GTx Inc.: Call Me A Pollyana... Or Not

| About: GTx, Inc. (GTXI)

GTx Inc. (NASDAQ:GTXI) is a microcap-biopharmaceutical company based in Memphis, TN, with a pipeline of Selective Androgen Receptor Modifiers (SARMs), which partially mimic androgens, the male hormones. Receptors for androgen (ARs) are found in muscle, bone, and other body tissues. SARMs are selective in the tissue types they bind (attach) to. The GTx lead drug candidate, enobosarm (enobo), binds to AR in muscle and bone. The goal is to improve or stabilize sarcopenia, the loss of lean body muscle [LBM] and physical function [PF] (strength) that occurs in advanced cancers and other benign diseases. Improvements or stabilization of both parameters were the co-primary endpoints in the study.

The POWER Trial design

The enobo Phase III (P3) POWER 1 (504) and POWER 2 (505) clinical trials were completed in May, with results announced on Aug. 19. The trials looked at the co-primary endpoints of improvement or stabilization of LBM and PF loss in 650 patients with severe sarcopenia due to advanced, Stages 3/4 lung cancer; in other words, extremely ill and fragile patients in a rapid catabolic state, and on chemo. Even to stabilize muscle loss is important, because further wastage is the natural course of NSCLC. Based on numerous literature sources, patients with sarcopenia have a poorer outcomes than those without.

The trial arms, 504 and 505, randomized the patients to two distinct chemo regimens, or placebo [PBO]. The 504 regimen allowed patients 2 (of 4) weeks to recuperate between cycles; the 505 regimen was more intense, with only 1 week of recuperation. Chemo was initiated on Day 1; continued for 4 cycles ending Day 84; with post-chemo follow-up for 2 months, ending on Day 147. By protocol, drug or PBO pills were started on Day 1, and continued until Day 147. The follow-up period was to establish whether such LBM and PF benefits as seen on Day 84 were sustained at Day 147.

Patients had pre-trial assessments for LBM by DEXA scan, and PF was measured by a stair climb power test (OTC:SCPT), such as used in physical therapy [PT]. Follow-up assessments were performed on Day 84 and Day 147 in those patients able to be tested. All analysis results were based on individual self-comparisons.

Regulatory agreements

For the POWER trials, the FDA pre-specified (stipulated) that the co-primary results be presented as a responder's analysis [RA] and reported as single, composite, primary endpoints per trial, for LBM and SCP at Day 84 (total 4 values). Per the FDA agreement, the approval decision will be based solely on the primary endpoints. The EU Medicines Agency [EMA] pre-specified that a continuous variable analysis [CV] be used. EMA endpoints included both Day 84 and Day 147 (total 8 values).

POWER Trial results (See table)

In the RA analysis (in US), only one pre-specified target, the LBM gain in trial 504, was statistically significant at Day 84. However, using the CV analysis (in EU), the LBM gain in both trials statistically met Day 84 endpoints; in 504, the SCP met the PF endpoint. For CV in 505, SCP was not statistically significant. Again, Day 84 results followed active chemo, more intense in 505. One unexpected finding was that in the treatment arms in both trials, there was a further LBM increase by Day 147, with very strong p values, 0.0001, 0.0036. In PBO, there was no change. GTx investigators assumed the LBM would merely plateau, and were pleasantly surprised at this finding.


DAY 84
p value RA 0.036 0.113 0.315 0.289
p value CV 0.0003 0.0227 0.0336 0.792
DAY 147
p value RA 0.026 0.013 0.67 0.68
p value SCP 0.0001 0.0036 0.107 0.67

LBM, lean body mass; PF, physical function; RA, responder's analysis; CV, continuous variable analysis

My opinion is that the 505 cohort did not meet the PF goals because of an unforeseen design flaw. That would be, that SCP was too high a bar for these patients, compared with benign sarcopenics. The 505 cohort had less recuperation time than the 504, which could have affected performance. Often, high stage cancer patients on chemo have limited mobility, so popping up for a SC test was out of range for many trial subjects, especially those with low baselines. In severe benign sarcopenia, improving PF requires a slowly graduated physical therapy rehab approach, starting with the upper extremities, with very slow increments, before standing. Patients may be on oxygen. In combination with PT, LBM improvement might help with some easily-lost activities of daily living, such as sitting up, feeding oneself, dressing, or getting out of bed; thus, improving the quality of life.

