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Douglas Krohn is a physician in private practice who provides biotechnology analysis. Dr. Krohn employs an evidence-based, peer-reviewed approach to his evaluation of pipeline biotechnology products. He is a graduate of the Albert Einstein College of Medicine, completed his pediatric residency... More
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  • How to Spot a Short Biotech Opportunity, Part III
    Sometimes when looking at an investigational drug, it doesn’t even matter if the new therapy is going to work or not: even if successful in a pivotal trial, nobody is ever going to use it, and so its data will only be of academic interest.
                    Such were my conclusions when I first looked at Poniard (OTCPK:PARD) Pharmaceuticals‘ picoplatin, a platinum-based chemotherapy agent proposed for use in small cell lung cancer. I had my doubts about whether the drug could really do anything for this indication (my reasons are detailed in the report I have included below), but from the standpoint of predicting whether the stock would ever derive fundamental value from the product, it didn’t really matter: the drug was never going to be able to penetrate the market for small cell lung cancer, and so I viewed picoplatin as little more than a drain on company resources (at least in regard to a lung cancer indication). 
    Were it not for the fact that stocks like PARD often have jumps in its stock price due to positive news flow (marginally useful announcements that trial recruitment has been completed,or that the data safety monitoring board has allowed the trial to continue, etc.), picoplatin and its small cell lung cancer initiative made PARD look like a safe short, if there is such a thing. And, eventually, from the time I first looked in August of 2008, picoplatin and PARD earned a short bias, the most immediate reasons why having been reviewed this past weekend at ASCO.
    I have included my initial report on PARD from August 2008 as a third case study in identifying short opportunities in the biotech sector. Before diving into the report, I have included five basic principles, relevant to the case of picoplatin and PARD, and often relevant to other investigational drugs as well:
    1)      Early and mid-stage trials recruited patients with baseline characteristics more favorable than the pivotal trial. I don’t know that this scenario universally predicts failure for later stage and pivotal trials, but certainly it cannot be used in support of a long position.
    2)      A competitor has a nearly simulataneous trial that is likely to produce better results. If this is the case, the only reason to have a long position at all is because you are playing the binary event of pivotal data release, and betting on positive results. Though this approach might work, it should be recognized that this is a calculated gamble on data release, and not really a belief that the drug has a significant sales potential.
    3)      There are comparable competitors with more convenient formulations.
    4)      The infusion rate of the drug is relatively long, and would thus command a higher CPT code than that of competitors. This, in turn, would put unwelcome financial pressure on both insurance companies and infusion centers that might offer the drug. This is something that those outside of clinical medicine – and, particularly, outside of private practice clinical medicine – might not think about. Rapidly infused drugs (less than five minutes) get lower reimbursements for drug administration than more slowly infused drugs. If two drugs have similar efficacy, but one is pushed right into an intravenous line, and the other one takes an hour to infuse, which one do you think insurance companies are going to want to cover?
    5)      There is emerging importance to health care policy makers of comparative effectiveness, and expensive drugs will not be judged on their efficacy alone, but on the cost of producing a particular outcome. This is already the case in England, where they use what is referred to as the quality-adjusted life year standard, and the writing is on the wall that we might be seeing this soon in the United States. Drugs that add several weeks of life onto one’s life expectancy are unlikely to be covered if their acquisition costs are in the tens of thousands.
    The full report I prepared on picoplatin is included below:
    Small cell lung cancer (SCLC) represents approximately 15% of all lung cancer diagnoses. Though SCLC is extremely sensitive to chemotherapy, and response rates to initial platinum-based therapies (cisplatin, carboplatin) are high, there is a significant number of patients who are refractory to first-line therapy, and a vast majority of patients relapse soon after their response to first-line therapy (which is usually the combination of a platinum drug with either etoposide, a topoisomerase-II inhibitor, or irinotecan, a topoisomerase-I inhibitor). Until recently, options for second-line therapy for SCLC were limited: basic supportive care (NYSE:BSC), which comprises of therapy aimed at the patient’s comfort and palliation, produces median overall survival (OS) rates of approximately 13 weeks. The long-standing alternative to BSC was the combination of the chemotherapy agents cyclophosphamide, doxorubicin and vincristine (CAV), which produced OS rates of about 25 weeks, but was highly toxic. In recent years, intravenous topotecan, a topoisomerase-I inhibitor, has gained approval for second-line SCLC therapy; like CAV, the drug produces OS rates of approximately 25 weeks, but with a far more favorable toxicity profile. Last year, oral topotecan gained approval for the second-line SCLC indication, as it was able to demonstrate similar therapeutic and adverse event profiles as its intravenous formulation. Currently, two important drugs are in phase III trials for use as second-line therapy in SCLC: amrubicin, an anthracycline agent that produces potent topoisomerase-II inhibition; and picoplatin, which is the focus of this paper, a sterically hindered platinum agent that has been designed to circumvent the inherent and acquired resistance patterns to platinum drugs that has proven a great obstacle in the treatment of patients with SCLC. Picoplatin is a bulkier molecule than cisplatin, carboplatin and oxaliplatin, and thus is more resistant to inactivation by tumors producing thiols, and perhaps to inactivation by other mechanisms of both inherent and acquired resistance. Picoplatin is currently being evaluated in the SPEAR trial (Study of Picoplatin Efficacy After Relapse) sponsored by Poniard Pharmaceuticals (OTCPK:PARD).
    Arguments in Favor of Picoplatin Achieving Positive Phase III Results
    • The dose of picoplatin in the phase III trial (150 mg/m2) has two favorable characteristics that would predict its clinical success: 1) this was determined to be the maximally tolerated dose during the phase I trials of the drug; and 2) the patient population in the phase III trial will have baseline characteristics that would minimize the chances of having an adverse event at the maximally tolerated dose – namely, they will have an ECOG performance status of 2 or less (a worse performance status is an exclusion criterion in the SPEAR trial), and the patients will have only one previous course of chemotherapy (more than one previous course is also an exclusion criterion). It was the phase I picoplatin study, in fact, that determined performance status and exposure to previous chemotherapy as being the two most important factors for experiencing toxicity at the maximally tolerated dose. Since the phase II trial did not exclude patients who had had multiple chemotherapy courses, it might be anticipated that the side-effect (and efficacy) profile in the phase III trial will be even more favorable.
    • The side-effect profile of picoplatin is likely to be similar (or improved) in its comparison to intravenous topotecan, oral topotecan, and intravenous amrubicin. Like most cytotoxic agents, picoplatin has a relatively high rate of toxic side-effects. However, in its mid-stage trials to date, its rate of toxicities is very similar to oral and intravenous topotecan and amrubicin: of these agents, picoplatin has the lowest rate of Grade IV neutropenia (14%, as opposed to about 33% for toptecan and 83% for amrubicin); picoplatin has a similar rate of Grade IV thrombocytopenia as the other agents (Grade III/IV combined of 33%); and a lower rate of anemia (18% vs. 25-33% for the other agents).
    • Picoplatin appears to effectively bypass the thiol-mediated inactivation associated with platinum-resistant tumors. One of the principal mechanisms of platinum resistance in SCLC is decreased accumulation of the platinum drug in the tumor cytoplasm via inactivation by thiol-containing compounds, and subsequent export from the cell. It has been shown with cisplatin, carboplatin and oxaliplatin that increasing levels of glutathione, glutathione S-transferase, and metallothionein decrease the activities of these drugs. Picoplatin, on the other hand, has been demonstrated to operate more or less independently of these thiol compounds. There is one notable exception, however: though picoplatin can overcome inactivation by increased metallothionein levels, SCLC cells begin to produce more metallothionein upon exposure to picoplatin and, over relatively short periods of time, picoplatin is less able to circumvent thiol-mediated inactivation.
