Zacks Small Cap Research – AZTR: Netherton Syndrome Review and ATR-12 Clinical Trial – Technologist

By John Vandermosten, CFA

NYSE:AZTR

Azitra, Inc. (NYSE:AZTR) is a clinical stage precision dermatology company developing candidates for a variety of rare and serious skin diseases. It is developing genetically engineered bacteria for therapeutic use in dermatology leveraging a microbial library of 1,500 unique bacterial strains that are candidates for a variety of indications.

Azitra’s lead candidate is ATR-12 for Netherton Syndrome (NS), a rare disease. A second candidate is ATR-04 targeting epidermal growth factor receptor inhibitor (EGFRi)-associated rash and a third, ATR-01, ichthyosis vulgaris. All are topically formulated. Preclinical work has shown effective and safe use of ATR-12 as a potentially disease modifying therapy able to colonize the skin and replace a missing protein. An IND has been cleared for ATR-12 and a Phase I study has started. An IND is expected for ATR-04 by year end 2024. Outside of its pipeline, the company has signed a Joint Development Agreement with Bayer Consumer Care AG for consumer health candidates.

We have developed this note to provide background on Azitra’s primary indication in NS which is a rare disease with an incidence of 1 in 100,000 to 200,000 births with its features tied to an autosomal recessive gene. The gene implicated in the disease is the serine protease inhibitor Kazal Type 5 (SPINK5) which produces a protein called lympho-epithelial Kazal-type-related inhibitor (LEKTI). The protein inhibits kallikrein related proteinase 5 (KLK5), 7 (KLK7) and 14 (KLK14) as well as elastase 2. When these enzymes persist in high enough concentrations, they break down proteins important for maintaining the skin barrier, cell adhesion in the epidermis and the structural integrity of the skin.

Primary Indication

Netherton Syndrome

Characteristics of NS include scaly red skin (ichthyosiform erythroderma), bamboo hair (trichorrhexis invaginate) and atopic dermatitis-like features such as eczema, asthma, and itch. At birth, the syndrome can present life-threatening complications due to severe dehydration, infections and failure to thrive. The disease is caused by a profound skin barrier defect due to uncontrolled proteolytic activity. The epidermal proteases break down the skin which leads to decomposition of the top layer of skin called the stratum corneum. The disrupted skin barrier allows bacteria and allergens to penetrate the epidermis potentially causing infections, systemic spread and immune response.

NS was first described by M. Comel in 1949 in Dermatologica and later by Earl Netherton, for whom the disease was named. Netherton reported it in 1958 in the Archives of Dermatology as a congenital skin disease characterized by “bamboo hairs.” In the 1980s, research found that the syndrome resulted from impaired function of the serine protease inhibitor involved in skin desquamation and hair formation. In the 1990s, the genetic basis of the disease was traced to mutations in the SPINK5 gene, which encodes the LEKTI protease inhibitor protein.

There is no cure or effective treatment for NS. However, topical corticosteroids, topical calcineurin inhibitors, topical retinoids, narrowband ultraviolet B phototherapy, psoralen and ultraviolet irradiation and oral acitretin are treatment options being used. Intravenous immunoglobulin and anti-TNF-α are therapeutic options for severe illness. Products in development include Sixera’s KLK inhibitor, Quoin’s broad spectrum serine protease inhibitor, Krystal’s gene therapy and Boehringer’s anti-IL-36 inhibitor among others.¹

Prevalence

Some sources estimate Netherton syndrome to occur in one of every 100,000 or 200,000² births, suggesting 20 to 40 new cases per year in the United States. However, the frequency of NS may be underestimated due to early mortality and misdiagnosis. Prevalence throughout the population is estimated to be between one and nine individuals per one million, which equates to 333 to 3,000 persons in the U.S.³ The First Skin Foundation, which is an educational support group for rare skin conditions estimates that there are about 150 reported cases every year and fewer than 5,000 people living with NS in the United States.

