Paion European Phase II Underway

Paion (PA.DE) has started a 90-patient Phase II study for its sedative remimazolam in general anaesthesia. Remimazolam has potential as an alternative to standard propofol because of its favourable side effect profile. In Japan, partner Ono Pharmaceutical is expecting Phase II/III anaesthesia data in Q114 needed for the European data package; however, Ono has stopped the Phase II ICU trial. We have maintained our valuation at €56m.

German general anaesthesia trial
Paion has started a Phase II trial of GABAA receptor agonist remimazolam in its lead European indication, general anaesthesia, following approval from the German regulator. Paion will finance the six-month trial at a cost of €2-4m, although it is in discussions to find a partner for a pivotal European Phase III trial. Remimazolam has potential to meet the need for new anaesthetics with rapid onset/offset, but that have lower risk of cardiopulmonary events than the standard of care propofol.

Ono’s anaesthesia readout due Q114, ICU on hold
Paion’s Japanese partner Ono has halted its Phase II trial of remimazolam in ICU sedation due to the unclear pharmacokinetic (PK) result in long-term administration. Ono will carry out pre-clinical studies and PK modelling to determine if dose adjustment is needed for further trials. However, the data from Ono’s Phase II/III trial in general anaesthesia is due in Q114 and will be used to support EU and US partnering discussions. The Japanese launch in general anaesthesia is set for 2015.

H113 financials and cash outlook
H113 income of €1.5m comprised €1.2m from Yichang for the technology transfer of remimazolam and a €300k option fee from the agreement with Hana Pharma. After repayment of a net €7m loan, Q213 cash and equivalents stood at €14.2m. We forecast that Paion is funded into Q115, including the cost of the Phase II study.

Valuation: Maintained at €56m
We maintain our DCF valuation at €56m, including €37m for remimazolam, €14m of H113 cash and €4m for the GGF2 with Acorda. We have made minor adjustments to short-term costs based on company guidance. The shares have risen c 45% over the past month but near-term data on remimazolam could serve as new catalysts.

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