    Arguments Against Picoplatin’s Clinical Efficacy and Adoption
    • Picoplatin is unlikely to produce phase III results with efficacy as impressive as those likely to be produced by the on-going amrubicin phase III trial. Mid-stage studies with amrubicin suggest that the drug can produce a median OS of 40 weeks (9.4 months) as second-line therapy for SCLC. Interestingly, the phase II amrubicin trial appears to have very different clinical benefits depending on whether the patient has refractory disease (disease progression less than 60 days after completion of first-line chemotherapy) or sensitive disease (disease progression more than 60 days after initial chemotherapy). In the refractory group, amrubicin produced a median OS of 24 weeks (5.7 months), which is similar to both topotecan and picoplatin in phase II; and in the sensitive group amrubicin produced a median OS of 47 weeks. But Pharmion, the manufacturer of amrubicin recently acquired by Celgene, has made a clever change in patient distinction in the phase III trial: refractory disease will now be defined as progression less than 90 (and not 60) days after initial chemotherapy (the same as in the SPEAR trial). What this means from a practical standpoint is that those patients who progressed after day 60 but before day 90 (who were considered “chemo-sensitive” in the phase II trial) will now be considered refractory – however, they will bring their favorable survival characteristics (median OS of 47 weeks) with them into the refractory group. Meanwhile, those who progress more than 90 days after initial chemotherapy – who were always considered sensitive, even in phase II – will retain their favorable characteristics. This should result in phase III data in which sensitive patients still have equally favorable survival statistics on amrubicin, while refractory patients “do better” because of the change in classification criteria. The SPEAR trial and the phase III amrubicin trial have another distinction that favors amrubicin over picoplatin: the SPEAR trial did not exclude mixed-type SCLC/NSCLC from the study, whereas the phase III amrubicin trial did. This was not a wise move on the part of PARD, as mixed-type SCLC does not respond as well to platinum-based drugs (and chemotherapy in general). In any case, it appears that amrubicin is well-positioned to dominate the second-line indication for chemo-sensitive relapses (>90 days), and at least split the market for second-line refractory disease (<90 days) with topotecan and picoplatin.
    • The phase II picoplatin study had patient baseline characteristics that were far too favorable to predict a phase III outcome with any accuracy. A personal communication with the investor relations division of PARD revealed that greater than 50% of the patients in the single-arm, open-label phase II picoplatin study had limited (as opposed to extensive) disease. This is a troubling baseline characteristic: only 30% or so of patients with SCLC have limited disease at diagnosis. Considering that both the phase II and phase III picoplatin studies are looking at patients with relapse, and the rate of limited disease in the phase II study was more than 50% greater than the rate of those naïve to treatment, it is clear that phase II looked at a group of patients at an uncommonly early stage in their disease process, which would predict a greater overall survival even without treatment. The phase III study will have a relatively large recruitment (approximately 400 patients), and it is therefore unlikely that such a high rate of limited disease patients will enter the study – as a result, it is equally unlikely the study will result in such positive survival benefits as demonstrated in phase II, especially when it is considered that the control group will be active supportive care, and not a historical norm.
    • Though the previous phase II picoplatin trials have enrolled patients with some baseline characteristics that are more stringent than in the phase III topotecan trials, the phase II picoplatin trials had a patient enrollment with characteristics that are less stringent and realistic than those seen in the phase II amrubicin trials. The phase II amrubicin trial, like the phase II picoplatin trial, had a very realistic female representation (23%). The phase II amrubicin trial also had a slightly high, but still realistic, rate of patients with prior radiotherapy (30%) – a personal communication with PARD revealed that the prior radiotherapy rate in the phase II picoplatin trials was equal to this number. But the one statistic which clearly establishes a different set of rigor for amrubicin is average patient age: the phase II amrubicin trial had an average patient age of 67, while the picoplatin (and topotecan) trials had average ages of about 57. Older age is associated with poorer prognosis in SCLC, and so amrubicin was able to achieve its favorable results despite a much older patient population. In addition, most patients with SCLC are over the age of 65, and so only amrubicin has been able to produce favorable data in second-line SCLC in patient groups that are truly representative in terms of both age and gender. If picoplatin’s phase III trial were to have an older, more representative SCLC patient population, there is no guarantee that its results would be as good – this would compound the problem, already stated, that the phase III picoplatin trial is unlikely to recruit as many limited disease patients as it did in phase II. Likewise, if the phase III amrubicin trial has a patient population as young as those for picoplatin and topotecan, you might expect amrubicin to do even better. In addition, the phase II amrubicin trial had a very high rate of patients with brain metastasis at entry (35%), and the drug still achieved good results – so good that brain metastasis is not an exclusion criterion in the phase III study. This speaks to an impressive result in a sick population – and, if replicated in phase III, might secure the indication for those with the most advanced disease.
    • Picoplatin is likely to have a significant marketing problem in the second-line SCLC landscape: there will be an oral agent (topotecan) with similar efficacy available as a clinical alternative, and there will probably be an intravenous agent (amrubicin) with superior efficacy also available – this could squeeze picoplatin out of substantial clinical use. Even if it is assumed that picoplatin is approved by the FDA, and it proves to have a survival advantage similar to that demonstrated in its phase II trial, the drug is still going to face the difficult task of finding its own market niche. Topotecan, for example, is already approved for the second-line SCLC indication, and available in an oral formulation that, at the phase III level, has already demonstrated OS data similar to that of picoplatin’s phase II results. Given similar efficacy, cancer patients will choose (by a 9:1 margin) a drug that is orally available, as opposed to an intravenous formulation. Insurance companies and other entities that pay for healthcare, too, will prefer an oral medication and its lesser associated costs, which will put a further squeeze on picoplatin’s market share. For those patients who cannot tolerate oral topotecan (due to chemotherapy-induced vomiting), the drug will still be available intravenously, which will preserve that drug’s market share. At the same time, it appears that amrubicin is probably heading toward a successful phase III trial, and if it replicates its phase II data, it will claim superior survival data – so on one side, picoplatin will be squeezed by a competitor with similar survival data but a more convenient method of delivery (topotecan), and on the other side picoplatin will be challenged by another intravenous drug that may achieve better results. In addition, if both picoplatin and amrubicin put forth positive phase III data, oncologists will probably be drawn to the more rigorous trial design of amrubicin’s phase III trial: amrubicin’s trial is larger than picoplatin’s (620 patients vs. 399), and has a standard-of-care active comparator as its control medication (topotecan), as opposed to basic supportive care.
    • Picoplatin cannot overcome two of the most important factors in SCLC platinum-resistance: BCL-2 gene products or CTR1 membrane protein deficiency. Though picoplatin can overcome the decreased accumulation mediated by thiols, that is not the only mechanism of platinum resistance. DNA mismatch repair with the BCL-2 gene product is another mechanism by which tumor cells grow resistant to platinum drugs, and picoplatin is unable to overcome BCL-2-mediated resistance. This is a major limitation on picoplatin’s efficacy, as 77% of SCLC cells express BCL-2. In addition, BCL-2 expression increases upon exposure to picoplatin, which further limits its activity. The most important mediator of platinum resistance in SCLC is decreased uptake through the copper transport membrane channel CTR1; cells that do not express CTR1 cannot take up platinum-based drugs (including picoplatin), and there is no platinum therapy that has been able to bypass a dependency on CTR1. About one in five SCLC lines have decreased CTR1.