Causes

NS arises from loss of function mutations from the serine protease inhibitor Kazal-type 5 (SPINK5) gene. This gene appears on chromosome 5 at location 5q32 and encodes the lymphoepithelial Kazal- type-related protease inhibitor (LEKTI) protein. LEKTI is a direct inhibitor of kallikrein-related peptidases (KLKs). This includes KLK5, KLK6, KLK7, KLK13 and KLK14. It is also a direct inhibitor of cathepsin G and an indirect inhibitor of elastase 2. Without LEKTI, the KLK and other enzymes increase in concentration and break down skin structures and lead to inflammation. This leads to the skin desquamation process, premature stratum corneum detachment and skin barrier defect.

Symptoms

Typical symptoms of NS include red, scaly skin that is apparent at birth. Outbreaks of red, circular scaly rashes arise periodically. NS patient hair is thin, patchy and the shaft of the hair strand is fragile. Under close examination, the hair strand is further characterized by the distal portion of the shaft invaginated into the proximal portion in a feature termed trichorrhexis invaginata (bamboo hair). Patients are susceptible to immune reactions such as hay fever, asthma, itchy skin and eczema. Due to the impaired skin barrier, dehydration and infection are common and can be serious. Babies usually grow slowly and do not gain weight easily.

Diagnosis

NS is diagnosed in early infancy first indicated by the presence of erythroderma and failure to thrive. Other signs include hair abnormalities such as patchy development and bamboo hair. The diagnosis is confirmed by biopsy, histology, molecular analyses and genetic sequencing that shows a germline mutation in the SPINK5 gene. Immuno-stained tissue samples will show low levels of LEKTI expression in the epidermis. Other histology will show hyperkeratosis (skin thickening), nucleated keratinocytes and thickened stratum spinosum. NS is also associated with high levels of immunoglobulin E (IgE) which is elevated due to inflammation and the penetration of allergens through a patients’ porous skin barrier.

Treatment

There are no disease modifying therapies approved for NS and treatment is oriented towards addressing the symptoms of dry, itchy and scaly skin. Anti-infective measures are also taken due to the risk from damage to the skin barrier. There are a wide variety of ameliorative approaches which include retinoids, prednisolone, cyclosporine, immunoglobulins and biologicals. Emollients and topical therapies are used to treat the skin condition and antibacterial soaps and ointments are also used.

Intravenous immunoglobulin (IVIG) therapy is used for NS patients to help manage recurrent infections and immune dysregulation. IVIG provides a broad spectrum of antibodies that can boost the immune system and help fight infections, particularly in younger patients.

Dry and damaged skin is treated with petroleum-based and ceramide-containing creams requiring frequent application depending upon severity which can help improve the integrity of the skin barrier. Non-detergent liquids with a modestly acidic pH to counteract the proteases is recommended for daily washing. Topical corticosteroids and calcineurin inhibitors can help reduce inflammation and pruritus, but must be used sparingly due to risk of severe side effects. NS patients also show higher susceptibility to allergens which calls for allergen-specific immunotherapy to manage these conditions. Further vulnerabilities for these patients include poor absorption of nutrients which may require a special diet appropriate to the condition. Finally, the highly visible skin and hair condition many times leaves patients with psychosocial challenges and psychological support may be necessary. Other therapies include:

➢ Calcipotriol (synthetic analog of vitamin D3)

➢ Calcineurin inhibitors (tacrolimus and pimecrolimus)

➢ Phototherapy

Experimental Therapies

Gene therapy to correct the SPINK5 gene or introduce the functional LEKTI protein.

➢ Inhibition of KLKs

➢ SPINK5 gene replacement

There are case reports that evaluate biotherapies targeting a broad range of interleukin (IL) targets for NS. Below we highlight several of these approaches:⁴

➢ Secukinumab targeting IL-17A

➢ Spesolimab targeting IL-36

➢ Ustekinumab targeting IL-12 & IL-23

➢ Dupilumab targeting IL-4

➢ Infliximab targeting TNF-α

Prognosis

Newborns with severe symptoms have a poor prognosis as they are at risk of infection and failure to thrive. The mortality rate is estimated to be from 10%⁵ to 20%⁶ for newborns. After the first year, symptoms and health usually improve; however, children remain underweight and exhibit below average height.