Importantly, the POWER trials show that it is possible for select cancer patients in a rapid catabolic state, with severe sarcopenia, to revert to an anabolic (muscle building) state via a pharmaceutical agent, enobo; or, at the least, the catabolism can be stabilized. Notably, responses occurred during active chemotherapy regimens. This is BIG!

Background science

In older literature, experimental evidence showed considerably higher body protein turnover rates in lung and other cancers, in contrast to the decrease seen in simple starvation; cachexia has been described as "a maladaptation to the state of starvation." Skeletal muscle fibers from sarcopenic cancer patients showed severe impairment in incorporating radio-labeled (radioactive) tracer amino acids; in a normal anabolic state, these proteins would be assimilated, adding to LBM. So, malignant tumors cause decreased protein synthesis, and an increase in degradation. To reiterate, the ability to reverse this, and add LBM, is BIG.

An old saying is, "If you give them [sarcopenic cancer patients] protein, you're just feeding the tumor." So, an intriguing conceptual question arises: Where does the protein needed to build new LBM come from? Is it out-competing or stealing it from the tumor? There is a great deal of academic interest in enobo, and academics set the tone for the up-to-date practice of medicine.

Overall survival

The second unexpected finding was a better overall survival [OS] signal in both trial arms, with a preliminary hazard ratio of 0.20 (20% higher survival) for both enobo arms over PCB. This was distinct from OS in the safety analysis, which included all trial participants, whether or not they completed the trial, and in which no OS difference was found. Of note, the survival signal correlated with improvements in LBM, but not with PF. I think the survival signal is real. If it holds, conceivably it could sway the regulators. The final OS safety assessment is powered to be actionable at 450 deaths (currently at 280), with results expected in Q1 of 2014.

To put it in perspective, the FDA has approved or reviewed some highly expensive chemotherapeutics designed to treat cancers, with OS benefits variously described as "trending," "marginal," "modest" or "no" survival benefit for the NSCLC indication. The 2nd link below compares costs between countries, explains rationale for expensive drugs, and attributes some cost variation to "shipping charges." Examples of these drugs are: Pfizer's (NYSE:PFE) Sutent (sunitinib) ($3750-$4000/mo); Boeringer Ingleheim's (not listed) Phase III Vargatef (nintedanib); Pfizer's Xalkori (crizotinib) ($5,746/mo, with coupon); and Eli Lilly's (NYSE:LLY) Erbitux (cetuximab) ($80,000/ treatment). LLY later withdrew a supplemental NDA for NSCLC.

The FDA and EMA

In summary, there were 2 positive unexpected findings in the POWER studies: the finding of continued LBM increase during the follow-up period; and the overall survival (OS) signal associated with LBM increase in both trial arms. The trials demonstrated 3 of the 4 endpoints pre-specified by the EMA, and the above might sway them. The FDA is more dicey, but again, OS is powerful, and better than in some chemotherapeutic drugs. Enobosarm has no identifiable side effects. Regulatory discussions for the enobo trials will be by year-end, prior to Q1 2014. "We planned to have information from both FDA and also EMA. The data in both studies and pooled is sufficient to go to the regulatory agencies now."

Other clinical trials

GTx is currently conducting two clinical trials. The first is a Phase IIb for Capesaris (GTX-758), a selective estrogen receptor modulator (SERM) that counters the side effects of androgen deprivation therapy [ADT], the standard of care for advanced prostate cancer. The goal of ADT is complete testosterone [T] blockade, since T stimulates tumor growth. But ADT also blocks estrogen receptors, resulting in the side effects of estrogen deficiency. The most serious are osteoporosis (thin or brittle bones), spontaneous vertebral (backbone) fractures, sarcopenia, anemia, and depression. Cape has a completely new and different mechanism of action than ADTs, is used in tandem with them, and is synergistic. The previous P2 trial was interrupted because of VTEs (blood clots), but was restarted with a significant reduction in dosage, from 1000 or 2000 mg; to 125 mg, monitored for VTEs, then dose escalation to 250 mg, then 500 mg. At last mention, the 125 mg dose results were "almost the same" as the higher doses. The trial duration for each dosage is 3 months to the primary endpoint, reduction of testosterone to lower than 20 mg/dl.