    • The frequency and length of picoplatin infusions will not be favored by U.S.-based payors, who will balance clinical efficacy with considerations of cost-containment. Picoplatin will become available, assuming it is approved, as a 15 minute intravenous infusion. This route of administration would command a substantially higher cost of administration from insurance companies when compared to the 5 minute infusion of amrubicin (assuming that drug is approved) or the oral administration of topotecan.  In the United States, medication administration, particularly for chemotherapy, receives a Current Procedural Terminology (NYSE:CPT) code that determines its reimbursement. Doctors and hospital centers that give medications that require an administration of 15 minutes or more receive a CPT code that increases their reimbursement for the procedure by 30-50% over infusions that are less than 15 minutes. Picoplatin is a 15 minute infusion, and thus would command a higher reimbursement rate than amrubicin, which is only a five minute infusion, and oral topotecan, which does not require professional administration at all. In addition, picoplatin is given five times per cycle, whereas amrubicin would only be given three times per cycle. Assuming all survival statistics are equal, this would make oral topotecan the preferred drug by U.S. insurance companies – who will bear the direct cost of therapy and thus determine which drug they will cover – followed by amrubicin, with picoplatin and intravenous topotecan representing the last choice from the standpoint of administration cost. For this reason, in the U.S., picoplatin would be at a further marketing disadvantage in comparison to oral topotecan and short-infusion amrubicin.
    • Amrubicin seems to be gaining preference in Asian markets (particularly in Japan), where its use is more routine. In addition, first-line therapy in Japan often prefers irinotecan over etoposide, and the more logical agent to follow a irinotecan-containing regimen would be amrubicin. Most of the work on amrubicin in the setting of SCLC has been in Japan, where the drug has already been accepted by oncologists there as the drug of choice for second-line SCLC. Japan and other nearby Asian countries have substantial rates of lung cancer, and so this is a significant segment of the global market that is already leaning heavily toward the adoption of amrubicin in the second-line SCLC setting. There is even speculation that the drug may work better in Asian populations (a concern that is being taken head on by Pharmion, which is conducting its phase III trial for amrubicin in North America, Europe and Australia). Furthermore, irinotecan is rapidly becoming a first-line agent globally – particularly in Japan. As a topoisomerase I inhibitor, it would be expected that irinotecan therapy would cause an up-regulation of topoisomerase II, which would render resistant tumors that follow irinotecan therapy to be most susceptible to topoisomerase II inhibitors like amrubicin. On the other hand, tumors exposed to etoposide, a topoisomerase II inhibitor, would subsequently be rendered most susceptible to topotecan (a topoisomerase I inhibitor). In conclusion, the emergence of irinotecan as a first-line alternative to etoposide is directly assisting the emergence of topoisomerase inhibitors like amrubicin and topotecan in second-line therapy, and leaving less space for a platinum-based drug like picoplatin.
    • Picoplatin will face fierce competition in the international (non-U.S.) marketplace not only because of the preference of Asian oncologists to use amrubicin and irinotecan, but because of the economic pressures exerted by the health services of European nations and others with socialized healthcare. The National Health Service (NYSEMKT:NHS) of the U.K. has already determined that intravenous topotecan is too expensive for a drug that adds only a twelve week survival benefit to basic supportive care. The NHS has stated as policy that it will not pay for topotecan as second-line therapy for SCLC. Other nations with socialized medical systems – for example, Holland and Germany – often rule in a similar manner to the U.K.’s NHS. It is reasonable to assume that, in a best case scenario, picoplatin will produce similar survival statistics, at a similar cost, to topotecan – and will likely be rejected by nations with socialized healthcare plans. Oral topotecan, which was just made available in 2008, has not yet been ruled on by the NHS, though might stand a better chance of approval if its administration costs are significantly lower than its intravenous formulation. Even amrubicin, which is likely to maintain a cost similar to topotecan and picoplatin, will not be viewed as a justified expense by socialized healthcare systems unless it can produce significantly better survival data than that seen with topotecan.
    • Though picoplatin addresses the issue of platinum resistance, it does not address the issue of topoisomerase resistance. Standard first-line therapy for SCLC combines a platinum drug (cisplatin or carboplatin) with either etoposide (a topoisomerase II inhibitor) or, more recently, irinotecan (a topoisomerase I inhibitor). Exposure to platinum therapy, of course, induces platinum resistance, and that is the chief aspect of second-line therapy that picoplatin addresses. But exposure to etoposide causes tumor to increase its expression of topoisomerase I (the enzyme that etoposide does not inhibit) and decrease its topoisomerase II expression; likewise, exposure to irinotecan induces tumor to increase its expression of topoisomerase II and decrease its expression of topoisomerase I. Picoplatin cannot address either of these changes in tumor enzyme expression. Topotecan, however, is a topoisomerase I inhibitor, and thus is a logical second-line agent to follow etoposide. As mentioned above, amrubicin is a topoisomerase II inhibitor, and thus a logical choice to follow irinotecan as second-line therapy (in fact, amrubicin did just as well in its phase II trial when following either irinotecan or etoposide). In summary, amrubicin and topotecan together address the importance of topoisomerase resistance, whereas picoplatin does not. In addition, as irinotecan gains increasing use in first-line treatment, it is indirectly setting amrubicin up as the preferred agent for second-line therapy (and, as mentioned, amrubicin does just as well when following etoposide).
    The Central Issues in the Evaluation of Picoplatin: Efficacy vs. Adoption
                    As detailed above, the future of picoplatin – and, therefore, the future of PARD – is not as simple as stratifying the drug’s chances of producing positive results in a phase III trial. Though efficacy (will the drug work?) is central to any investment thesis, adoption (will the drug be used?) is just as critical.
    The first question – will it work? – is difficult to answer in light of the poor methodology of the phase II trial. Since the design of the phase II trial is hampered by the unrealistic baseline characteristics of the study participants – the study had too many patients with limited disease, and thus it is impossible to tell if the overall survival data reflects the therapy or the relative heartiness of the study population – prediction of any phase III outcome is at best guesswork.
    The second question – will it be used? – is a complex issue to address. Though picoplatin might generate a modest survival benefit, its benefit is unlikely to be significantly better than that of topotecan – which has a head start on it in terms of clinical use, and is available in two different formulations. To that end, picoplatin is unlikely to distinguish itself as superior in clinical efficacy to oral topotecan: given cancer patients’ preference for oral over intravenous therapy (when efficacy is equivalent), this is a factor that is likely to restrict the practical use of picoplatin. In addition, topotecan is available in both oral and intravenous formulations with equivalent efficacy, which means that patients who cannot tolerate one formulation can be switched to the other without ceding market share to a competitor.
    Another issue that picoplatin will have to face, particularly outside of the United States, is the heavy burden of its cost for a survival benefit that is, at an absolute best, only 12 weeks longer than palliative care. The National Health Service of the United Kingdom, for example, has already weighed in on intravenous topotecan and has declared that it is not worth the cost of its additional life expectancy, and so will not pay for it. Given that picoplatin is likely to have no better than a similar survival rate and cost as intravenous topotecan, it might be anticipated that countries with socialized healthcare like the U.K. will also reject the routine use of picoplatin for second-line SCLC.
