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The American Academy of Orthopaedic Surgeons (AAOS) recently released the second edition of their guidelines for the treatment of osteoarthritis (OA) of the knee, a condition that can lead to high levels of joint pain and stiffness in patients. While the organization provided a total of 15 recommendations, most of these were obvious and unsurprising. However, recommendation 9, which states "We cannot recommend using hyaluronic acid (HA) for patients with symptomatic osteoarthritis of the knee," may cause some concern for companies like Sanofi (NYSE:SNY) that sell HA ($484 million in sales in 2012 for its two products Synvisc and Synvisc-One). The only drugs that the AAOS does recommend are non-steroidal anti-inflammatory drugs (NSAIDs) and generically available Tramadol, a pain reliever working through a different mechanism. Intra-articular corticosteroids do not even make the recommendation list. This unfortunately highlights the status of drug treatments for OA of the knee, and clearly implies that better drug therapies are needed. In this article I hope to explain the background of the problem, and focus on three companies developing new OA treatments: Ampio Pharmaceuticals (NYSEMKT:AMPE), Flexion Therapeutics (private) and Array BioPharma (NASDAQ:ARRY).

HA Background

HA is a polysaccharide that is found in connective tissue and can be extracted from chicken combs in high amounts. Several companies market some form of HA, often differentiating their products by offering a certain molecular size of HA, which can have a big difference in terms of the potential benefits. It is amazing that half a dozen treatments are available using HA for OA of the knee, despite the apathy from an organization like the AAOS. While Sanofi leads the pack in sales with a reported $484 million in 2012, four other HA-based treatments are available and their combined sales exceed $1 billion each year. How is it possible that the AAOS does not recommend practitioners administer this type of treatment when HA is more than a billion dollar market? Clearly there is a significant unmet need here. To be clear, the organization never recommended the use of HA in its original 2009 guidelines, and initially said the evidence was inconclusive. The AAOS is now giving an updated opinion, complete with 83 pages of support. The analysis by AAOS simply indicates that the efficacy benefits of such treatments are lacking. I would also like to note that no safety concerns are associated with HA, and statistically significant improvements in patients have been reported for HA versus placebo, but the AAOS does not feel these improvements are clinically meaningful. As mentioned before, this opens up the possibility for new entrants with highly efficacious products. By developing new drugs with novel mechanisms of action, Ampio, Flexion, and Array are all fighting for a piece of this growing $1 billion pie.

Ampio Pharmaceuticals

Ampio Pharmaceuticals is developing a drug with anti-inflammatory properties derived from human serum albumin called Ampion. The company completed a Phase I trial in Australia that originally compared Ampion to steroid injections, but the trial was expanded to allow a comparison of Ampion to placebo in 32 patients. The drug was administered via a single intra-articular injection, similar to Flexion's FX005 (see next section). Ampion is well tolerated with no serious adverse events attributed to the treatment. The WOMAC pain scale was used to monitor pain in patients at baseline as well as 30 and 84 days post treatment. Patients that received Ampion injections had a statistically significant improvements in pain at both of these time points (p < 0.05), and importantly, patients in the placebo arm did not experience a statistically significant difference in pain score. Ampion further grouped patients into responders and non-responders, where a responder had a 2 or more point shift towards improvement in pain relief out a 10-point scale. Twice the percentage of patients receiving Ampion were responders versus those receiving placebo.

Ampio is currently conducting a Phase II run-in trial with Ampion, where run-in means that once they collect enough data to support their hypothesis, they can release the data without fully completing the trial. The trial is expected to enroll over 300 patients.

Array Biopharma and Flexion Therapeutics

Array Biopharma and Flexion Therapeutics (private) both are developing p38 inhibitors targeting OA of the knee. p38 is a mitogen-activated protein kinase that is involved in the cellular response to stress, and plays a role in the microglial signaling during the pain response.

Array presented data for their p38 inhibitor, ARRY-797, at the 2012 American College of Rheumatology Scientific Meeting from a Phase II clinical trial in patients with moderate to severe OA of the knee that were also taking NSAIDs. A total of 157 patients were enrolled in the trial, and the primary endpoint was the change in WOMAC pain score from baseline to 4 weeks post treatment. The patients were randomized into 3 groups where they received placebo, ARRY-797, or oxycodone via oral administration. The efficacy data were quite good, demonstrating a statistically significant change in the WOMAC pain score versus placebo at week 4, and a comparable change versus oxycodone, a drug known to reduce pain in patients. The company did not comment on clinical relevance, which would be nice to know! However, the main concern with this treatment is that patients taking ARRY-797 experienced mild prolongations in the QTc interval. These heart-related side effects may turn out to be a non-issue, but they have effectively stalled the program and it is unclear if Array will even reactivate the program for OA of the knee. This is unfortunate considering the unique mechanism of action and positive Phase II data.

As readers of SA are no doubt aware, Array's business model is highly focused on collaborations. Array is currently partnered with a total of nine companies, including an AKT inhibitor in Phase II with Genentech and a MEK inhibitor with Novartis. In fact, they are searching for a new partner for ARRY-797, so hopefully when Array finds a partner for the program, they will consider this indication going forward.

Flexion recently presented data from their Phase II trial of their own p38 inhibitor, FX005, at the 2013 Orthopaedic Research Society meeting. FX005 is a p38 inhibitor contained in microspheres, which degrade slowly, allowing a sustained release of the inhibitor. The Phase II trial monitored 53 patients who were randomized to a single intra-articular injection of 45 mg of FX005, blank microspheres, or diluent. The primary endpoint was change in WOMAC pain score from baseline to 4 weeks post treatment. Flexion combined both placebo arms for the analysis of the data as both groups met pre-specified criteria for similarity. Unfortunately, the primary endpoint was not met, and there was not a statistically significant difference between the placebo groups and FX005 group at 4 weeks. The p value was 0.0535, very close to the commonly accepted value for significance of 0.05. A sub-analysis of patients with a higher baseline pain score demonstrated a significant difference between placebo and FX005 (p = 0.024). With efficacy being the major issue for the AAOS and HA, Flexion will need to find a subset of patients or use a better dosing structure to improve the efficacy in their upcoming Phase IIb trial expected to launch in 2014.

Conclusions and Future Directions

With approximately 11% of people older than 64 with symptomatic osteoarthritis of the knee and a standard of care that has not fundamentally changed in a long time, this is a problem that warrants a better solution. With the AAOS not recommending HA treatment for patients with osteoarthritis of the knee, the door is open for new treatments offering superior efficacy while maintaining a strong safety profile. p38 inhibitors in development are promising but not without safety and efficacy concerns. However, Ampio has a biologic in development with a good safety profile and statistically significant efficacy on the WOMAC pain scale. Whether the efficacy is confirmed and clinically meaningful is something that will be determined in the current Phase II trial or later Phase III trials.

Source: What The Snubbing Of Hyaluronic Acid By The AAOS Means For Investors