...A Little On Orphan Drugs...
The U.S. FDA established the Orphan Drug Act (ODA) in January 1983. The ODA has since been enhanced and expanded, with a goal of encouraging pharmaceutical and biotechnology companies to develop drugs for rare diseases that may have a small market. Under the law, companies that develop such a drug (a drug for a disorder affecting fewer than 200,000 people in the United States) may sell it without competition for seven years, as well as gain certain clinical trial tax incentives. Orphan designation also qualifies the drug developer for a waiver of the prescription drug user fee. More on the FDA Orphan Drug Act can be found on the FDA's website.
CCIPN is a type of pain that results from nerve damage and is characterized by an abnormal hypersensitivity to innocuous, as well as noxious stimuli. This type of pain is extremely difficult to manage, fails to respond to standard analgesic interventions including opioids, and often worsens over time. There are currently no FDA approved treatments for CCIPN. We remind investors that the U.S. FDA has previously granted DARA “Fast Track” status for KRN5500 in this indication.
The global neuropathic pain market is forecast to grow to $5.5 billion by 2015. We see it as one of the more sought-after in the pharmaceutical industry, and Orphan Drug status makes the opportunity even more attractive. We found during our research that neuropathic pain occurs in 30% of cancer patients, with up to 90% in patients with advanced cancer (source). The incidence and severity of CCIPN vary considerably for each neurotoxic agent, administered alone or in combination, but for vincristine, cisplatin, oxaliplatin, and paclitaxel, estimates are as high as 70% to 90%. As many as 60% of patients receiving docetaxel and 40% of those treated with carboplatin develop CCIPN (source).
There are an estimated 1.6 million Americans living with active cancer (source). Conservatively, if we assume that half of 30% noted above with neuropathic pain are due to chemotherapy and other neurotoxic agents, the market opportunity for KRN5500 is around 240,000 patients. This seems in-line with the requirements of the ODA.
Background on KRN5500
DARA's KRN5500 an intravenous semisynthetic derivative of the nucleoside-like antineoplastic antibiotic spicamycin, originally isolated from the bacterium Streptomyces alanosinicus that has the potential to be a breakthrough, non-opioid medicine for the treatment of neuropathic pain in cancer patients, or more specifically, chronic chemotherapy-induced peripheral neuropathy (CCIPN).
KRN5500 was originally developed in an effort to identify new anti-cancer agents that induce apoptosis and differentiation of myeloid leukemia cells by Japan’s Kirin Brewery. The work was collaborated with the Massachusetts General Hospital (MGH), the National Cancer Institute (NCI), and Eastern Cooperative Oncology Group (ECOG) in the U.S. Preclinical data demonstrated that KRN5500 has significant in vitro activity against human chronic lymphocytic leukemia (CLL) cells, thus providing support for advancement into clinical trials for patients with CLL, as well as those with acute myeloid leukemia (AML) and solid tumors.
Four clinical trials have been conducted in cancer patients, including one in Japan and three in the U.S. A total of 91 patients with solid tumors have been treated with single IV KRN5500 doses of up to 21 mg/m2 and weekly doses of up to 42 mg/m2. Unfortunately, no objective antitumor response was observed at the maximum tolerated dose (MTD) in any of these programs. However, potent neuropathic pain reduction was observed in a significant number of patients. MGH has published this data in Clinical Cancer Research in November 2003 (paper).
On September 8, 2010, DARA Bio presented positive study results from a phase 2a dose escalation study with KRN5500 at the 13th World Congress on Pain (release). The multicenter, placebo-controlled phase 2a study was designed to evaluate the safety and efficacy of KRN5500 for treatment of neuropathic pain in patients with cancer. The trial assessed KRN550 vs. placebo to compare treatment differences in median changes from baseline in pain scores recorded by patients in a daily diary as measured by the numeric rating scale (NRS). Results show:
- KRN5500 significantly reduced neuropathic pain when compared to placebo (24% vs. 0%; p = 0.03) when looking at the median decrease in pain intensity from baseline.
- KRN5500 significant improved the number of patients achieving pain reduction from baseline of > 20% when compared to placebo (83% vs. 29%; p = 0.04).
- KRN5500 significantly reduced NRS from baseline compared to placebo when looking at the best weekly median response (29.5% vs. 0%; p = 0.02).
In addition, regression analysis of the best response for each patient over doses showed a significant linear decrease in pain intensity with increase in dose (slope = -18.2; p = 0.009).