    But perhaps the biggest issue that picoplatin will have to face is the imminent ascendancy of amrubicin. It appears that amrubicin has a better chance than picoplatin at producing positive phase III results for second-line SCLC, and its historical norms suggest that it might extend life by as much as 25% more than picoplatin did in its imbalanced phase II trial. If these historical norms for both picoplatin and amrubicin hold true, then picoplatin will be faced with the cold truth that amrubicin might just be the better drug. At that point, independent of economic factors, amrubicin would become the first intravenous drug choice of patients and their physicians, and perhaps shrink the practical market for second-line SCLC to two drugs: amrubicin and oral topotecan.
    In conclusion, though picoplatin might produce positive phase III results (and therefore generate a possible bump in its market capitalization due to the temporary effects of positive news flow), it appears that picoplatin will then have to wage a war for its market share on two different fronts: on one side, an orally available and more convenient drug with similar activity (topotecan), and on the other, a drug with better survival characteristics (amrubicin).
    Source Material and Correspondence
    1. Brendan Doherty, Manager, Corporate Communications/Investor Relations, Poniard Pharmaceuticals
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    Jun 07 11:00 AM | Link | 2 Comments
  • How to Spot a Short Biotech Opportunity, Part II
    How to Spot a Short Biotech Opportunity, Part II
    What, exactly, defines pivotal drug trial data as “positive”?
    On the surface it would seem that any drug that meets its trial’s primary endpoint would have produced data that could be defined reasonably as “positive.” But even that definition should be accepted with caution, as the primary endpoints that are submitted to the FDA 1) are hand-picked by the company that is developing the drug and sponsoring the trial; and 2) may have little to do with the standard clinical practice of the disease in question. Meeting a primary endpoint is relevant only if the endpoint itself is relevant.
    Issues such as this call to mind the curious case of AP Pharma (APPA), which nearly two years ago released the “positive” data from its phase 3 trial of sustained-release granisetron (for chemotherapy-induced nausea and vomiting, CINV) – and, on the heels of this “good news,” subsequently saw its stock price drop about 33% in a day. The drug had met three of its primary endpoints, the company announced, but not the fourth (for treatment of delayed-onset CINV in highly emetogenic chemotherapy) – which was the only one that had any relevance to the investigational drug’s potential use in clinical practice.
    I have included below the report I had prepared for a client three months before APPA released its data, as another case study in identifying a potential short opportunity in the biotechnology sphere. Similar to the case discussed in the first installment of this article (in which SNTA’s melanoma drug, elesclomol, was analyzed), the case of APPA and its investigational drug, APF530, also hinged on the binary event of phase 3 data release. But in the case of APPA, a further question lurked in the background – namely, even if APF530 were to achieve positive phase 3 results, and even receive distinction from the FDA as approvable, would it matter? Would the drug, even if it one day reached the marketplace, be prescribed? And, if prescribed, would anybody pay for it?
    I argued “no” at the time, to all of the above questions, and though APPA never got past the first hurdle – the pivotal trial – these questions might represent the second wave of attack on a long position in any biotech firm whose fortunes rest on a single investigational product. A few other companies, too, might qualify as having “approvable” (or even approved) drug candidates that nevertheless have difficulty addressing the first two questions – Will anybody want to use it? Will anybody pay for it? – as well as a third (Over time, will it still prove to be safe?). AMAG, with its questionably beneficial drug for anemia in chronic renal disease, immediately comes to mind.
    Before reading the 2008 report on APPA, I have included the five basic priniciples of the APF530 case that might lead any investor toward a short bias on any drug. They are:
    1)      The investigational drug in question is simply an off-patent drug, packaged in a new delivery formulation, and then marketed for a new indication. Changing a drug from an immediate release formulation to a sustained release formulation can be valuable, provided the new formulation is used for the same indication and increases patient compliance. But when an old drug has its delivery mechanism changed so that it can market itself for a whole new indication (in this case, putting granisetron in a sustained-release formulation and now claiming it works for delayed-onset CINV, instead of only early-onset CINV) the results are rarely successful – and, if successful, easily knocked off by potential generics competitors.
    2)      The control arms do not conform to academy standards, and so even positive results would not change clinical practice standards. Sometimes, new drugs for diseases that have established therapies are compared to placebo – this would be the most obvious example of a trial that, even with positive clinical data, might not change anything: the new drug may be better than nothing, but we already have more than nothing to treat the disease. In the case of APPA, the control group did not receive academy-endorsed treatment for delayed-onsent CINV in highly emetogenic chemotherapy.
    3)      The proposed therapy, even if successful, already has unfavorable cost-efficacy data. It is worthwhile to see if healthcare economists have already taken a look at the drug in question, particularly when the current presidential administration touts the importance of “comparative effectiveness.”
    4)      Results from early stage studies (phase 1 or 2) have not been published in peer-reviewed journals. The immediate inference here would be that articles derived from earlier studies were either rejected by such journals, or so flawed that exposure to public scrutiny would injure public relations.
    5)      Earlier stage studies that have been “successful” had undertreated patients in their control groups.
    Remarkably, APPA still remains an actionable stock: the company is still seeking approval from the FDA for APF530 in the three indications in which it proved to be “non-inferior” to control, and its stock price continues to hover around $1. At its current price, it is hard to call APPA a short, but the full report I prepared in 2008 is provided below:
    APF530 (biochronomer-treated granisetron) is a novel formulation of granisetron, a 5-hydroxytryptamine type-3 receptor antagonist (5-HT3RA) used for the prevention of the nausea and vomiting that often follows administration of chemotherapy. The active drug in APF530 is granisetron, which has a long, effective and safe history in the treatment of chemotherapy-induced nausea and vomiting (CINV). What distinguishes APF530 from typical formulations of granisetron is its method of delivery: APF530 is delivered in a bio-eroding polymer, administered by subcutaneous injection, that can sustain a controlled release of granisetron over a period of five days. AP Pharma (APPA), the manufacturer of APF530, contends that this prolonged release of granisetron will allow for control of CINV in both its acute setting (defined by clinical oncologists as occurring within 24 hours of chemotherapy administration) as well as in its delayed setting (greater than 24 hours after chemotherapy, with a generally recognized limit of 120 hours). To date, 5-HT3RAs as a class of drugs have been very effective at controlling acute CINV, but have been far less effective in controlling delayed CINV. For the control of delayed CINV, the steroidal anti-inflammatory dexamethasone has proven to be a successful clinical tool, though its mechanism of action remains unknown. Aprepitant, a neurokinin-1 (NK-1) receptor antagonist that has penetrated the market in the last 10 years, has had great success in the treatment of delayed CINV – probably because delayed CINV is mediated principally by substance P, a neurotransmitter that binds NK-1 – and has become the standard of care for delayed CINV for highly emetogenic chemotherapy (HEC), usually in conjunction with dexamethasone; it is also the standard of care in some moderately emetogenic chemotherapy (MEC) regimens. Olanzipine, an antipsychotic drug, has also had promising results in the treatment of delayed CINV (probably through its antagonism of dopamine and, to a lesser degree, serotonin receptors), but its use has been limited to second line and treatment failures because of its narrow therapeutic window. Of all the 5-HT3RAs to the present date, only palonosetron – which has a very long half-life and an unusually strong binding affinity to the receptor – has demonstrated any consistent success for the treatment of delayed CINV, despite the fact that the entire class of drugs is extremely successful in the treatment of acute CINV. This is probably because acute CINV is mediated by serotonin through its binding of the 5-HT3 receptor, and this mechanism of acute CINV rapidly attenuates after 16 hours, with a substance P-mediated mechanism gaining predominance after the first 24 hours. APPA is challenging the notion that granisetron is less effective than its clinical alternatives in the treatment of delayed CINV, and to that end has designed a pivotal phase III trial in the treatment of both acute and delayed CINV in HEC and MEC. APF530 has been tested in a three-arm trial: one arm gives a single injection of 5 mg APF530 on day 1 of chemotherapy; a second arm gives a single injection of 10 mg APF530 on day 1 of chemotherapy; and a third, active comparator arm gives a single infusion of 0.25mg palonosetron on day 1 of chemotherapy. All arms will also receive a dexamethasone infusion on day 1, and HEC patients will also receive oral dexamethasone on days 2-4. All arms will also receive either an IV or SC administration of placebo, so that all patients in the study will have received two IV infusions and one SC injection. Roughly half of the 1400 patients received HEC, and the other half received MEC. The trial is designed by APPA to demonstrate non-inferiority of APF530 to palonosetron for acute CINV in MEC and HEC, and to delayed CINV in MEC; the trial is also designed to demonstrate superiority of APF530 to palonosetron for delayed CINV in HEC. Results of the trial, already completed, are due 2H08.
