That was apparent yet again this week, with a slew of binary events that moved stocks in unexpected ways.
Beginning with Zafgen (ZFGN). The developer of a new type of obesity drug – a methionine aminopeptidase 2 (MetAP2 ) inhibitor called beloranib – dropped out of a non-deal roadshow early in the week. Investors feared the worst and sent the stock down by 70% over the following two days, while the company remained completely silent on what, if anything, had prompted the cancellations.
On Wednesday, the company revealed the cause of the cancellations: a patient death in an ongoing phase 3 trial of beloranib in patients with Prader-Willi Syndrome, a rare genetic eating disorder. Whether the death was in a patient taking beloranib, or a placebo-treated patient, was not addressed.
Finally, the company said Friday that the death did occur in a patient receiving beloranib, and the company had received verbal notice from the FDA that beloranib would be placed on a partial clinical hold. While the exact cause of death is yet unknown, beloranib has been associated with thromboembolic events in the past. Patients already participating in the Prader-Willi study (called ZAF-311) will be screened for existing thrombotic disease prior to receiving the drug further and will be monitored through the completion of the study. Zafgen said they anticipate announcing top-line data in the first quarter of next year.
Below is a chart of the stock’s performance last week. ZFGN dropped 70% in the vaccuum of silence that followed the cancellation, then rallied 50% when the patient death was announced. On confirmation that it was a beloranib patient, and that the study would be put on hold, the stock dropped even lower than before. That’s one helluva 5-day ride, and yet another reminder that biotech investors need a strong stomach.
In one of the most anticipated events of the year, PTC Therapeutics (PTCT) released top-line results from a phase 3 trial of Translarna (ataluren) this Thursday, its oral drug for Duchenne Muscular Dystrophy. The ACT study missed its primary endpoint in the intent-to-treat population: Translarna-treated patients demonstrated a 15 meter benefit on the 6-minute walk test (6MWT) compared to placebo-treated patients, which was not statistically significant (p=0.213).
But, PTC plans to file for approval in the U.S. anyway, pointing to subset and meta-analyses that, the company says, indicate the drug does benefit DMD patients with nonsense mutations. Translarna produced a 47 meter benefit (p=0.007) in a pre-specified subset of patients with baseline 6MWT results of 300-400 meters, which the company says is in line with their previous [failed] Phase 2b trial. The company also pointed to a pre-specified meta-analysis of the combined ACT phase 3 and prior phase 2b trials, in which Translarna demonstrated a statistically significant benefit on the primary (p=0.015) endpoint.
Whether that’s enough to convince the FDA is another question entirely, but PTC rallied into the end of the week.
Biotech investors will be well aware of Sarepta Therapeutics‘ (SRPT) eteplirsen and Biomarin’s (BMRN) drisapersen, which also target DMD subsets and will both go before the FDA for approval in the next 6 months (February and December, respectively). None of these three companies bring a perfectly clean set of clinical data to their regulatory discussions, but all three address an entirely unmet need. Worth noting, the smaller players Sarepta and PTC (Biomarin has a deeper pipeline and commercial portfolio) are both valued at about $1.2 billion by the markets, as of Friday’s close. We’ll be curious to see how the two trade in the run-up to regulatory decisions on drisapersen and eteplirsen.
This Friday, Cempra (CEMP) released data from SOLITAIRE-IV, a phase 3 trial of the antibiotic solithromycin in community acquired bacterial pneumonia (CABP). The stock initially climbed higher, but fell as investors digested the drug’s side effect and safety profile.
Solithromycin met the majority of its efficacy endpoints, demonstrating non-inferiority to the standard moxifloxacin nearly across the board – but with some hangups. Namely, the drug was not numerically superior on any endpoints, for which investors had been optimistic; and solithromycin appeared to raise liver enzymes (a pre-cursor to deleterious toxicity) at a higher rate than moxifloxacin. That prompted flashbacks to an earlier ketolide called telithromycin (Ketek), an antibiotic that was approved but never gained traction commercially due to liver toxicity that only emerged shortly after it was on the market. Solithromycin was supposed to avoid this very same issue.
Investor expectations were high coming into this phase 3 event, as solithromycin had performed well in every other clinical trial to date. That’s exactly what we told PropThink readers just two weeks ago – high expectations skewed risk to the downside, and we suggested a strong hedge for anyone involved. Click here to read that, and our take on the latest data. CEMP closed Friday down about 27%.
