COVID-19 DRUG DEVELOPMENT UPDATE – FDA Issues Latest Vaccine Guidance, Countries Vie For Vaccines – There are now 2,378 global coronavirus-related studies posted on ClinicalTrials.gov (https://clinicaltrials.gov/ct2/results?cond=COVID-19). There are now more than 10 million people that have tested positive, many in the U.S., causing re-closures in several regions. Multiple vaccines are releasing initial data in July including MRNA, AZN/Oxford, PFE/BNTX, INO and NVAX. Remdesivir pricing announced. Countries and companies establishing vaccine manufacturing capacity before any data. Some cytokine storm studies approaching, too. Investor sentiment still solid despite new guidelines suggesting more stringent vaccine development requirements and possibly longer timelines, never-ending secondary offerings and hot IPOs.

FDA Vaccine Guidance Causes Some To Pause

On June 30, the FDA posted updated guidance on the requirements necessary to gain approval and eventual commercialization for any COVID vaccine (https://www.fda.gov/news-events/press-announcements/coronavirus-covid-19-update-fda-takes-action-help-facilitate-timely-development-safe-effective-covid). In sum, the agency reiterated that while there are various approaches (some proven, some novel) to address the pandemic, “Right now, neither the FDA nor the scientific community can predict how quickly data will be generated from vaccine clinical trials. Once data are generated, the agency is committed to thoroughly and expeditiously evaluating it all. But make no mistake: the FDA will only approve or make available a COVID-19 vaccine if we determine that it meets the high standards that people have come to expect of the agency.” Most important, the FDA tells us that traditional Phase III trials will be necessary and despite the urgency, there will be no shortcuts allowed. That and some uninspiring early data by INO, has paused the meteoric rise in the story stocks of today. Even for new leader BNTX (see below).

Remdesivir Pricing Below ICER Recommendation

Gilead announced pricing of its Covid-19 antiviral drug remdesivir. While the figure is lower than some estimates, shares of Gilead are bouncing on the news. A five-day course of remdesivir will cost private health insurers in the U.S. $3,120, and will cost governments of developed nations, including the U.S., $2,340. The Company believes that remdesivir’s ability to shorten recovery times for Covid-19 patients will result in hospital savings of $12,000 per patient in the U.S. It said it chose to set its price for remdesivir lower “to ensure broad and equitable access at a time of urgent global need.” The Institute for Clinical and Economic Review (ICER), an influential research group that issues drug pricing recommendations, said on June 24 that Gilead could charge between $4,580 and $5,080 per treatment course if remdesivir were priced based on the drug’s cost-effectiveness. Hence, pricing is lower than the ICER recommendation and in our opinion that should please providers and payors. Governments have already begun scooping up supply.

PFE/BNTX – Jumps To Lead

On July 1, a COVID-19 vaccine from PFE and BioNtech (BNTX) showed initial safety and produced strong neutralizing antibodies against the virus, keeping it at the forefront of the vaccine race. The messenger RNA product was tested on 45 healthy adults divided into several groups – 24 of them got two injections with two different doses of the experimental vaccine, 12 of them received a single shot with a very high dose and 9 patients got two placebo injections. All patients developed SARS-CoV-2 neutralizing antibodies 1.8- and 2.8-times the level of recovered patients. Low grade fever was a common adverse reaction (75%) in patients receiving the highest dose but only 8.3% in participants on the lower dose. A Phase 2b/3 trial is scheduled to start in late-July and will seek to confirm whether or not there is sufficient efficacy against preventing COVID-19. Additional data from three other candidates (BNT162a1, BNT162b2, BNT162c2) are expected over the coming weeks, after which they will select the best candidate to  move into a larger trial involving as many as 30,000 patients. The study had been uploaded to the preprint server MedRxiv, but has yet to be peer-reviewed. Nonetheless, it appears to be solid enough to create the current leader in the race, while stocks of the competitors take a pause.

Inovio Early Data Does Not Say Much

INOVIO (INO) announced interim clinical data from its Phase 1 trial of INO-4800, its COVID-19 vaccine candidate. Limited data were released, with the company noting that 94% of trial participants demonstrated overall immunological response rates. However, key data regarding the number of patients that produced antibodies were not released. With the Company’s vague release, PFE/BNTX’s impressive data and the new FDA vaccine guidelines, INO shares have seen a sharp drop.