    Arguments Against the Generation of Positive Phase III Data and Adoption by Clinical Oncologists
    • The phase III APF530 trial is not relevant to current American Society of Clinical Oncology (OTC:ASCO) guidelines for antiemetics in oncology, and so even positive results will not have a significant effect on clinical practice. The most obvious problem with the phase III APF530 trial design is that none of the arms represent the current standard of care for the prevention of CINV. The ASCO guidelines clearly state that all HEC patients should receive aprepitant on days 1, 2 and 3 of their chemotherapy course; both the National Comprehensive Cancer Network (NCCN) and the Multinational Association of Supportive Care in Cancer (MASCC) agree with these guidelines. However, aprepitant is not part of any regimen in this study, and so no matter the results that this pivotal trial produces, it will not be able to establish itself as either equivalent or superior to current standards of care (at least not for HEC patients). Likewise, ASCO guidelines also state that for MEC patients, dexamethasone must be continued through day 3 of the chemotherapy course if aprepitant is not being used; both NCCN and MASCC agree with these guidelines. However, the phase III APF530 trial is only giving dexamethasone on day 1 to the MEC patients, and so the treatment of MEC patients, too, has essentially omitted any comparison to current standards of care. It should also be noted that ASCO, NCCN and MASCC all agree that MEC patients receiving a combination of an anthracycline and cyclophosphamide should also receive aprepitant on days 1, 2 and 3 – as already stated, however, aprepitant is not included in this trial, and so this recommendation has not been recognized by APPA in its trial design. In defense of APPA, this may not all be the result of poor planning, but may have been the result of bad luck: APPA initiated its trial in 2006, only months before ASCO updated its antiemetic guidelines. Nevertheless, the phase III trial design does not reflect current standards of clinical care, and this will likely cause dismissal – or, in the very least, skepticism – of whatever positive results the trial produces.
    • Published clinical evidence has established that the addition of a 5-HT3RA to dexamethasone does not significantly prevent delayed emesis, and that the use of a 5-HT3RA beyond 24 hours after chemotherapy does little to prevent delayed emesis. Dexamethasone – an old, safe, familiar and generic steroidal anti-inflammatory drug – is so effective at preventing delayed emesis in MEC that it does not benefit from the use of additional antiemetic therapy, and does not receive added benefit in HEC beyond the addition of aprepitant. This, in fact, is the official policy of ASCO (as well as NCCN and MASCC), and is substantiated by the clinical evidence that delayed emesis is not mediated by serotonin (which binds the 5-HT3R), but by the substance P-mediated binding of the NK-1 receptor. Trials that have looked specifically at the use of granisetron and dexamethasone for delayed emesis (6) have demonstrated that the administration of granisetron after 24 hours conferred no benefit over dexamethasone alone. Considering that the APF530 trial will compare not just granisetron and dexamethasone vs. dexamethasone alone – but against dexamethasone AND the extremely long half-life 5-HT3RA palonosetron – it is unlikely that this study will be able to detect even a small incremental effect of a 5-HT3RA when added to dexamethasone, let alone an effect that is uniquely attributable to granisetron. In trials that have looked at granisetron on day 1 with ondansetron on days 2-4 in combination with dexamethasone (9), none of the efficacy variables related to control of delayed emesis differed significantly between this combination and dexamethasone alone. And Paul Hesketh, M.D. – the Harvard Medical College oncology professor who is the author of the Hesketh algorithm for prophylactic management of CINV – has demonstrated that serotonin mediates the early CINV that occurs within 8-12 hours of chemotherapy, after which time substance P acting at NK-1 receptors becomes the dominant mediator of CINV (11). In sum, the entire premise of the APF520 trial – that longer acting 5-HT3RAs can be as effective at controlling delayed CINV as they are at controlling acute CINV – is flawed.
    • Cost-benefit analyses of 5-HT3RA use for the delayed emesis (>24 hour) period have demonstrated that their minimal improvements do not justify their costs. Neither clinical evidence nor considerations of cost effectiveness justify using 5-HT3RAs beyond 24 hours after chemotherapy for prevention of delayed emesis (5). A meta-analysis acknowledged by ASCO determined that when 5-HT3RAs are administered in combination with dexamethasone, there was no added benefit, and so it is impossible (and irrelevant) to demonstrate cost-efficacy of a futile therapy. But even when 5-HT3RAs were administered beyond the 24 hour period and compared against no therapy at all, it was determined that 423 doses of ondansetron would have to be administered to prevent a single episode of vomiting. At an average price of $30.45 per ondansetron tablet, the drug acquisition costs to prevent a single episode of CINV would be $12,880. Now, if this $12,880 cost of a futile therapy were compared to the cost of one that actually works – e.g., dexamethasone, which as an IV formulation costs about $0.62 per dose (and less when given orally), or aprepitant, which has a full course cost of about $590 (but a probable drug acquisition cost of under $2000 when numbers needed to treat are considered) – the balance still weighs strongly against the use of a 5-HT3RA. When it is further considered that, even if demonstrated to show a modest clinical benefit, APF530 is likely to cost approximately $370 per dose (the cost of palonosetron, and roughly twice the cost of a four day ondansetron regimen), then it becomes even clearer that it will be virtually impossible to justify the cost of this drug, even in the unlikely scenario that it gains FDA approval. No managed care organization will bear the extreme costs of marginally effective therapy, let alone therapy that might add nothing at all to current standards.
    • The cumulative dose of granisetron in the APF530 trial will be either 5 mg or 10 mg (over a 5 day period). There are published clinical data, however, that demonstrate 5 day cumulative doses of as much as 13 mg granisetron (given in multiple dose, in standard formulations) do nothing to prevent delayed emesis. In many ways, this contention is simply a re-statement of the fact that 5-HT3RAs do not work beyond the first 24 hours of therapy. Nevertheless, there is precedent that giving granisetron specifically over a five day period does not prevent delayed emesis (6). In a 1996 trial acknowledged by ASCO, granisetron was given as 13 mg over a five day period (and 17 mg over a period of seven days) in conjunction with dexamethasone, and it offered no benefit over dexamethasone alone. Now, the current APF530 trial is essentially the administration of granisetron with multiple doses over multiple days – the active drug (granisetron) is the same, but the biochronomer delivery system allows for a gradual absorption of the drug into the bloodstream over a five day period. Since the cumulative dose of granisetron in the APF530 trial is actually smaller (5 or 10 mg) than the cumulative dose in previous trials that have failed, it is even more unlikely that APF530 will be able to demonstrate any benefit at all.
