrease in 2023 was primarily due to higher interest income and lower professional fees and other general and administrative costs, partially offset by higher research and development expenses as the company advanced its clinical studies. In the fourth quarter of 2023, the company reported a net loss of $2 million, consistent with the net loss of $2 million in the fourth quarter of 2022.

Quoin's operating cash flow for the full year 2023 was -$7.8 million, and its free cash flow was also -$7.8 million. For the first quarter of 2024, the company reported a net loss of $2.3 million and negative operating and free cash flows of $1.4 million.

Liquidity

In terms of the company's liquidity and capital resources, Quoin has determined that it has sufficient resources to effect its business plan for at least one year from the issuance of the unaudited consolidated financial statements as of March 31, 2024. However, the company will need to obtain further funding through public or private offerings of its capital stock, debt financing, collaboration and licensing arrangements, or other sources to complete the research and development of its therapeutic targets and its other operating requirements.

Risks and Challenges

Quoin's risk factors include, but are not limited to, its limited operating history and the difficulties encountered by a small developing company, its history of losses and need for additional capital, its lack of revenue generated from product sales since inception, uncertainties of cash flows and inability to meet working capital needs, its ability to obtain regulatory approvals, its ability to generate favorable pre-clinical and clinical trial results, and the extensive regulatory requirements and future developmental and regulatory challenges it will still face even if it obtains approval for a product candidate.

Conclusion

Quoin Pharmaceuticals is a promising rare disease specialist that is advancing its lead asset, QRX003, for the treatment of Netherton Syndrome, towards potential approval. The company has made significant progress in its clinical development program, including the expansion of its studies to include pediatric patients and the implementation of protocol amendments to potentially improve the likelihood of success. Quoin's strong financial position, with funding into the second half of 2026, provides the resources necessary to complete the clinical testing of QRX003 and position the company for potential commercialization. While the company faces the typical risks associated with a clinical-stage biopharmaceutical company, its focus on rare and orphan diseases and its differentiated commercial strategy provide a compelling investment opportunity for those interested in the rare disease space.

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