ATR-12 Preclinical Trials

Azitra has conducted in vivo and ex vivo preclinical work to explore the potential efficacy of ATR-12 as a disease modifying therapy for Netherton syndrome. In vivo studies were conducted to measure the ability of ATR-12 to colonize sterile reconstructed human epidermis and to test whether or not the auxotrophic modification would successfully prevent colonization. Results showed that the bacteria did colonize the skin as desired but would not persist without D-alanine, confirming that the amino acid must be present for ATR-12 to persist.

In vitro studies sampled tape stripped skin from healthy volunteers spiked with KLK5 to mimic Netherton syndrome. The experiment showed that diluted SE351 culture supernatant dose-dependently inhibited trypsin-like (KLK5) activity. Trypsin-like activity in the Netherton syndrome surrogates returned to normal healthy levels when the SE351 culture supernatant was added.

Ex vivo studies employed a pig skin model to measure secretion of active human recombinant LEKTI (rhLEKTI-D6). A single topical dose of ATR-12 was administered at three dose levels to produce the result. Ex vivo studies using healthy human skin demonstrated that a single topical dose of ATR-12 can deliver sufficient rhLEKTI-D6 into the lower layers of the stratum corneum to effectively inhibit KLK5 at levels observed in NS patients.

ATR-12 Clinical Trials

Azitra received investigational new drug (IND) clearance for its treatment of Netherton Syndrome, ATR-12 in January 2023. The company has launched a Phase Ib clinical trial under the identifier NCT06137157 and expects to enroll 12 patients with a target of generating first data to be presented in late 2024. The study will evaluate the tolerability, safety and pharmacokinetics of topically administered ATR-12. A clinical site at Yale University has been established and other sites are being sought.

The study will apply ATR-12 to lesions on one side of a subject’s body and apply the vehicle to the other. Application of ATR-12 and the vehicle will be performed twice daily for two weeks. Patients will be randomized to receive ATR-12 on either the right or left side.

The primary endpoint is adverse events at 84 days as well as quantifying or qualifying incidence, severity, seriousness and relatedness. Secondary endpoints include investigators’ and patients’ global assessment of severity, concentration of recombinant human lymphoepithelial Kazal-type related inhibitor (rhLEKTI) in the plasma and on the skin following topical application. Biomarkers will be evaluated including KLK5, KLK7, IL-36, TARC/CCL17, trypsin-like activity and chymotrypsin-like activity.

The ongoing Phase I study for ATR-12 may evolve into a proof-of-concept trial that could enroll up to 20 patients including those in the Phase I portion. If supportive, the Phase II could lead to a larger pivotal trial acceptable to the FDA for BLA submission and approval.

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1. Mut Quej, J.E., et al. Netherton Syndrome: Unraveling the Molecular Underpinnings of a Rare Epidermal Disorder. International Journal of Medical Science and Clinical Research Studies. November 2023.

2. Mut Quej, J.E., et al. Netherton Syndrome: Unraveling the Molecular Underpinnings of a Rare Epidermal Disorder. International Journal of Medical Science and Clinical Research Studies. November 2023.

3. Netherton syndrome. MedlinePlus. Accessed April 2024.

4. Pontone, M., et al. Biological treatments for pediatric Netherton syndrome. Frontiers in Pediatrics. December 2022.

5. Qasim, W., et al. Genetic Correction of Netherton Syndrome Keratinocyte Stem Cells. Molecular Therapy. May 2010.

6. Renner, E.D., et al. Comel-Netherton syndrome defined as primary immunodeficiency. Journal of Allergy and Clinical Immunology, 2009.