    • For acute emesis (<24 hours), all 5-HT3RAs are equivalent, and so APF530 is unlikely to demonstrate superiority in acute emesis in its head-to-head comparison with palonosetron, or in comparison to historical controls. This has been the conclusion of virtually every meta-analysis that has compared 5-HT3RAs – whether they have been sponsored by ASCO, NCCN, MASCC, the Cancer Care Ontario Practice Guidelines Initiative, or any other group: the 5-HT3RAs are all virtually the same. The only possible exception to the contention that all 5-HT3RAs should be considered equivalent – which, in fact, is the official policy statement of ASCO, NCCN and MASCC – is palonosetron. In both acute and delayed CINV, palonosetron has been able to demonstrate superiority to other 5-HT3RAs in head-to-head comparisons (12) – in the acute setting, probably because of palonosetron’s superior binding affinity to the receptor; in the delayed setting, palonosetron’s superiority to other 5-HT3RAs is probably due to its significantly longer half-life, and a blockade of the minor elements of serotonin-mediated CINV that exist beyond the 24 hour period of chemotherapy. With palonosetron as its active comparator, APF530 has quite a hill to climb: 1) in the acute phase, it is being compared to a drug that, in the best-case scenario, it can only hope to achieve non-inferiority; and 2) in the delayed phase, it is hoping to surpass the most effective drug in a class that does not have a clear indication for this clinical use. In general, there are two schools of thought within the oncology community: One is that all 5-HT3RAs are interchangeable – if true, APF530 is unlikely to succeed in its trial, because it will not demonstrate superiority. The other school contends that palonosetron is a best-in-class molecule – if this is true, then APF530 is unlikely to succeed in its trial, for it will not demonstrate non-inferiority.
    • The pharmocokinetics of granisetron, even in a sustained-release formulation, compares unfavorably to palonosetron. Though the biochronomer formulation of granisetron will sustain release of the drug, it will do nothing to affect its half-life or, more importantly, its binding affinity. Palonosetron’s binding affinity (pK) to the 5-HT3R is nearly two logs (or 100 times) as strong as granisetron’s. The biochronomer delivery system that signifies APF530 as unique is merely an eroding polymer that sustains release of the drug – there is no change in the molecule that makes it bind its receptor target with greater affinity. So in this respect, at least in the first 48 hours of therapy, APF530 will have an extremely difficult time competing with palonosetron. Similarly, palonosetron’s half-life is nearly five times as long as granisetron’s – 40 hours, as compared to eight. Again, the polymer delivery system of APF530 does nothing to prolong half-life – the granisetron molecule is unchanged. But it does sustain a continued release of the granisetron over approximately five days. Given that the half-life of palonosetron is about 40 hours, this sustained release mechanism is unlikely to confer any clinical benefit to APF530 in the first 48-72 hours of therapy. Perhaps beyond that point – days four and five of the chemotherapy course – APF530 will still be active, while the palonosetron dose has dissipated. But at this point, the contribution of serotonin-mediated effects on CINV are so small that it is unlikely that a significant benefit over palonosetron can be measured.
    • As experience with aprepitant accumulates and doctors grow more comfortable with its use, it is likely that it will expand its market into the moderately emetogenic therapy space and further squeeze out 5-HT3RAs for delayed emesis. Aprepitant has already gained a foothold in the delayed CINV market space – it has academy recommendation from ASCO, NCCN, and MASCC for HEC. It also has recommendations from those same academies for MEC that utilizes an anthracycline drug in combination with cyclophosphamide. In addition, aprepitant has the endorsement of the NCCN for its use in all MEC, including those regimens that do not employ anthracyclines – as clinical use with aprepitant becomes more widespread, and oncologists grow more comfortable with its use in specific MEC regimens, it is likely that the other two academies (ASCO, MASCC) will follow suit and recommend aprepitant more broadly. Even if successful in its trial, APF530 is likely to see a further competitive infiltration of its potential market space (specifically, MEC) by aprepitant.
    • Three of the four goals of the APF530 trial, even if met, will do nothing to create a market for the drug. As stated publicly by APPA, the APF530 trial is looking to achieve four primary endpoints: 1) non-inferiority to palonosetron for acute CINV in MEC; 2) non-inferiority to palonosetron for acute CINV in HEC; 3) non-inferiority to palonosetron for delayed CINV in MEC; and 4) superiority to palonosetron for delayed CINV in HEC. However, the entire success of APF530 hinges on the fourth endpoint, and the fourth endpoint alone. Non-inferiority to cheaper and/or long-established treatment alternatives will not lead to adoption of APF530. To grab any market foothold at all, APF530 must demonstrate superiority to palonosetron for delayed CINV in HEC. Even then, APF530 will meet some very serious marketing challenges: as mentioned, aprepitant in combination with dexamethasone is an established and effective regimen for delayed CINV in HEC, and this trial will do nothing in the way of addressing whether APF530 can be just as effective as this standardized combination.
    • Previous trials of APF530 that have demonstrated superiority to trials of palonosetron for delayed CINV in HEC have not standardized dexamethasone use, nor were they of equal statistical rigor. APPA has designed its phase III trial based on its phase I and II results with APF530, and historical standards of palonosetron trials that were submitted to the FDA. According to investor presentations by APPA, APF530 is non-inferior to palonosetron for acute and delayed CINV in MEC; it is insignificantly superior to palonosetron for acute CINV in MEC, and significantly superior to delayed CINV in HEC. There are numerous problems with these comparisons, however. For one, none of these comparisons were head-to-head – they compare a recent trial of APF530 to a historical trial of palonosetron. Two, the APF530 trials have been, to this point, open label, whereas the palonosetron trials to which it was compared were blinded and controlled. Three, the APF530 trials had approximately 20 patients in them; the palonosetron trials to which they have been compared had over 500 patients. Four, in the midstage trials of APF530 to date, dexamethasone use was not standardized: in most patients, dexamethasone was used, but not in all. In addition, HEC patients in previous APF530 trials only received dexamethasone on day 1, and not beyond (current standards call for its use through day 4, which is how it has been used in the phase III trial). John Barr, the Senior Vice President of Research & Development of APPA, notes that dexamethasone use was not standardized in any palonosetron trial, either, but this explanation is insufficient: the pivotal palonosetron trials took place prior to the publication of current academy guidelines. In addition, the poor design of a competitor’s trial does not justify the subsequent use of the same poor trial design.
    • APPA has not published the results of its phase I or phase II APF530 trials in any peer-reviewed journal. It is troubling when supposedly promising results are not shared with the peer-reviewed academy.  There are numerous reasons why a promising paper would not have been published:   Studies with only 20 patients in them that use sub-standard protocols and, perhaps, do not achieve statistical significance seems like a likely explanation for why a study was never printed in an academic journal.

    Disclosure: No positions
    May 17 11:55 AM | Link | Comment!
  • How to Spot a Short Biotech Opportunity, Part I
    How to Spot a Short Biotech Opportunity, Part I
                In 2008, Synta Pharmaceuticals (NASDAQ:SNTA) concluded the analysis of its phase 3 trial for esleclomol, a drug with the potential indication for treatment of advanced melanoma. As investors awaited the release of data from its pivotal trial, elesclomol seemed to have all the makings of an approvable drug with a successful commercial future.
                For one, elesclomol’s potential indication was not just for cancer, but for one with a particularly grim prognosis – a context which seems to promote the most sympathetic ears among regulatory panels. In addition, it had been decades since a new cytotoxic (“cell-killing”) drug had been approved for melanoma, and long positions seemed to rest on the grounds that it was high time the FDA approve something, provided it was reasonably safe and effective. Also, it did not hurt that SNTA had significant support from one of the biggest names in the pharmaceutical industry (NYSE:GSK).
