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Equity Research Nosa Plugs: drug delivery taking a big first step

6 Feb 2024

Carlsquare Equity Research is optimistic about the recent successful steps in the development of NOSA drug delivery. Through independent testing in a laboratory in Lund, including using an artificial nose, the company showed strong dispersal with strong uptake at the favorable parts of the nose. The news highlights the strong potential in this leg of the business, with more progress expected throughout 2024. They were discussed in an interview available here.

Nosa drug delivery tested in the laboratory

In the early morning of Monday, February 5, NOSA announced progress in the testing of their drug delivery plugs. In the fall of 2023, NOSA conducted pre-clinical testing regarding pharmaceutical administration via the nose. Different substances were tested before the study to select the ones best suited for NOSA drug delivery. More precisely, the testing of different substances had three intended goals; drug suitability for nasal administration, which of the substances that was most likely to benefit from a new mode of administration and finally to be as efficient as possible in terms of the regulatory process. After landing on one substance in particular, testing began in an independent laboratory in Lund using, among other things, an artificial nose ex-vivo to track dispersal and uptake.

The study revealed that the substance was both dispersed and taken up by the nose at a desirable rate at the desired locations in the nose. As such, all parameters being tested were within the desirable range. Intriguingly, the results of the test also showed that the uptake could be very fast, which is highly sought after when it comes to indications such as acute pain or abstinence relief. Thus, the window of opportunity for this patented technology has only gotten bigger. As was discussed in our interview with the CEO, Adrian Liljefors, one example of a possible indication included acute pain relief in kids and infants. These patients often are afraid of needles and thus could benefit from a less invasive mode of administration.

Several important factors play into the strong results found in the study and that should be of interest for potential partners in the future. First, NOSA has a patented technique of casting their plugs with substances in gaseous form. This critical fact differentiates NOSA drug delivery from its competitors that use powder or liquids through inhalers or strips. Furthermore, it allows for uptake through the olfactory bulb, one of the few places where drugs can circumvent the blood-brain barrier (BBB). By not going orally this also means that the substance can circumvent the first-pass effect, whereupon drugs administered orally first go through the liver and gut where much of the substance is metabolized. This, in turn, means that drugs administered this way tend to be of significantly higher doses to compensate, which in turn heightens the risk of side effects, as was mentioned during our interview referenced in the paragraph above.

Possibilities for partnerships offer short routes to patients

The company is primed for more exciting news from NOSA drug delivery in the coming months, with money in the bank for the selection of a target substance and indication and later a first in-human clinical study. As drug delivery technology faces less regulatory hurdles than traditional pharmaceutical development, NOSA should be able to reach patients relatively quickly (1-2 years rather than 7-10) upon striking a deal. With the technology being built upon a patented method of casting gases into plastics, NOSA has, in essence, created a platform from which they can launch several new products through partnerships and licensing deals. With pharmaceutical companies fronting the costs for the development of the actual drugs, NOSA should be able to reach patients faster and without significant investments of their own. As was mentioned in the press release and sequentially discussed in our interview, investments have already been made to secure sufficient production capacity. This means that should NOSA find a partner, production should not risk becoming a bottleneck.

NOSA primed for an exciting 2024

In summary, Carlsquare Equity Research finds the results from the pre-clinical studies highly promising. While the core business of NOSA in their current market segments provides strong short-term prospects, with smell training expected to boost the B2C segment of the company, drug delivery offers enticing prospects for the medium and long term. Worth noting, however, is that it is still too early to credibly value the project. We expect a long list of possible companies, indications and substances that could benefit from the technology, but this needs to be narrowed down to the most promising fit with the best net present value. On the flip side, it is also not outside the realm of possibility that a pharmaceutical company would prefer to outright purchase NOSA to get the production technology in-house, likely following proof-of-concept in humans. To finish, even though the project is still not ready for inclusion in our valuation, we recognize the potential and expect to include it faster than we thought previously.

Read our latest update (Dec 23) covering the directed shares issues here and watch our interview with the CEO, Adrian Liljefors here.


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Equity Research Nosa Plugs: drug delivery taking a big first step