These results indicate that KRN5500 was effective in reducing pain in patients with CCIPN in a dose-response relationship. The data show that higher doses of KRN5500 result in greater reductions in pain over time. The data was published in the Journal of Pain and Symptom Management in October 2011 (full paper).
In May 2012, DARA announced new data from the phase 2a study that incorporated a new analysis conducted by an external biostatistician with extensive FDA experience (release). Previous analyses of the study data were based predominantly on patient-reported Numeric Rating Scale (NRS) pain scores collected by healthcare professionals in a clinic setting during weekly visits, whereas this new analysis focused specifically on self-reported daily pain scores from patients' diaries. Responders in this analysis were defined as patients attaining a clinically-meaningful (at least 20%) improvement in mean NRS scores from baseline within any given week.
Of the 12 patients who received KRN5500 in this 19-patient trial, 7 (58%) were classified as responders. Further, 5 of the 7 (71%) showed sustained pain relief over several weeks. Of the 7 patients who received placebo, none were responders. We find these results impressive since patients enrolled in this proof-of-concept trial had unrelenting pain at baseline despite the concomitant use of other approved analgesic agents.
Individual Patient Scores
KRN5500 was generally well tolerated with adverse reactions limited to primarily gastrointestinal (GI) symptoms such as nausea, vomiting, and diarrhea. These were more frequent and severe in the KRN5500 arm than in the placebo arm. GI disorders affected 11 (92%) of the 12 patients dosed with KRN5500 vs. only 4 (57%) for the placebo. In fact, a third of the GI disorders relating to KRN5500 were deemed to be severe. However, DARA management has attributed these symptoms to the excipients (diluents such as propylene glycol) used in the KRN5500 formulation known to induce nausea and vomiting. Accordingly, DARA has since reformulated KRN5500 into a nano-emulsion lyophilised version to remove these excipients and reduce these GI related side effects.
Next Step - Find A Partner
In April 2010, DARA Bio announced that it had entered into a clinical trial agreement on KRN5500 with the Division of Cancer Prevention (DCP), National Cancer Institute (NCI), National Institutes of Health (NIH), for the treatment of CCIPN in patients with cancer. Under the terms of the collaboration, NCI will help fund future stages of development (release). We also suspect that DARA can tap into the NCI's established national network of investigators (Community Clinical Oncology Program - CCOP) to conduct the future studies.
But the collaboration alone with the NCI alone, even with financial support, isn't enough to fund a phase 2b program in CCIPN. Thus, we expect DARA to partner KRN5500 within the next few months. Management has guided to starting the phase 2b trial in CCIPN before the end of 2013. To get this done, DARA needs to secure a partner in the first quarter 2013. This would then allow six to nine months for finalizing the protocol and design, scale-up supply, and logistics. Gaining Orphan Drug status for KRN5500 should bring significant new interest from pharmaceutical companies.
Management has reported being in discussion with several interested parties to date on KNR5500. CCIPN represents an excellent niche indication with a quick route to market, especially with the FDA Fast Track designation and now potential Orphan Drug status. Larger indications within neuropathic pain and fibromyalgia represent a billion-dollar opportunity.
With respect to the phase 2b program, we expect that patients will have to have had confirmed CCIPN for a period of time, actively failing standard-of-care pain meds, including NSAIDs, anticonvulsants, antidepressants, and opioids. In the previous phase 2a studies discussed above, management tested KRN5500 out to 12 weeks of dosing. However, looking at the graphs above we see that the separation from placebo was statistically significant by weeks five or six. For the phase 2b program, management may be able to conduct a shorter trial. Of course, we expect a larger program than the 19 patients enrolled in the phase 2a study. We suspect management will seek to enroll around 50 subjects for the phase 2b. All in, we think costs are around $6 to $8 million.
In the past we've written that we are Bullish on DARA Bio. KRN5500 is mostly an afterthought in our investment thesis that centers around the company's core commercial assets in Soltamox, Gelclair, and Bionect. Orphan Drug status for KRN5500 changes things - it creates enormous upside coming from the pipeline, as well as partnerships.
DARA's specialty oncology commercial story with a path to profitability and cheap valuation has peaked our interest. At today's price, investors are getting KRN5500 for free. If the FDA grants Orphan Drug status for KRN5500 and the company can secure a partner for phase 2b, this free pipeline asset, largely ignored by investors, could be worth multiples of the company's current market valuation.