                And then, several months after the anticipated phase 3 data on elesclomol was expected to be released, the news finally broke: the drug did not work. The stock, which had been trading in the $8 range, fell to about $2. The partnership with GSK was severed.
                I had prepared for a client an analysis of SNTA – or, more specifically, elesclomol – about nine months before the release of the pivotal trial data, in which I anticipated disappointing results. I have included that report here, as a sort of case study in identifying short opportunities in the biotechnology sector – particularly when a biotech stock’s price hinges on the binary event of phase 3 data release.
                The report, included below, employs the same standard of evidence that the FDA would demand in evaluating any drug: evidence-based, academically oriented, peer-reviewed data, complete with references and citations. In other words, I had to go back to the library and read what the scientists had to say in the journals and in the quarterlies.
                This approach lays in contrast to the more typical biotech analysis, which relies upon the impressions of “thought leaders,” or “key opinion leaders” in the field. Whereas it can never hurt to seek the guidance of an accomplished physician-researcher with expertise in a specific field, it should be remembered that the FDA does not accept expert opinion as a grounds for approval or dismissal: It is all about high-quality data, which can never be replaced by expert intuition.
                Before reading the 2008 report on SNTA, I have included the five basic principles of the elesclomol case that might lead any investor toward a short bias on any drug. They are:
    1)      The mechanism of action (MoA) is theoretical, but not established, and there is scant pre-clinical data that attempts to define the MoA. I suppose it can be argued that, as long as a drug is reasonably safe and effective, we do not need to know exactly how it works. But in an era in which most molecules’ MoAs are well-defined, no molecule can be felt to be in expert hands if not even the expert knows how it works. And the absence of published pre-clinical data makes one wonder if the company running the trial possesses data that they do not want you to see. A more recent example of a drug that had promising early stage trials but scant published data on its MoA is dimebolin, a drug developed by Medivation (NASDAQ:MDVN) for Alzheimer’s disease – this drug, of course, failed its phase 3 trial.
    2)      There were significant baseline imbalances in preceding non-pivotal trials. Earlier stage studies might have significant differences in the baseline characteristics of its study group when treatments are non-randomized, or entire studies are open-label. This is fine when a study has the characteristics of a pilot investigation – but positive data can hardly be accepted as valid and ready for confirmation when earlier stage studies do not meet anyone’s standard of statistical rigor.
    3)      There were manipulations of the “intention to treat” principle. The most common manipulation of the intention to treat principle is to ignore it altogether – for example, not including in the final analysis any of the patients who dropped out of a study (a technique recently observed, but then corrected, by a company with an investigational weight loss drug), and thus skewing the data toward a favorable result. In the SNTA example, however, it held on to the intention to treat principle too strongly, attributing adverse events to control patients in early stage trials, even after they had crossed over to the experimental group.
    4)      Control groups are not given an active comparator, or are given a sub-therapeutic dose of an active comparator. This one is simple: If a disease has an accepted standard of therapy with an accepted dosing regimen, then that standardized treatment should be given to the control group – particularly when you are dealing with a disease that has a high mortality rate. Only when there is no therapeutic standard available are placebos (or, in the case of SNTA, real drugs given at dummy doses) acceptable.
    5)      The control group does not receive an academy-accepted standard of care. Even if data is positive, the drug will eventually need to receive FDA approval, and the FDA usually considers the value of the drug over therapies that are already available.
    The full report that I prepared on elesclomol in 2008 is provided below:
    Elements of the Phase I and Phase II Trials that Argue Against the Generation of Positive Phase III Data
    • Not only did the paclitaxel (control) group have more patients with advanced (M1c) disease than the elesclomol + paclitaxel (experimental) group, but the control patients with M1c disease had more distant and/or multiple metastases than their experimental counterparts. The American Joint Committee on Cancer Staging melanoma guidelines define the M1c stage as any visceral (organ) metastasis other than the lung, or any distant metastasis (for example, a lymph node) with an elevated serum lactate dehydrogenase (LDH). To this end, it is already known that the rate of M1c disease (the most advanced stage) was higher in the phase II trial’s control group – 75% vs. 53% -- and so it would be expected that the control group, with its higher disease burden, would have a poorer outcome. However, SNTA reports that the rate of liver metastasis (a common site of melanoma spread) was equal in both the experimental and control groups, with a rate of 32% in each. As defined by the Joint Committee, however, liver metastasis would qualify as M1c disease – so if both the control and experimental groups had the same rate of liver involvement, but the control group had a higher rate of overall M1c disease, then we know that the control group had a higher rate of multiple or more distant metastases. Consider this: if the experimental group had a liver metastasis rate of 32%, and its incidence of M1c is 53%, then its rate of metastasis beyond the liver was 21%. Compare this to the control group, which also had a liver metastasis rate of 32%, but an overall M1c rate of 75%: that means that 43% (more than twice as many as in the experimental group) had distant metastases beyond the liver. In appreciation of this, it should be noted that the phase II trial not only had more advanced patients in the cohort, but even those patients in the most advanced disease cohort had, on average, more distant spread. This is an important point to recognize, since SNTA management has advanced the argument that, even correcting for M stage, the experimental group fared better. This may be so, but the baseline imbalance of the two cohorts is such that one cannot discount the possibility that this may have more to do with patient selection than with therapeutic effect. In sum, SNTA appears to have spun a positive result out of one of the quirks of cancer staging: quantum distinctions (e.g., M1a, M1b, M1c) are given to continuous processes, and so an appearance of equivalence can be assigned to an entity that has progressed further along the continuum (e.g., distant metastases are not distinguished from isolated liver metastases).
    • The elesclomol + paclitaxel cohort also had a younger average age than the control group (57 vs. 61), and a lower rate of prior chemotherapy (56% vs. 68%). The latter point – that the control group had a 12% higher rate of prior chemotherapy than the experimental group – is probably the more significant, in that it suggests incomplete randomization, more advanced disease, disease more resistant to therapy, and/or a patient population already exposed to the deleterious effects of cytotoxic agents. Prior chemotherapy certainly suggests more advanced disease – and, in the case of melanoma previously exposed to cytotoxic agents, it is a disease which is well-described as being more resistant to other chemotherapeutic agents like paclitaxel. In fact, the investigators of the phase II study even drew this conclusion – patients previously treated with chemotherapy fared so poorly that the phase III trial has subsequently been designed to exclude them. SNTA maintains that, no matter the prior chemotherapy status, the experimental group still fared better. However, SNTA did not break down its data in a way that stratifies how many prior chemotherapy patients were in which M stage, and so prior chemotherapy status alone does not assure clinical similarity. The first point – that the experimental patients were slightly younger than the control patients – is self-explanatory: as SNTA acknowledged at its analyst day, patients over 60 (particularly male patients, which comprises 67% of the study) fare worse than those under 60. Again, the median control age was 61; the median experimental age was 57.