Vaxart (VXRT) Vaccine Pill Added To “Warp Speed” Project

Small cap biotech Vaxart’s oral COVID-19 vaccine candidate has been added to the cadre of experimental vaccines being studied as part of President Trump’s (along with DOD and HHS) mission to delivering 300 million vaccine doses against SARS-CoV-2 by January 2021. VXRT has a room temperature stable tablet vaccine that has just been selected for a non-human primate (NHP) challenge study organized and funded by Operation Warp Speed. The study is designed to demonstrate the efficacy of Vaxart’s COVID-19 vaccine candidate, which is based on the company’s Vector-Adjuvant-Antigen Standardized Technology (VAAST™) Platform. VXRT also announced a collaboration with Attwill Medical Solutions Sterilflow, LP (AMS) for lyophilization development and large scale manufacturing including tableting and enteric coating for Vaxart’s oral COVID-19 vaccine to manufacture as many as one billion doses a year. A lot can be said for Vaxart to gain acceptance in Operation Warp Speed, which so far includes the biggest and most advanced COVID vaccine players around.

SENTIMENT – Two CRLs Don’t Stop The Good Vibrations

Each of the past few times we have published the MTSL, the market’s Fear & Greed Index heads to overbought levels and then reversed back to neutral. The same pattern has occurred again with the F&G closing directly at 50, The XBI touched 70 (June 23) – which may have included some end-of-quarter window dressing – and now has receded to 62. Cities and states are recoiling from re-opening and the massive spike in infections is keeping businesses and government from moving to less restrictive phases – and that is probably good news for biotech stocks. Cash levels remain at record levels – and plush fund managers and funding biotech companies at a historic pace. After a sharp bounce when restaurants and bars started opening in June, underperforming sectors have quickly reversed. Biotechs are still kings of the castle in the current environment. After the flurry in May/June, the virtual science conferences are pausing. However, ZOOM presentations by companies themselves and sponsored by brokers are making it easier to reach a much larger audience from home. While we have been through a trove of positive data and deals and approvals, the FDA issued two Complete Response Letters (CRLs) that flat out rejected new drugs in the NASH and pain space, to ICPT and HRTX, respectively. MTSL Recommendations MDGL and PCRX are major beneficiaries of the delays. Despite the 40% and 33% respective declines in ICPT and HRTX, the CRLs failed to slow down the biotech stock party.

An FDA approval for RARE and favorable follow-on NASH data for ATRA highlight the good, non-COVID biotech industry news keep long investors in the right direction. With the giant joint ventures announced in the last Issue, SNY has not yet made any acquisitions with their REGN bounty. On the other hand, QURE’s stock fell after the Company signed a major deal with CDL Behring for its hep B gene therapy. QURE was rumored to be up for sale over the past year or two and failed to deliver a premium takeover. When SNY sold their REGN stake, some analysts predicted that Sanofi may buy QURE. The CSL Behring deal put an end to that speculation.

TECHNICALS – Next Floor Up Or Pie In The Sky

After basing for a month from mid-May to mid-June, the bios have moved another level higher as the powerful second quarter for the group came to an end. The XBI is currently at ~114, having bounced higher off the super strong support at 99 that created a wonderful technical floor. The next floor up came with the help of a fundamental catalyst from a large cap – notably MTSL Rec BMRN’s hem A data. While some stocks are at what we believe are “pie in the sky” valuations, the chart says we are still in good shape as a group (see XBI daily chart above). The index remains well above the rising 50-day (103) and 200-day (91) moving averages. The daily XBI RSI is at 64 (positive). The MACD is base lining a bit, probably due to the increased demand, huge cash inflows and some smart money profit taking. Not unexpected, the weekly XBI is nearing overbought (66) although the 50-week MA (90) and 200-week MA (83) keep rising. The weekly MACD (+5.9) is at bullish levels not seen in years. Hence, the charts say to us that biotech is getting a bit overheated, but still in a very strong position technically. There is a lot of room for a healthy pullback which should not deter the positive momentum.

ESPR just announced that pooled efficacy analysis from the four Phase III clinical studies of NEXLETOL, an oral, once-daily LDL-cholesterol lowering medicine, was published in the Journal of the American Medical Association (JAMA) Cardiology.  The four Phase III clinical studies evaluated the efficacy and safety of NEXLETOL versus placebo in 3,623 patients with hypercholesterolemia while receiving stable lipid-lowering therapy and at high cardiovascular risk or with hypercholesterolemia and statin intolerance.  JAMA is one of the world’s premiere medical journals and publication in this peer reviewed publication is a significant recognition.

The publication highlighted that NEXLETOL added to maximally tolerated statins, including moderate- or high- intensity or no background statin demonstrated significant additional LDL-C lowering levels versus placebo.  In patients on background statin therapy, NEXLETOL lowered LDL-cholesterol (LDL-C) by a mean of 18% compared to placebo (p<0.001). In statin intolerant patients, NEXLETOL lowered LDL-C by a mean of 24% compared to placebo (p<0.001).  Furthermore, decreases in non-HDL-C, total cholesterol, Apo B and hsCRP were greater with NEXLETOL versus placebo.  Finally, overall and common adverse events occurred at similar rates in patients treated with NEXLETOL and placebo.

