Smaller pharmaceutical companies embark on an exciting journey as they seek to advance experimental drug candidates from pre-clinical work through clinical trials and ultimately to FDA approval. Each stage of development requires significant investment of time and money while risking potential failures should the results prove negative or inconclusive. These organizations are faced with repeatedly convincing investors that the project is worthy of funding, or perhaps seeking partnerships with larger pharma’s with more resources should the task prove too large.
Cardiol Therapeutics Inc. (Nasdaq: CRDL)(TSX: CRDL) has been navigating this path with aplomb. Cardiol recently raised over $11 million to finance one of its drug programs, while the company’s existing cash reserves were already sufficient to complete another. Cardiol specializes in developing novel therapeutics to address problematic heart conditions, including pericarditis, myocarditis, and heart failure. Here we’ll take a look at how Cardiol’s financial status impacts each of those investigative avenues.
Phase III Clinical Trial Ongoing
Cardiol is currently conducting a Phase III trial for CardiolRx™ in recurrent pericarditis, with the asset having received Orphan Drug Designation from the U.S. Food and Drug Administration. Dubbed the MAVERIC trial, it is the final step before a planned New Drug Application with the FDA. The drug candidate is CardiolRx™, an oral formulation which showed great promise in the Phase II trial for the treatment of this troubling disease.
Recurrent Pericarditis is estimated to affect around 38,000 Americans annually, and a 2021 study found recurrent pericarditis patients spent nearly $3,000/month trying to treat their persistent cases. Importantly, the recurrent pericarditis market is projected to reach a billion dollars in the United States by 2028.
Cardiol already had the cash on hand, prior to the recent raise, to fund this trial all the way through its completion. Should things go as planned, an approval would mark Cardiol’s first and could add tremendous value to the company.
As a reference, the only FDA-approved treatment for this debilitating inflammatory heart condition is rilonacept (trade name ARCALYST), marketed by Kiniksa Pharmaceuticals (Nasdaq: KNSA). ARCALYST is mainly responsible for the company’s ~$2.8 billion valuation. It’s an interleukin-1 blocker and immunosuppressant primarily used as a third line therapy, which Kiniksa licensed from Regeneron in 2017.
Heart Failure – The Largest Indication
Whereas recurrent pericarditis is an orphan disease affecting a relatively small patient population, heart failure is one of the most common and deadly forms of cardiac disease. Heart failure affects more than 64 million people globally. Over 6 million Americans over the age of 20 are living with heart failure, and this number is projected to increase to >8 million by 2030. Healthcare costs associated with heart failure exceed $30 billion annually in the United States alone.
Cardiol’s subcutaneous drug candidate, CRD-38, is in the IND-enabling stage of development. Data demonstrates improvement in cardiac function and reductions in cardiac hypertrophy, remodeling, inflammation, and cell death – key underlying mechanisms in heart failure.
The company recently completed a Phase II trial of CardiolRx™ for the treatment of acute myocarditis, and the results accelerated Cardiol’s efforts to advance CRD-38 in heart disease. Interestingly, both drug candidates have the same active pharmaceutical ingredient, and the myocarditis trial showed a significant reduction in left ventricular (LV) mass, which turns out to be a key component of heart failure.
Acute myocarditis is another orphan-eligible indication affecting a smaller population of patients. While Cardiol is by no means abandoning the myocarditis program, the finding of significant LV mass reduction in the human trial has spurred immediate action on the much larger heart failure program. Here is a quote from the financing press release:
“As recruitment in our pivotal Phase III MAVERIC trial gains momentum, with several prominent centers across the U.S. now enrolling patients, we are pleased to have secured a direct investment of US$11.4 million to strengthen our balance sheet and accelerate the development of our novel heart failure drug, CRD-38, based on the recently reported findings from our ARCHER trial,” said David Elsley, President and CEO of Cardiol Therapeutics.
“Topline results from our ARCHER trial demonstrated a significant reduction in LV mass—marking the first evidence of structural and remodeling improvement in patients with myocarditis. This landmark finding represents our second clinical validation in inflammatory heart disease and establishes a key translational link to data published earlier this year in the Journal of the American College of Cardiology, which demonstrated the beneficial effects of the active pharmaceutical ingredient or API in CardiolRx on cardiac structure, inflammation, and fibrosis in a model of heart failure. The ARCHER findings support pursuing an additional Orphan Drug Designation for CardiolRx in myocarditis and advancing the development of our next-generation CRD-38 formulation, which delivers the same API via subcutaneous administration, to target the broader heart failure market. Notably, blockbuster drugs that reduce LV mass have been shown to lower heart failure-related death and hospitalization, underscoring the clinical potential of Cardiol’s differentiated anti-inflammatory mechanism to address a large unmet need in heart failure, where five-year mortality rates still exceed 50%.”
Investor Takeaway
Cardiol now has the cash to carry it into Q3 2027 and through the IND-enabling phase of development for their novel subcutaneous drug CRD-38. Facing a sizable indication that necessitates large-scale clinical studies and complex commercialization efforts, Cardiol is proactively seeking collaborations with leading pharmaceutical companies to harness the financial and operational strength of Big Pharma.
Combined with the fully funded ongoing Phase III trial for recurrent pericarditis, as well as the potential to further advance another Orphan Drug-eligible program in acute myocarditis, Cardiol offers several opportunities for success. Advancement of any one of these candidates has potential to greatly impact the company’s current ~$110 million market capitalization. Investors are encouraged to conduct their own due diligence on Cardiol Therapeutics.
