Coronado Discontinues Phase 2 Crohn’s Study Due to Lack of Efficacy

The bad news keeps coming at Coronado Biosciences (CNDO), although based on recent history, the news wasn’t a major surprise.

In mid-October, CNDO announced that TRUST-I, its Phase 2 clinical trial of CNDO-201 (Trichuris suis ova, or TSO) in Crohn’s disease failed to show improvement versus placebo. Now the company is stopping its TRUST-II Phase 2 study of the same therapy based on an interim analysis showing a lack of efficacy. The shares, which traded as high as $12 in May 2013, fell another 15% on the news and trade around $1.35 on Thursday. However, with $106 million in cash on hand and quarterly expenses of around $10 million, CNDO has the funding to continue operations for the foreseeable future.

TRUST-II is a Phase 2 clinical trial in Europe evaluating Trichuris suis ova (TSO) in Crohn’s disease. A second interim analysis of clinical data from approximately 240 patients who have completed 12 weeks of treatment in TRUST-II showed lack of efficacy, according to the Independent Data Monitoring Committee (IDMC), which recommended that the trial be stopped early for futility. CNDO’s development partner, Dr.Falk Pharma GmbH, is conducting the TRUST-II study and announced that it would discontinue the study based on the IDMC’s recommendation.

CNDO is still looking at TSO as a biologic treatment for other conditions, including multiple sclerosis, ulcerative colitis and autism. It is expected to start Phase 2 trials for type 1 diabetes, RA and psoriatic arthritis before the end of the year. Its other key product, CNDO-109, a biologic that activates natural killer (NK) cells\ for the treatment of acute myeloid leukemia (AML), multiple myeloma, and solid tumors, is currently in Phase 2a studies.

Last week, CNDO reported a third quarter net losses of $7.8 million, compared to net losses of $5.9 million a year ago. Research and development expenses were $5.4 million compared with $3.8 million in the year-earlier period. The increases in research and development expenses relate primarily to increased clinical activities in the TSO development program.  At September 30, 2013, Coronado’s cash totaled $106.3 million.

At $1.35 and a valuation well below cash (market cap of $52M), investors are clearly quite wary of this small company and what it will do with the balance sheet. While the story may again attract a new investor base in the next six months, we would continue to avoid CNDO.