ICPT recently received a CRL from the FDA for obeticholic acid (OCA) their potential treatment for NASH.  Part of the problem was that ICPT appears to have expected the agency to focus on advanced fibrosis NASH patients.  However, the FDA granted Breakthrough Therapy Designation (BTD) to ICPT for OCA in 2015 to treat NASH with fibrosis without specifying advanced fibrosis. By redefining a narrower target NASH population for OCA, ICPT may have created the problem with the FDA as the NDA was reviewed for a broader patient population.  In our view, ICPT’s receipt of an CRL is a significant positive for MDGL as it narrows ICPT’s lead as they both race to become the first FDA approved treatments for NASH.

In addition, the focus on sicker NASH patients with advanced fibrosis allows for greater usage of non-invasive diagnostics, no biopsy, making it easier to penetrate this new market opportunity.  The targeting of sicker NASH patients may support higher pricing for OCA.  OCA is already approved as a second-line treatment for a unique liver disease, primary biliary cholangitis alone or in combination with ursodeoxycholic acid.  ICPT sells OCA for almost $70,000 per year making it a very expensive drug.   Even if ICPT were to sell OCA for $30,000 per year in the NASH market, they will have a difficult time competing with a cheaper and safer pill (i.e., resmetiron).

MYOV recently announced top-line results from SPIRIT 1, the second of two Phase 3 studies of once-daily relugolix combination therapy (relugolix 40 mg plus estradiol 1.0 mg and norethindrone acetate 0.5 mg) in women with pain associated with endometriosis. Relugolix combination therapy met its co-primary efficacy endpoints and all seven key secondary endpoints in the SPIRIT 1 study. In addition, relugolix combination therapy was generally well-tolerated and resulted in minimal bone mineral density loss over 24 weeks:

• Co-primary endpoints met with response rates of 74.5% for dysmenorrhea (menstrual pain) and 58.5% for non-menstrual pelvic pain (p-values < 0.0001)
• Women receiving relugolix combination therapy, on average, had a 73.3% reduction on the Numerical Rating Scale for dysmenorrhea from 7.3 (severe pain) to 1.8 (mild pain)
• Achieved all seven key secondary endpoints, including dyspareunia (painful intercourse) and a greater proportion of women not using opioids, with a generally well-tolerated safety profile including minimal bone mineral density loss

MYOV also announced that the NDA for relugolix (120 mg) for the treatment of men with advanced prostate cancer has been accepted for Priority Review by the FDA. The FDA grants Priority Review to applications for potential therapies that, if approved, would be significant improvements in the safety or effectiveness of the treatment, diagnosis, or prevention of serious conditions when compared to standard applications. The FDA has set a PDUFA date of December 20, 2020. In its acceptance letter, the FDA also stated that it is currently not planning to hold an Advisory Committee meeting for this application. If approved, relugolix would be the first and only oral gonadotropin-releasing hormone (GnRH) receptor antagonist treatment for men with advanced prostate cancer.

For at least the third and maybe the fourth delay (we’ve lost count), Heron Therapeutics (HRTX) received a second Complete Response Letter (CRL) from the FDA regarding HTX-011 for the management of postoperative pain. Once again, the FDA letter noted (four) non-clinical issues in the CRL. Three relate to confirming exposure of excipients in preclinical reproductive toxicology studies, and the fourth relates to changing the manufacturing release specification of the allowable level of an impurity based on animal toxicology coverage. While the HRTX bulls and PCRX bears will once more say there is no need for additional studies and the delay will be temporary, etc. etc. etc., Pacira’s Exparel leadership and monopoly for liposomal bupivacaine continues intact. It will likely be at least several months before HRTX can re-file and get approval, if ever.

PGEN recently announced preclinical data for its innovative investigational PRGN-3005 UltraCAR-T® in patients with advanced, recurrent platinum resistant ovarian, fallopian tube or primary peritoneal cancer has been published as an e-poster and accompanying audio presentation at the American Association for Cancer Research (AACR) Virtual Annual Meeting II. The e-poster presentation titled “PRGN-3005 UltraCAR-T: Multigenic CAR-T Cells Generated Using Non-viral Gene Delivery and Rapid Manufacturing Process for the Treatment of Ovarian Cancer” (Abstract 6593) was part of the Immunology/Adoptive Cell Therapy session and is accessible on the AACR e-poster website (June 22). Despite COVID-19, companies like PGEN are doing a good job of continuing data flow to the investment community via virtual conferences and posts online.  In our view, management’s ability to start this trial during COVID-19 is a testament to both their skill and experience and illustrates a willing patient population for new cell therapies to treat cancer. Reiterate BUY.

