Soligenix: Advances Two Lead Programs Into Phase II Within One Week

| About: Soligenix, Inc. (SNGX)

Soligenix Initiates Phase II Trial of SGX942 for Oral Mucositis

On December 5, 2013, Soligenix (OTCQB:SNGX) announced that it has initiated a Phase II, randomized, double-blind, placebo-controlled study evaluating SGX942, a first-in-class innate defense regulator (IDR), as a treatment for oral mucositis in patients undergoing chemoradiation (NYSE:CRT) therapy for head and neck cancer.

This is the second Phase II program Soligenix initiated within one week.

This Phase II study is a multicenter trial focused on patients with tumors of the mouth and oropharynx who often experience debilitating oral mucositis as a consequence of tumor treatment with intensity modulated radiation and chemotherapy. The primary efficacy will be assessed on the basis of the incidence and duration of both ulcerative and severe oral mucositis throughout the course of radiation treatment. Other key efficacy measures will assess patient reported outcomes, pharmacoeconomic parameters such as hospitalization and radiation-associated side effects including mouth stiffness (trismus) and dryness (xerostomia).

SGX942 is a fully synthetic, 5-amino acid peptide with high aqueous solubility and stability. Extensive in vivo preclinical studies have shown that SGX942 reduces tissue damage associated with chemotherapy, radiation, trauma and inflammation. Although SGX942 is not directly antimicrobial, it accelerates pathogen clearance and increases host survival in a broad spectrum of bacterial infections including Gram positive and negative bacteria, and both drug sensitive and resistant strains, by directly targeting the host innate immune system.

Soligenix has completed a double-blind, placebo-controlled Phase I clinical trial of SGX942 in 84 healthy volunteers with both single ascending dose and multiple ascending dose components. SGX942 showed a strong safety profile when administered IV over 7 days and was consistent with safety results seen in pre-clinical studies. Drug clearance in humans is rapid and similar to results seen in pre-clinical studies.

Results are expected to be available in 2H14.

Market Opportunity For SGX942 Is Big

Mucositis is a debilitating condition involving extensive ulceration of the oral cavity that frequently affects cancer patients undergoing radiation and chemotherapy treatment. Roughly 90% of patients on radiation (43% severe) and 40% of patients receiving chemotherapy get mucositis. There is an estimated 500,000 cancer patients getting mucositis annually in the United States alone. World-wide, the potential market for mucositis will exceed $1 billion in the next few years.

Mucositis can be severely debilitating and can lead to infection, sepsis, the need for parenteral nutrition and narcotic analgesia. The gastrointestinal damage causes severe diarrhea. These symptoms can limit the doses and duration of cancer treatment, leading to sub-optimal treatment outcomes. We believe any treatment that accelerates healing and/or diminishes the rate of appearance of mucositis would have a significant beneficial impact on the quality of life of these patients and may allow for more aggressive chemotherapy.

The mechanisms of mucositis have been extensively studied and have been recently linked to the interaction of chemotherapy and/or radiation therapy with the innate defense system. Bacterial infection of the ulcerative lesions is now regarded as a secondary consequence of dysregulated local inflammation triggered by therapy-induced cell death, rather than as the primary cause of the lesions. As a modulator of the innate immune system, SGX942 has the potential to target both primary and secondary causes of mucositis.

Oral mucositis is an area of unmet medical need where there are only limited treatment options. Ccurrently, no drug has been approved for oral mucositis in head and neck cancer. We noticed that there are a few products already on the market for oral mucositis. But the competitive landscape favors SGX942 in our view.

Amgen's Kepivance (Palifermin) is the only approved drug for oral mucositis in transplantation; but is contra-indicated for solid tumor patients. Kepivance is a recombinant form of human keratinocyte growth factor (KGF), a protein that is naturally produced by the body. Kepivance is indicated to decrease the incidence and duration of severe oral mucositis in patients with hematologic malignancies receiving myelotoxic therapy requiring hematopoietic stem cell support. The safety and efficacy of Kepivance have not been established in patients with non-hematologic malignancies. Kepivance must be IV injected for 3 consecutive days before and 3 consecutive days after treatment for a total of 6 injections. Also, Kepivance is expensive at about $10,000 per patient.

