In several comments to my recent article “What Tekmira Investors Are Missing” it was brought up that Tekmira’s (TKMR) experimental Ebola drug, TKM-Ebola, was being tested on animals under the FDA’s “Animal Rule.” While this is an accurate statement, a number of incorrect conclusions were drawn from this fact.
Development of TKM-Ebola
TKM-Ebola was first found to have successfully combated the disease within primates four years ago. The key points to note in the drug’s development are:
- 100% success in early trials with primates
- $140 million development contract in place with US Government Agency
- Efficacy testing conducted on animals under FDA’s Animal Rule regulatory guideline
- Phase 1 safety trial on humans began this year
A good, accurate and concise overview of the drug’s development so far is described in Tekmira’s February 12, 2014 press release:
“VANCOUVER, British Columbia, Feb. 8, 2012 (GLOBE NEWSWIRE) -- Tekmira Pharmaceuticals Corporation (Nasdaq:TKMR) (TSX:TKM), a leading developer of RNA interference (RNAi) therapeutics, today announced the commencement of patient enrollment in its Phase 1 clinical trial for TKM-Ebola.
"The initiation of TKM-Ebola clinical development marks another important milestone for Tekmira. TKM-Ebola continues to be developed under a $140 million contract with the U.S. Government's Transformational Medical Technologies (TMT) Program, which allows us to advance this program to FDA approval as well as develop further innovations to Tekmira's broader LNP technology platform," said Dr. Mark J. Murray, Tekmira's President and CEO.
The Phase 1 TKM-Ebola clinical trial is a placebo-controlled, single-blind, single-ascending dose study with additional multiple-ascending dose cohorts in healthy human volunteers. The objective of the Phase 1 trial is to assess the safety and tolerability of TKM-Ebola and evaluate the pharmacokinetics and systemic exposure following both a single-ascending dose (SAD) and multiple-ascending doses (MAD) of TKM-Ebola. A maximum of 56 healthy adult subjects will participate in this study, in two stages. In stage one, the SAD phase will have up to six cohorts with four subjects (three receiving TKM-Ebola and one receiving placebo) in each cohort. In stage two, the MAD portion of the study will have up to three cohorts with four subjects per cohort (three receiving TKM-Ebola and one receiving placebo) in each cohort.
TKM-Ebola will be developed under specific FDA regulatory guidelines (called the "Animal Rule"), which are designed to advance therapeutics that cannot meet the requirements for traditional approval because human efficacy studies are not feasible.
In addition to the TKM-Ebola product development collaboration, the TMT program has supported further development of Tekmira's LNP technology, resulting in a successful 100-fold scale up of the LNP manufacturing process as well as the development of a lyophilization (freeze drying) process while maintaining key LNP product characteristics. These advances will support the late stage clinical development and commercialization of TKM-Ebola as well as other LNP-enabled products.
Tekmira believes its LNP technology represents the most widely adopted delivery technology for the systemic delivery of RNAi therapeutics. Tekmira's LNP platform is being utilized in multiple clinical trials by both Tekmira and its partners.”
What The Animal Rule Means
The animal rule was set up in 2001 in response to 9/11 and other terrorist attacks to allow the development of experimental drugs where using them in human trials would be unethical or unfeasible. The rarity of instances of Ebola make it unfeasible to get sufficient number of infected humans to set up a proper trial. This has been compounded by a general lack of medical infrastructure in regions where Ebola has been identified.
Once this pathway has been approved by the FDA, data on other animals (often primates) who are believed to react in a similar fashion to how humans react to a drug, are provided with drug in various doses to determine more about efficacy of the drug, appropriate dosages, etc.
To get the proper perspective about what the Animal Rule means to the development of a drug, I highly recommend investors read this brief FAQ on the FDA Animal Rule. Two apparently common mis-conceptions are that the Animal Rule will shorten and make less expensive the approval process. From the FAQ:
Q: Is the Animal Rule a more rapid approach to licensure than more traditional pathways?
A: No. All traditional licensure requirements must still be fulfilled including conducting nonclinical safety studies, demonstrating control of manufacturing processes, establishing lot release criteria, completing assay validation, providing regulatory submissions to the FDA and conducting Phase 1, 2 and 3 clinical trials under CGMP, GLP and GCP guidelines as appropriate.
In addition, nonclinical studies will be required to demonstrate that the hallmarks of human disease occur in the animal models selected and are ameliorated by vaccination, that immune responses evaluated in the animals are similar to those induced in the clinic and that immune responses between animals and humans can be bridged in a manner that predicts clinical benefit and supports selection of an effective dose. No vaccines have been licensed using the Animal Rule to date so the impact of the additional nonclinical studies on product development timelines has not been assessed.
Q: Is the Animal Rule less expensive than the more traditional route to licensure?
A: No. The Animal Rule is unlikely to result in cost savings over traditional licensure routes, since all other licensure requirements still apply. Additional nonclinical testing requirements may result in additional costs over traditional licensure paths. The Animal Rule is neither a shortcut nor a cheaper alternative to licensure.
TKM-Ebola Does Have “Fast Track” from the FDA
The FDA has a Fast Track approval process that can speed the development and availability of drugs that attempt to treat serious disease. In March of 2014, TKM-Ebola was granted this status. On its website, the FDA states: “Once a drug receives Fast Track designation, early and frequent communication between the FDA and a drug company is encouraged throughout the entire drug development and review process. The frequency of communication assures that questions and issues are resolved quickly, often leading to earlier drug approval and access by patients.”
Such communication can relieve time lags but does not short circuit the process. All of the same review criteria are in place for Fast Track approvals as for regular approvals. The FDA will expedite their review of the process, shortening the review time from ten months to six months, typically.
The Animal Rule provides an important pathway to allow Tekmira (and other drug manufacturers) to develop vaccines that would not be possible under traditional means. (By the way, vaccine is a correct term. Some commenters seem to think that the term vaccine is limited to a prophyllactic meaning; it is not, it also has a therapeutic meaning.) However, it does not either shorten nor make less expensive the process to receive approval.
Investors need to keep these facts in mind when evaluating Tekmira or other biotech stocks. The path to developing cures has always been, and always will be an expensive and time-consuming process. Fast Tracks and Animal Rules, while helpful, do not change those facts. Keep in mind one of the points quoted in the FAQ above is that “No vaccines have been licensed using the Animal Rule to date…”
Investors are focusing on the wrong attributes of Tekmira, in my opinion, and because of this I presently own a small number of puts on Tekmira. This is not because I hold any negative view about Tekmira the company. Quite the reverse. I have met some of senior management and discussed the development of their RNAi technology with them. They strike me as impressive managers diligently working on a novel but important potential treatment platform. I was long the stock several years ago, made my trade, got out and have been following it loosely since. What I now see is that investors in TKMR have placed too much focus on the headline grabbing but not fully developed TKM-Ebola. In particular have touted the near-term success possibilities they erroneously think the Animal Rule affords. While there is much good to be said about TKMR, too much is being said about the Ebola outbreak and its effect on the stock. A whole new flock of shareholders have just recently jumped on board, looking to get rich off the latest trend. Volume of trading has accelerated to the ridiculous. The company has only 22 million shares out; the float is half that. Yet average daily volume has soared from 300,000 in June to 4 million currently. During August there have been two days when more than the entire capitalization turned over and two further days when more than the entire float has turned over. That is a lot of froth. I own puts for the short term, as I believe the stock has got ahead of itself resulting from the current Ebola frenzy, and I look for it to correct to more normal levels as the frenzy inevitably wears down.
Good luck to all investors.
Disclosure: The author is short TKMR via puts.