PRGN-3005 is an autologous CAR-T treatment simultaneously expressing three gene products, which results in a uniform, homogenous CAR-T cell therapy: 1) CAR to specifically target the unshed portion of Mucin 16 (MUC16), which is overexpressed on over 80% of ovarian tumors with limited expression found in healthy tissues; 2) membrane-bound IL-15 (mbIL15) to provide improved UltraCAR-T persistence and maintenance of preferred stem cell like memory phenotype; and 3) a kill switch to eliminate the CAR-T cells, if needed.

Preclinical data demonstrate the specificity and efficacy of using the rapidly manufactured PRGN-3005 UltraCAR-T cells for the treatment of ovarian tumors. Specifically, a single administration of PRGN-3005 showed significantly superior expansion and preferred memory phenotype of UltraCAR-T in vivo and significantly superior efficacy compared to traditional CAR-T resulting in all PRGN-3005 treated mice becoming tumor-free. Furthermore, re-challenging these tumor-free mice three months later with ovarian tumors for a second time (to simulate tumor relapse) led to the elimination of tumor burden without additional PRGN-3005 UltraCAR-T treatment. These data demonstrate the potential of UltraCAR-T cells to persist long-term in vivo, prevent CAR-T cell exhaustion, and mount a durable anti-tumor response with the ability to continue to respond upon tumor re-challenge.

ZIOP announced that 36 subjects have been enrolled in the Phase II clinical trial evaluating Ad-RTS-hIL-12 with veledimex (Controlled IL-12) in combination with Regenron’s PD-1 inhibitor Libtayo (cemiplimab-rwlc) for the treatment of recurrent or progressive glioblastoma (rGBM) in adults. Subjects in this multi-center trial were enrolled from seven hospitals specializing in the treatment of brain cancers across the U.S.  Any clinical progress enrolling new patients during COVID-19 is impressive and also points out the desire of rGBM patients for new therapies as they currently have no real treatment options.

The open-label, single-arm Phase II trial (NCT04006119) is designed to examine Controlled IL-12 in combination with cemiplimab in 36 patients with rGBM, with the primary endpoints being safety and efficacy. Patients with rGBM scheduled for resection, who have not been treated previously with immune checkpoint inhibitors, received Ad-RTS-hIL-12 intratumorally at the time of surgical resection plus 20 mg of veledimex, an oral activator of Ad-RTS-hIL-12, daily for 14 days. Patients will also receive cemiplimab intravenously (350 mg) every three weeks until documented progression or withdrawal from the study. Trial investigators may enroll additional patients currently in screening.

ZYNE’s stock is down significantly this morning after reporting disappointing top line results from the 14-week pivotal CONNECT-FX (Clinical study of Cannabidiol (CBD) in Children and Adolescents with Fragile X) trial. The multi-national, randomized, double-blind, placebo-controlled trial assessed the efficacy and safety of Zygel™ CBD gel as a treatment in for behavioral symptoms of Fragile X syndrome (FXS) in 212 patients failed to achieve statistical significance for the primary and secondary endpoints.  Zygel did not achieve statistical significance versus placebo in the primary endpoint of improvement in the Social Avoidance subscale of the Aberrant Behavior Checklist – Community FXS (ABC-CFXS). Zygel also did not demonstrate statistical significance versus placebo in the three key secondary endpoints, which were the change from baseline to the end of the treatment period in the Irritability subscale score of the ABC-CFXS, the Socially Unresponsive/Lethargic subscale score of the ABC-CFXS and Improvement in Clinical Global Impression (CGI-I).

However, a pre-planned ad hoc analysis as defined by patients having full methylation of the impacted FMR1 gene showed an improvement of 40% vs 21.1% in 169 patients (p=0.002) in the primary endpoint, or 80% of the patients in the total trial.  The Company believes that full methylation occurs in approximately 60% of the overall FXS patient population. Based on this analysis, Zynerba intends to meet with the FDA regarding a regulatory path forward for Zygel.  While this is a subset analysis, it is not a small subset and represents more than 80% of the study (n=169/210), and based on the numbers alone it appears that the drug works in FXS patients with a fully methylated FMR1 gene as represented by the strong p=0.020. (i.e., p=0.05 is the level needed for statistical significance). In addition, the safety data was immaculate; with only 10% of subjects experiencing mild skin related irritation and no blood or liver side effects whatsoever.

Primary and Key Secondary Endpoints – Patients with Full Methylation of the FMR1 Gene

The results of CONNECT-FX in the analysis set of patients with full methylation of the FMR1 gene across the primary and key secondary endpoints are summarized below.