Access Pharma's MuGard is approved as a medical device and is dispensed in a ready to use mouth rinse. MuGard is indicated for the management of oral mucositis/stomatitis that may be caused by radiotherapy and/or chemotherapy.

Three other medical devices on the market are EKR Therapeutics' Gelclair, GeoPharma's Mucotrol, and EUSA Pharma's Caphosol. Gelclair is a prescription mouth gel that is designed and approved for the management and relief of pain caused by mouth sores. Gelclair is established by mixing the powder in a glass of water to form the rinse and patients gargle and spit out. Mucotrol is concentrated oral gel wafer which is indicated for the management and relief of pain from oral lesions associated with oral mucositis/stomatitis. Caphosol is similar to Gelclair. Patients must mix the contents of two ampoules to form a rinse and then swish/spit out. These devices attempt to create a protective barrier around the oral ulceration; however, none of these devices are biologically based.

Apparently, most of the above treatment options for mucositis only address the symptoms and do not address the cause of mucositis, while Soligenix's SGX942 has a new mechanism of action which can address both the primary and the secondary causes of mucositis. We believe that, if approved, SGX942 will command a significant market share of the mucositis market, which could reach $1 billion in the next few years.

Soligenix Initiates Phase II Trial of orBec® for Chronic GI GVHD

On December 2, 2013, Soligenix, Inc. announced that it has initiated a Phase II, randomized, double-blind, placebo-controlled study evaluating orBec® (oral beclomethasone 17,21-dipropionate or BDP) as a treatment for the gastrointestinal (NYSE:GI) manifestations of chronic Graft-versus-Host disease (GVHD).

This study is partially funded by the National Cancer Institute (NYSE:NCI) which has awarded Soligenix a Small Business Innovation Research (SBIR) grant to support the conduct of a Phase II clinical trial. The award provides Soligenix with approximately $300,000 over a two-year period.

The Phase II study is designed as a multicenter, pilot study enrolling patients that have received allogeneic hematopoietic cell transplantation (NASDAQ:HCT) at least 100 days earlier, have documented chronic GVHD in at least one organ outside the GI tract, and have a mucosal biopsy consistent with GI GVHD. The primary efficacy objective of the study is to estimate the proportion of subjects with chronic GVHD with GI involvement who achieve a complete response, partial response or minimal response of GI GVHD signs and symptoms when treated with orBec® for up to 16 weeks. Response will be assessed using a composite score based on the symptoms of satiety, nausea/vomiting, and anorexia.

Data are expected to be available in 2H14.

orBec ® is a two tablet delivery system of BDP specifically designed for oral use that allows for delivery of immediate and delayed release BDP to treat the gastrointestinal manifestation of chronic GVHD, the organ system where GVHD is most frequently encountered and highly problematic.

orBec® is intended to reduce the need for systemic immunosuppressive drugs such as prednisone to treat chronic GI GVHD. The active ingredient in orBec® is BDP, a highly potent, topically active corticosteroid that has a local effect on inflamed tissue.

orBec® has been awarded orphan drug designations in the U.S. and in Europe for the treatment of GI GVHD. In September 2012, Soligenix received a $300,000 two-year SBIR grant awarded by the NIH to support a Phase II study for the treatment of chronic GI GVHD.

GVHD is a major complication of allogeneic hematopoietic cell transplantation. GVHD is an inflammatory disease initiated by T cells in the donor graft that recognize histocompatibility and other tissue antigens of the host, and is mediated by a variety of effector cells and inflammatory cytokines. GVHD presents in both acute and chronic forms. The symptoms of chronic GVHD typically present at between 100 days and three years post-transplant.

Chronic GVHD has features resembling autoimmune and other immunologic disorders such as scleroderma, Sjögren syndrome, primary biliary cirrhosis, wasting syndrome, bronchiolitis obliterans, immune cytopenias and chronic immunodeficiency. The manifestations of chronic GVHD may be restricted to a single organ or tissue or may be widespread. Chronic GVHD can lead to debilitating consequences, e.g., joint contractures, loss of sight, end-stage lung disease, or mortality resulting from profound chronic immune suppression leading to recurrent or life-threatening infections.

