Coya Therapeutics (Nasdaq: COYA) is an affordable, off-the-radar name developing a drug, COYA 302, for ALS, an indication with a lot of clinical baggage but plenty of green space. The company is completing enrollment in a Phase 2/3 study with pivotal potential, backed by $43 million in cash, enough to see it through to top-line data expected in the second quarter of next year. It also has a partner in Dr. Reddy’s Laboratories, whose involvement is both comforting and curious. Affordable, ignored, binary, and underwritten by an unusual partner, it is the kind of setup that we find ourselves drawn to.
Novel Approach
COYA 302 combines two drugs, low-dose IL-2 and CTLA-4 Ig, both aimed at restoring regulatory T cell (Treg) function. While the broader immune system is optimized to seek out and eliminate threats, Tregs provide the necessary balance by dampening destructive cellular activity and winding down inflammation after a threat subsides. In ALS, they stop doing that job. Inflammation around dying motor neurons runs unchecked, and rather than clearing damage, the immune response becomes part of what causes it.
Treg biology is among the most validated areas of immunology. Shimon Sakaguchi shared last year’s Nobel Prize for discovering them, yet nearly all work built on that science has focused on inflammation and immunology. Coya is applying that science to neurodegeneration, where no Treg-directed therapy has yet produced a controlled clinical win. That is the risk, and it is also the opportunity. What makes the bet reasonable is that ALS patients have fewer and weaker Tregs, and the worse they perform, the faster the disease progresses, an observation from Stanley Appel’s group at Houston Methodist, where Coya’s science originated.
In a BiotechTV interview earlier this year, Coya’s CEO Arun Swaminathan provided the mechanistic rationale for the fixed-dose combination of IL-2 and CTLA-4 Ig in a manner that resonated with us:
“We want to increase Treg numbers, increase their suppressive function. But the critical factor is that when you restore Treg function, and these Tregs are back in an inflammatory environment, which is the case in ALS and FTD, the macro environment, the milieu, is still inflammatory. And when that happens, these Tregs become dysfunctional pretty fast. We saw that in our early cell therapy work: we took out the Tregs, restored their function, and put them back in patients. Yes, it worked, but the Tregs became dysfunctional pretty fast… And that’s where the combination of a low-dose interleukin-2 and a CTLA-4 Ig comes. The low-dose IL-2 expands the Tregs, increases their function, and the CTLA-4, by acting on a different pathway, the CD86 pathway, gets the inflammatory milieu less inflammatory… So now the Tregs that have become functional stay functional.”
To further simplify, low-dose IL-2 increases Treg numbers and enhances their function. According to Coya, it cannot, on its own, keep them working in inflamed tissue, and that is the second drug’s job. CTLA-4 Ig (abatacept) cools the inflammatory environment that would otherwise render those Tregs dysfunctional again.
Half of the Story
Low-dose IL-2, half of COYA 302, has had one large, properly controlled trial in ALS. That was MIROCALS, an investigator-sponsored trial that enrolled 220 patients and gave them low-dose IL-2 for five consecutive days once a month, or placebo, both on top of riluzole, a decades-old standard of care (SoC), for eighteen months. The results were published in the Lancet last year.
The primary survival endpoint showed that 63% of patients in the IL-2 group and 55% of those in the placebo group were still alive at 21 months. This translated to a 19% lower risk of death with IL-2 treatment versus SoC, but the difference was not statistically significant. The study’s secondary functional endpoint, the ALS Functional Rating Scale-Revised (ALSFRS-R), also missed, with a non-significant 12% slower rate of decline in favor of IL-2 versus SoC.
However, in a pre-specified subgroup analysis, patients with slower-progressing disease, defined by lower cerebrospinal fluid (CSF) neurofilament levels measured at randomization, showed a statistically significant benefit with IL-2 in both survival (a 48% lower risk of death) and function (a 23% slower rate of ALSFRS-R decline) versus SoC. This subgroup analysis matters because Coya is enrolling these slower progressors in its ongoing Phase 2/3 ALSTARS study.