The second study is a proof of concept using enobosarm 9 mg for treatment of refractory metastatic breast cancer, i.e., patients who have run out of options. Anti-androgens are known to be effective in these cases, but the drugs are several [human] generations old, and were pretty much abandoned due to side effects and tolerability. Trial duration is 6 months to the primary endpoint. Results for both studies are expected in Q1 2014. In summary, GTx has a completed P3 drug, soon to be under review; and two promising clinical trials.

Inside ownership

There is some scuttlebutt on the web regarding GTx ownership, including comments such as, "Why aren't the directors buying more shares?" and various other rumors. The following is intended to clarify some of these. First, GTx insider ownership is 68.7%. On Sept. 9, 3 days ago, a Form 13D/A, reporting change of ownership of shares, was filed at the SEC by Mr. John Pontius, a director. To begin at the beginning, on July 16, there was a large non-open market purchase of 354,883 shares by Mr. Joseph Hyde, Chairman of the Board. It was immediately transferred into 2 GRATs (irrevocable trusts). On Aug. 27, Mr. Hyde received a distribution of 1,126,128 shr from one GRAT. Mr. Pontius is the trustee of the said GRAT, and filed the 13D/A due to transfer of ownership. The following statement was made:

"Mr. Pontius and each of the parties described acquired the shares of Common Stock for investment purposes, and Mr. Pontius and each party intend to evaluate the performance of such securities as an investment in the ordinary course of business. [Italics mine] Neither Mr. Pontius nor any of the parties described has any plans or proposals which relate or could result in:"

Public offering of shares (dilution); merger, reorganization or liquidation (acquisition or privatizing); sale or transfer of material amounts of assets (no large block sales); change in board or management; changes in capitalization; changes in corporate structure or bylaws; plans to de-list stock; or any similar corporate actions. These are self-explanatory, and answer most of the rumors. Board member Jack Schuler also owns 21.56% of OS, at 7,357,512 shr, with 3 recent open market acquisitions of 403K. In 2013, as of Sept. 9, insiders have made 17 acquisitions and 1 sale. On Aug. 19, the Schuler Family Foundation purchased 1,325,300 open market shares of GTx, avg PPS $1.475; on Aug. 20, it purchased 350,000 open market shr, avg $1.45/shr (A large insider purchase, or what?). As an aside, GTx has very strong anti-takeover clauses in its terms of incorporation, including a "poison pill" provision. I hope the above is reassuring to investors.

Selected financial data

Immediately following release of the POWER results, there was a dramatic weakening of GTx fundamentals. The share price [PPS] plunged immediately, falling 65% to $1.43, leaving a MC of 94M, a 68% drop (current MC, 121.9M). August short interest increased 32%, to 30.39%. Previous bullish analysts downgraded their recommendations: WedBush, from Outperform to Neutral, TP $2.00; Jefferies (NYSEARCA:CRBQ), Buy to Hold, PT $1.50; Lazard Capital (NYSE:LAZ), Buy to Neutral; Stifel Nicolaus (NYSE:SF), Buy to Hold; and Leerink Swann, Market Perform, TP $1.00. These are low ball. The cash reserves were $31.6M as of Q3, and GTx still states there is enough money for the rest of the year. I had the opportunity to speak with Dr. Mitch Steiner, CEO of GTx. There are ongoing discussions with possible big pharma partners, and possibly "other fronts" for funding, excluding the above. A presentation of the company overview was held yesterday (Sept. 11) at the Stifel Nicolaus 2013 Healthcare Conference, and there was an immediate rally, +$0.34 to $1.93 (21.38%), but retrenched yesterday by $0.11 (5.7%).

Invest in GTx

I am still a GTx bull, and have recently "averaged down" my portfolio, as other bulls are doing. Anyone who has followed me knows that I've been patiently waiting for a short squeeze. Based on Wednesday, it looks there might be some drift in that direction. I hope, and think, this may portend a momentum change. Some analysts interpret a large short interest as bullish. Shorts now control a third of the tiny float, so when they decide to cover, with limited shares available, PPS will be driven up. As noted, two board members have recently sopped up some more of the float. At this point, the wise course is to cover. So I reiterate a Strong Buy for GTx at these bargain prices; and, for shorts, do yourselves a favor and think about closing your positions.

Disclosure: I am long GTXI. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.