Treatment of chronic GVHD is a challenge because it can be refractory to frontline immunosuppression. High-dose systemic corticosteroids are used with some success but carry significant toxicity. The risks of prolonged immunosuppression include local and disseminated infections; Epstein-Barr virus associated lymphoproliferative disease, hypothalamic-pituitary-adrenal ("HPA") axis suppression, myopathy, glucose intolerance, neuropsychiatric disease and bone demineralization.

There are about 6,000 patients annually in the U.S., with a comparable number in Europe that suffer from chronic GVHD.

Two More Phase II Trials Will Be Initiated In 1H14

SGX203 for children's Crohn's disease

Soligenix plans to start Phase II/III trial of SGX203 (oral beclomethasone 17,21-dipropionate or oral BDP) for the treatment of pediatric Crohn's disease in 1H 2014. Primary endpoint data are expected in 1H 2015.

The Company has enrolled and treated all patients in the Phase I study, which enrolled 24 subjects between the ages of 18-22, with all assessments completed in May 2013. Preliminary PK results indicate that the PK profile in this population is consistent with the profile established in previous studies in a broader population and supports a convenient twice a day dosing regimen. SGX203 administration (6 mg BDP twice daily over 7 days) was found to be safe and well-tolerated.

The PK data generated from the Phase I study will be used to refine the PK model previously established with Dr. Jeffrey S. Barrett, PhD, FCP, from The Children's Hospital of Philadelphia. The refined model will provide the justification for limited PK sampling in the planned Phase II/III pediatric clinical study and will help inform the dose selection for the Phase III component of the study.

There is currently no cure for Crohn's disease, and there is no one treatment that works for everyone. Drug therapies usually include anti-inflammatory drugs, immune system suppressors and antibiotics. There are currently no FDA approved corticosteroid therapies for pediatric Crohn's disease. 80% of patients with Crohn's disease are treated with steroids off-label as first-line therapy, which may suppress adrenal function and result in growth retardation. Remicade is the only approved product in pediatric Crohn's disease in the US, which is used in 30% of patients within first year of diagnosis. However, Remicade carries a black box warning for potential malignancy (T cell lymphoma). Two biologics, Cimzia and Tysabri and one corticosteroid Entocort (budesonide) are on the market to treat Crohn's disease in adult patients, and are currently in trials in pediatric patients.

SGX203 is designed to block inflammation of Crohn's disease throughout the GI tract and is positioned as a corticosteroid option with less toxicity than the current standard systemic steroid therapy - prednisone.

SGX203 has received Fast Track and Orphan Drug designations from the US FDA for the treatment of pediatric Crohn's disease. We believe SGX203 has the potential to meet an important medical need in children with this serious illness.

SGX201 for Preventing Acute Radiation Enteritis

SGX201 is a delayed-release formulation of BDP specifically designed for oral use and is designed to block inflammatory component of radiation enteritis in GI tract of cancer patients receiving pelvic radiation therapy.

Soligenix completed a 16-subject Phase I/II clinical trial testing SGX201 in prevention of acute radiation enteritis. Patients with rectal cancer scheduled to undergo concurrent radiation and chemotherapy prior to surgery were randomized to one of four dose groups. SGX201 is safe and well tolerated in these subjects.

The Company plans to initiate a Phase II randomized, double-blind, placebo-controlled trial in 1H2014. Data are expected in 1H2015, assuming continued financial support from NIH. The Company has received Fast Track designation from the FDA for SGX201 for radiation enteritis. It's possible for continued government funding for the Phase IIa trial.