The Whole Story
The only human data on Coya’s combination come from a small investigator-initiated study in which four ALS patients received COYA 302 for 48 weeks.
In that study, two patients improved by four and three points on the ALSFRS-R scale, one remained stable, and one lost six points. The group average is more informative. These four patients began with a mean score of 33.5 and reached 33.75 twenty-four weeks later—the same timeframe ALSTARS uses for its primary endpoint. In other words, a cohort expected to decline over six months did not. By week 48, the mean had fallen to 32. Treatment then stopped, and eight weeks later, the average had dropped to 30. For context, placebo patients in MIROCALS declined by a median of 1.11 points per month, or 1.06 points per month among slow progressors. Thus, the two-point decline during the two months after COYA 302 treatment ended roughly matches the course of untreated ALS.
It feels like we use the breadcrumb analogy in most of our pieces, but it applies to Coya too. Four patients are not evidence; they are a breadcrumb, and we would rather follow one than none.
Coya’s Big Bet(s)
Coya is expected to complete enrollment in its Phase 2/3 ALSTARS study shortly. The study will enroll 120 patients with mild-to-moderate ALS across three arms: two treatment arms and one placebo arm. Both treatment arms use the same COYA 302 subcutaneous dose, but one group receives a single five-day dosing block per four-week cycle, while the other receives two. To be clear, on a monthly (four-week) schedule, patients in all three arms will be treated in weeks one and three, with treatment arm one receiving drug in week 1 and placebo in week 3, treatment arm two receiving drug in weeks 1 and 3, and the control arm receiving placebo in weeks 1 and 3. The study’s primary endpoint is the change in ALSFRS-R at week 24 versus baseline. Top-line data are expected in Q2 2027.
It is worth noting which of these two schedules has actually been tried in patients. The four-patient study we described above dosed 302 every two weeks for 24 cycles over 48 weeks, which matches regimen two in ALSTARS. Arm one, at half that exposure, has never been given to an ALS patient. Combined with the MIROCALS authors’ recommendation to optimize dosing to sustain IL-2 levels between cycles, arm two is the one we will watch most closely.
One key inclusion criterion we think investors should focus on is the MIROCALS study. In ALSTARS, patients need a baseline ALSFRS-R score of ≥35 AND documented disease progression of between −0.5 and −1.5 points per month. The latter is the key study enrichment criterion that piques our interest. Recall that in a prespecified secondary analysis, MIROCALS patients who were slow progressors showed statistically significant improvements in survival and function with IL-2 treatment. However, there was no screening in advance to exclude fast-progressing patients, and that fifth of the study population, which showed no benefit at all, is a large part of why the overall result missed. ALSTARS excludes those fast-progressing patients. The 1.5-point-per-month ceiling sits below the roughly two points per month that MIROCALS’s fast-progressing non-responders were losing. To be clear, Coya is not screening entry based on CSF neurofilament, the measure MIROCALS used to sort patients by pace of progression. However, we think the −0.5 to −1.5 points per month entry criterion should largely exclude the fast-progressing patients that tripped up MIROCALS. In effect, with ALSTARS, Coya is running the trial that MIROCALS could only assemble in hindsight.
That brings us to Coya’s other big bet, CTLA-4 Ig’s contribution. Coya is betting that CTLA-4 Ig can, as CEO Swaminathan says, dampen the “inflammatory milieu” and improve Treg function. As we highlighted above, the complementary effect of IL-2 and CTLA-4 Ig makes mechanistic sense. IL-2 alone slowed ALSFRS-R decline in MIROCALS. In four patients, the combination, COYA 302, appeared to halt it for 24 weeks. That is a small sample making a large claim, and it is the claim ALSTARS is designed to test.
