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SQX770: A Novel Immunologic Approach for the Prevention of Cold Sores (Herpes Labialis)

June 2021

Section information 1

Harnessing the power of the immune

system to prevent cold sores

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Executive Summary• SQX770 is a unique, first in class topical immunomodulator

• SQX770 is the only product shown to reduce the number of cold sore events or flareups as well as their severity.

• SQX770 is applied topically and has a systemic effect: One topical dose applied to the arm prevents outbreaks for at least 4 months

• SQX770 addresses a very substantial worldwide market – 2.1% of the population has 6 or more outbreaks per year and 15% have 1 or more.

• Efficacy and safety demonstrated in each of two multi-center, double-blind placebo-controlled clinical trials

• Patents covering SQX770 are issued in US until at least 2036 and pending in Europe, China, Canada, Japan, India and Australia.

• Estimate of $600 million annual revenue in oral herpes in U.S., $3.6 billion worldwide in oral and genital herpes.

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Squarex Technology

• SQX770

– Small Molecule

– Topical immuno-sensitizer

– Prevents HSV-1 outbreaks

• Active ingredient:

– Squaric acid dibutyl ester (SADBE)

• Proven effective in preventing cold sores in two randomized double-blind placebo-controlled clinical trials Squaric acid dibutyl ester (SADBE)

One topical dose to the arm prevents outbreaks for at least 4 months

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Medical Need• HSV-1 Infection (herpes

labialis),a very common condition

– Herpes simplex virus

– Small blisters and sores

• >50% of persons are infected with HSV-1

• 15% of adults have 1 or more herpes labialis outbreaks per year*

• 2.1% of adults have ≥6 outbreaks per year*

• No current therapy for prevention; just treatment.

* Stalder, J.F. et al. 2013. Value in Health. 6 (6):760.

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• No drugs approved for preventing herpes labialis outbreaks (or even in clinical trials other than SQX770)

– Currently approved drugs only act to shorten the length of outbreaks once they occur

– Current drugs do nothing to prevent the next occurrence

– Prevention is better than treatment

• Huge market

– US market potential estimated in excess of >$600 million dollars

• 2.1% of population has ≥6 outbreaks per year, 15% has ≥1 outbreak per year.

• Survey of pharmacy benefit managers showed most would approve paying more than $100 per dose at 4 doses per year.

Positioning: The only drug in an enormous market

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• Huge market

– US market potential estimated in excess of >$600 million dollars

• 2.1% of population has ≥6 outbreaks per year, 15% has ≥1 outbreak per year.

• Survey of pharmacy benefit managers showed most would approve paying more than $100 per dose at 4 doses per year.

• If just half of those with ≥6 outbreaks per year and none with 1-5 outbreaks per year received the drug, and only received 2 doses per year instead of the recommended 4 doses, at $100 per dose, revenue in U.S. alone = 3 million patients x 2 doses/year x $100 per dose = $600 million per year.

• Would probably have equal or greater revenue in the 43 million Americans with 1-5 outbreaks per year.

• Would have revenue outside the U.S., probably double the U.S.

• Will seek approval in genital herpes after oral herpes and that market is probably roughly equal to the oral herpes market.

Revenue Estimate

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• One topical dose to the arm prevents outbreaks for 4 months

• Can be given between or during outbreaks

• Extended duration of action (only necessary to apply 4 times per year)

Ease of Use

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Phase 1 Trial Design

• Conducted at Massachusetts General Hospital

• Study drug

– 2% SQX770 in DMSO

• 43 adult subjects – 6 or more cold sore outbreaks annually (mean 7.75 episodes)

• Randomization schedule

– Placebo (DMSO)

– Study medication (9 males; 34 females)

Palli MA, McTavish H, Kimball A, Horn TD. Immunotherapy of recurrent herpes labialis with squaric acid. JAMA Dermatol. 2017;153:828-829.

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• SQX770 well tolerated• No serious adverse events

– Mild reversible redness at sensitization site

*SQX770 tripled time to next cold sore outbreak in frequent sufferers compared to placebo*

P=0.006

Phase 1 Study Results43 patients, randomized, placebo-controlled double-blind, at

Mass. General Hospital

Palli MA, McTavish H, Kimball A, Horn TD. Immunotherapy of recurrent herpes labialis with squaric acid. JAMA Dermatol. 2017;153:828-829.