External radiation therapy is used to treat most types of cancer. During delivery of treatment, some level of radiation will also be delivered to healthy tissue, including the bowel, leading to acute and chronic toxicities. The large and small bowels are very sensitive to radiation and the larger the dose of radiation the greater the damage to normal bowel tissue. Radiation enteritis is a condition in which the lining of the bowel becomes swollen and inflamed during or after radiation therapy to the abdomen, pelvis, or rectum. Most tumors in the abdomen and pelvis need large doses, and almost all patients receiving radiation to the abdomen, pelvis, or rectum will show signs of acute enteritis.

Patients with acute enteritis may have nausea, vomiting, abdominal pain and bleeding, among other symptoms. Some patients may develop dehydration and require hospitalization.

Symptoms will usually resolve within 2-6 weeks after therapy has ceased. Radiation enteritis is often not a self-limited illness, as over 80% of patients who receive abdominal radiation therapy complain of a persistent change in bowel habits. Moreover, acute radiation injury increases the risk of development of chronic radiation enteropathy, and overall 5% to 15% of the patients who receive abdominal or pelvic irradiation will develop chronic radiation enteritis.

Based upon published studies and reports, there are over 100,000 patients annually in the U.S. and over 200,000 patients worldwide, who receive abdominal or pelvic external beam radiation treatment for cancer, and these patients are at risk of developing acute and chronic radiation enteritis. Currently there are no approved therapies for this indication. Based on current preclinical and Phase I/II clinical data, SGX201 has the potential to make a meaningful difference in this indication.

Soligenix Reaches A Flexible Favorable Financing Agreement With Lincoln Park

In addition to clinical advances, Soligenix is also making progress in improving balance sheet and financing flexibility.

On November 21, 2013, Soligenix, Inc. announced that it signed a stock purchase agreement with Lincoln Park Capital Fund, LLC (LPC) providing an initial investment in Soligenix of $600,000 and the availability of additional periodic investments up to $10.0 million over a 36 month term.

Upon execution of the agreement, the Company received an investment of $600,000 in exchange for the issuance of 285,714 shares of the Company's common stock to LPC. The per share purchase price of $2.10 was equal to the closing price of the Common Stock on the day prior to the execution of the agreement.

At its sole discretion, Soligenix has the right to sell to LPC up to an additional $10.0 million of its common stock, in amounts as described in the agreement and subject to certain conditions, which include the effectiveness of a registration statement with the U.S. Securities and Exchange Commission covering the sale of the shares that may be issued to LPC. The purchase price of the shares will be based on prevailing market prices of Soligenix's shares immediately preceding the notice of a sale without any fixed discount. Soligenix controls the timing and amount of any future investment and LPC is obligated to make such purchases, if and when the Company decides in accordance with the stock purchase agreement. Additionally, there are no upper price limit restrictions, negative covenants or any restrictions on the Company's future financing activities. Soligenix can terminate the agreement at any time without any monetary cost or penalty. LPC has also agreed not to cause or engage in any manner whatsoever, any direct or indirect short selling or hedging of the Company's shares of common stock.

We view this financing positive to Soligenix in the following aspects:

  • Soligenix has the ability to raise capital at or near market prices, which will enhance the potential to pursue strategic alliances in a very efficient and opportunistic manner;
  • The financing agreement is favorable to and flexible for Soligenix with the company controlling the timing and amount of share sales;
  • The flexible financing agreement not only boosts Soligenix's balance sheet, but importantly validates the company's technology and clinical programs;

As of September 30, 2013, the Company's cash position was $6.6 million. Current cash balance, along with potential grant revenue, will last through the end of 2014 according to our financial model. With the new flexible financing vehicle, Soligenix should be able to focus on advancing its clinical programs.

Soligenix also remains active and opportunistic in pursuing non-dilutive capital through government grants and contracts. Most notably, the company was awarded two contracts from the US government in September 2013 to support the development of OrbeShield™ for the treatment of gastrointestinal acute radiation syndrome (GI ARS).

Our Assessment

With two programs already in Phase II studies and two more programs entering into Phase II clinical trial in 1H14, Soligenix has become a middle stage development biopharmaceutical company with reduced risks.

Multiple catalysts in the next 6 to 12 months could move Soligenix shares even higher. Our price target of $4.50 per share values Soligenix at $86 million in market cap which we think is very conservative.

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