The Curious Partner
Dr. Reddy’s Laboratories is one of India’s largest pharmaceutical companies, built on generics and biosimilars. It is not known for substantial investment in early clinical research. Yet in December 2023, Dr. Reddy’s licensed rights to COYA 302 for ALS for $7.5 million upfront. Coya can also earn roughly $700 million in development, regulatory, and sales milestones, along with mid-teen royalties. Reddy’s has subsequently paid another $4.2 million upon IND acceptance and $4.2 million when the first patient was dosed in ALSTARS. In January, Reddy’s made a $10 million equity investment in Coya, taking a 9.7% stake.
What makes the relationship more interesting than a licensing deal is that Dr. Reddy’s is also a supplier. The CTLA-4 Ig half of COYA 302 is Dr. Reddy’s own abatacept biosimilar candidate. So the partner is a licensee, a manufacturer, and a shareholder, three separate ways of being exposed to a single Phase 2/3 readout.
In our view, this makes Dr. Reddy’s involvement far more compelling than a standard licensing arrangement. If ALSTARS yields positive results, consider their strategic positioning: they retain ALS commercial rights across most primary markets, produce one of the therapy’s core components, maintain a 9.7% equity stake, and are obligated to pay royalties on all sales and to make several hundred million dollars in milestone payments. Consequently, when you consider who will be at the negotiating table with strong data, the answer is clear—they are already seated there.
The Middle Ground
Coya has done what it can to improve its odds of success. It enriched the population to exclude the fast progressors who sank MIROCALS, it built in a second regimen that doses twice as often in response to what the MIROCALS authors themselves recommended, and it is testing a combination whose two halves work on different pathways. None of that changes the fundamental character of this readout. There is no substantial precedent data here. This is a high-risk readout, and we would not pretend otherwise.
What strikes us is that the market appears to have priced in that risk and then some. At roughly $115 million in market cap and $75 million in enterprise value, the market is assigning very little value to a well-designed Phase 2/3 study in a rare disease, where any success, statistical hit, trend, etc., could capture the attention and imagination of patient advocates, the media, and investors.
A statistical hit on the primary would be an enormous win for patients and investors, but we think a middle ground is also being overlooked. Suppose the treatment arms separate numerically from placebo on ALSFRS-R at 24 weeks, with a healthy trend, but fall short of statistical significance. In ALS, with a tolerable drug, a coherent mechanism, and a real effect size that falls short on powering, it is very hard to argue the right answer is to stop. Also recall that this is registered as a Phase 2/3 study, which implies it could be registrational or supportive of a larger Phase 3. Such a study should be fundable, whether Coya raises it in the equity markets or Reddy’s pays for it.
The secondary data, specifically plasma neurofilament levels, could make such a scenario far more compelling. If the drug narrowly misses its functional target while showing a marked neurofilament reduction, Coya would have a solid basis to discuss accelerated approval with the FDA as a confirmatory trial gets underway. Regulatory precedent already supports this route. In 2023, Biogen’s Qalsody secured approval based on neurofilament lowering despite failing to hit its primary functional endpoint in a genetic subset of ALS. Clene (Nasdaq: CLNN) is now evaluating whether this regulatory framework applies to sporadic ALS, having received FDA feedback that its data might support an accelerated NDA submission using neurofilament as a reasonably likely surrogate marker. Clene has guided that it plans to submit its NDA in early Q4, which should put FDA’s acceptance for review decision before year-end, an interesting read-through for Coya on whether the Agency is willing to entertain neurofilament as a pathway to accelerated approval in ALS.
Final Thoughts
The evidence behind COYA 302 in ALS is thin. It is not, however, without reason for optimism, and in our opinion the range of potential outcomes extends well beyond what a $115 million valuation and balance sheet that will see it through top-line data implies. An unambiguous success would drive a multi-fold re-rating. Even an intermediate result, a numerical trend that falls short of significance but supported by strong neurofilament data, could be received well by the market, justify a larger trial, warrant a conversation with the agency, and keep the partner engaged. Outright failure is certainly possible, and we do not dismiss it.
Affordable, ignored, binary, and underwritten by an unusual partner. For the kind of investor who is built for that, Coya is worth the risk.