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• Persons with infrequent or zero outbreaks vs. those with at least 6 outbreaks have:– Higher immune cell proliferation (PBMCs) to HSV-1 virus– Altered immune gene expression against HSV-1 virus,

• higher interferon gamma (IFNG) (cellular immune response, type 1)• lower interleukin-5 (IL5) (antibody or humoral immune response, type 2)

• 8 weeks after one dose of SQX770 results in:– Increased immune cell proliferation to HSV-1 virus– Improved immune gene expression against HSV-1 virus

• higher IFNG• lower IL5

– Restored immune levels even beyond that seen in persons with infrequent or zero outbreaks

Mechanism of Action Clinical Trial:SQX770 Strengthens the Immune System

SQX770 improves the immune system response to HSV-1McTavish H, Zerebiec KW, Zeller JC, Shekels LL, Matson MA, Kren BT. Immune characteristics correlating with HSV-1 immune control and effect of squaric acid dibutyl ester on immune characteristics of subjects with frequent herpes labialis episodes. Immun. Inflamm. Dis. 2019;7(1):22-40.

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Phase 2 Trial Design

• Conducted at five US centers, including Stanford and Mass. General

• Included 139 patients reporting 4 or more cold sore outbreaks annually (median 6 episodes)

• Patients randomized to placebo (DMSO) or 2% SQX770 in DMSO

Chang ALS, Honari G, Guan L, Zhao L, Palli MA, Horn TD, Dudek AZ, McTavish H. A phase 2, multi-center, placebo-controlled study of single dose squaric acid dibutyl ester (SADBE) to reduce frequency of outbreaks in subjects with recurrent herpes labialis. J. Am. Assoc. Dermatol. Apr 11;S0190-9622(20)30561-2. doi: 10.1016/j.jaad.2020.04.021. 2020. In press.

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Phase 2 Trial Results

Greatest effectiveness 6 weeks to 4 months after one dose, as predicted

Over days 43-121, the one-dose group vs. placebo:

• 2.4-fold longer time to next outbreak (P=0.02)

• 2.6-fold fewer outbreaks (P<0.01)

• The outbreaks they did have were significantly less severe. On a 0-3 scale, average severity score 0.3 vs. 1.4 (P=0.01)

Chang ALS, Honari G, Guan L, Zhao L, Palli MA, Horn TD, Dudek AZ, McTavish H. A phase 2, multi-center, placebo-controlled study of single dose squaric acid dibutyl ester (SADBE) to reduce frequency of outbreaks in subjects with recurrent herpes labialis. J. Am. Assoc. Dermatol. Apr 11;S0190-9622(20)30561-2. doi: 10.1016/j.jaad.2020.04.021. 2020. In press.

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Phase 2 Trial Conclusions

• Results replicate earlier Phase 1 outcome in multi-center trial

– SQX770 reduces the frequency of cold sore outbreaks

– SQX770 reduces the severity of cold sore outbreaks

• Maximal effectiveness after initial immune training period, like a vaccine

• Duration of effectiveness up to four months

– Dosing frequency of 3-4 times per year

• Safety

– Study drug well tolerated

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Completed End-of-Phase 2 meeting with the FDA.

• Path to FDA approval is clear and achievable.

Patent exclusivity in U.S. and global markets until at least 2036.

• Four issued U.S. patents and others pending.

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Management

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Kathleen Littrell, M.S. Vice President for Clinical Development

• >10 years experience managing all phases of clinical trials

Hugh McTavish, Ph.D., J.D. President, CEO, and Founder

• Ph.D. biochemist and patent attorney

• Author of several refereed scientific publications, inventor of >10 issued U.S. patents, 15 years experience as patent attorney

• Co-inventor of company technology

Thomas Horn, M.D. Founder and Advisor

• Board certified dermatologist and dermatopathology Faculty at Harvard Medical School

• Former Executive Director of the American Board of Dermatology

• Co-inventor of the company’s technology

Arkadiusz Dudek, M.D Chief Medical Officer

• Practicing Physician

• Assoc. Prof. of Medicine at Univ. of Minnesota

• Extensive clinical trial experience.