    • There is no evidence to support oxidative stress as elesclomol’s mechanism of action. In addition, the pharmacokinetic data that comes out of the phase I trial suggests elesclomol’s mechanism of action may actually be its inhibition of paclitaxel metabolism and a subsequent prolongation of paclitaxel’s duration of action. There is no pharmacodynamic data that demonstrates whether elesclomol does anything at all – even the data which SNTA presented at its analyst day demonstrated that elesclomol has virtually no activity on melanoma when administered as a single agent. The only data, in fact, that is even suggestive of elesclomol’s mechanism of action is the pharmacokinetic data derived from the phase I study. That study demonstrated that elesclomol had a rapid elimination from plasma (the biologic half life was about an hour) and a low volume of distribution – not surprising pharmacokinetic characteristics in a drug that has not been shown to be effective as a single agent. At the same time, the co-administration of elesclomol with paclitaxel resulted in a significant decrease in total body clearance of paclitaxel, and a slower elimination of the paclitaxel – a finding that was noted to increase when the dose of elesclomol was escalated and the dose of paclitaxel was fixed. This measured pharmacokinetic data was supported by the clinical data of the phase I trial, in which co-administration of elesclomol with paclitaxel resulted in an increased incidence of paclitaxel-related toxicities (neutropenia, mucositis, myalgia, etc.) – another suggestion that elesclomol’s contribution to this regimen was its increase of the effective circulating dose of paclitaxel. In other words, it appears that elesclomol does not so much synergize with paclitaxel, or sensitize cancer cells to paclitaxel (both are claims made by SNTA) – it rather appears to be inhibiting the metabolism of paclitaxel and driving up its effective dose, thus allowing paclitaxel a greater opportunity for cytotoxicity. This would explain both greater therapeutic action, as well as greater adverse reactions – a trend that was indeed found in the subsequent phase II trial: that study demonstrated an improvement in clinical response with elesclomol, but it also demonstrated an increase in paclitaxel-related adverse events, despite the fact that the paclitaxel dose was fixed. This, of course, is not at all consistent with SNTA’s proposed mechanism of action, in which elesclomol pushes cancer cells over their oxidative threshold, but leaves healthy cells alone – if that were indeed the case, then you would not see an increase in paclitaxel-related toxicity in the experimental group. But, in fact, there was an extremely strong signal for neutropenia (a well-known toxicity of paclitaxel) that was completely absent in the control group – again, a suggestion that elesclomol may be acting in no other way then simply ramping up the levels of circulating paclitaxel and increasing that agent’s cytotoxicity. Though it will be discussed in greater detail at a later point in this report, it is important to recognize that the dose of paclitaxel used in both the phase II and phase III trials (80 mg/m2) has been established as subtherapeutic in melanoma and is well below the dose of paclitaxel used in other cancer therapies. In fact, the phase II and phase III dose is less than half the dose used in the phase I trial (175 mg/m2), which is a standard dose of the drug and one in which you would expect to see some clinical activity. That dose was dropped for phase II and phase III, of course, because the SNTA investigators knew that the effective half-life of paclitaxel would increase in the presence of elesclomol, and an unfavorable toxicity profile would emerge – so they more than halved the dose. What you are left with for phase II and III is, in essence, a control group on an established subtherapeutic dose (80 mg/m2) being compared to an experimental group that has an agent (elesclomol) that pushes its pharmacokinetic distribution into the therapeutic range – a drug that can’t work versus a drug that might work. What you do not have is a drug that sensitizes melanoma to paclitaxel.
    • The phase II trial probably underestimated the incidence of adverse events in the experimental group, as the study was an intention-to-treat analysis with a remarkably high rate of crossover. The phase II study allowed for crossover of the control group when their treatment failed, but their data was included and analyzed by their original group assignment – a standard intention-to-treat analysis. However, there was a remarkably high rate of crossover in this study: 68% of the control group crossed over into the experimental group. As a result, any of the toxicities experienced by those control group patients after crossing over to the experimental group were assigned to control. This could represent a potential obstacle in the phase III study, where there will be stronger statistical powering (an estimated 630 patients will enroll, which is almost eight times the size of the phase II study) and no crossover – and thus a potentially larger, and more likely significant, difference between adverse event rates of the two groups that will not reflect favorably on the experimental group.
    • Despite claims by SNTA, the on-going phase III trial is not confirmatory: it is exploratory, and would likely be held to the same scrutiny, and possible standard of confirmation, as any exploratory phase III trial. The press conferences and releases that have flowed from SNTA management have gone to great efforts to promote their phase III trial as a confirmatory trial, and not an exploratory trial more typical of a first phase III study. Management’s rationale for this position is that, unlike most phase II trials, the phase II elesclomol study was randomized, controlled, and blinded. But having explored the role of elesclomol for melanoma in the phase II trial, the investigators concluded that it was best indicated for patients who had never received chemotherapy, and so the phase III trial was designed to include chemotherapy-naïve patients only. Consider that 56% of the phase II experimental group and 68% of the control group had received prior chemotherapy: if you exclude these patients from the analysis (as they do not apply to the phase III study), then there were only 9 chemotherapy-naïve patients in the control group, and only 23 in the experimental. A grand total of 32 patients, despite randomization and blinding, is more consistent with a pilot study, and hardly qualifies as even a hearty phase II trial. It certainly is not strong enough to qualify its subsequent study as confirmatory – in fact, the phase III trial is exploring the hypothesis that elesclomol and paclitaxel work better together in chemotherapy-naïve patients. Even if this phase III study works, and I believe this report will make my doubts on that clear, it is likely that either the FDA or the oncology academy will demand confirmation. In addition, as stated before, the phase III study will not be a crossover study – this, too, will make the evaluation of the adverse events data exploratory, and not confirmatory.
    • The dose of paclitaxel (80 mg/m2) used in both the phase II and on-going phase III trials is not a standard dose in either combination or monotherapy, and by all parameters would be considered subtherapeutic. Zimpfer-Rechner et al. (15) have demonstrated that paclitaxel monotherapy for melanoma at 100 mg/m2, or in combination with carboplatin at 80 mg/m2, does not improve survival. Walker et al. (14) has demonstrated that a dose of 80 mg/m2 for melanoma has virtually no anti-tumor activity. Bedikian et al. (12) concluded that a dose of 90 mg/m2 for melanoma is “marginally active.” Meanwhile, the standard paclitaxel dose for lung cancer ranges anywhere from 120 mg/m2 to 1000 mg/m2, and the standard paclitaxel dose for ovarian and breast cancer ranges anywhere from 120 mg/m2 to 200 mg/m2. And yet, despite all this antecedent data, SNTA chose as its control paclitaxel 80 mg/m2 – in other words, the control medication at the chosen dose is a drug that more or less has no anti-tumor effect in melanoma, effectively acting as a placebo with toxicity. Paclitaxel 80 mg/m2 is a poorly chosen control, and one has to wonder whether the FDA and/or the oncology academy would even accept positive results from a phase III trial as being relevant – if elesclomol + paclitaxel is better than subtherapeutic paclitaxel alone, does that mean anything? Referring back to an earlier point in this analysis, it seems that elesclomol’s mechanism of action may be a simple increase in the circulating dose of paclitaxel, which would mean that both the phase II and phase III trials essentially pit a possibly therapeutic dose of paclitaxel (paclitaxel + elesclomol, with elesclomol pushing paclitaxel into a therapeutic range) versus a known subtherapeutic dose – hardly an impressive head-to-head study. In fact, the adverse event data from the phase II study suggests that virtually inactive paclitaxel (control) was put up against a minimally active paclitaxel: Though the PDR lists neutropenia as occurring in 90% of patients on paclitaxel, it occurred in only 6% of the phase II experimental group, and 0% of the control. Though neuropathy occurs, as a standard, in 60% of paclitaxel patients, it only occurred in 31% of the experimental and 21% of control. Anemia is listed as occurring in 78% of paclitaxel-treated patients, but in only 24% in the phase II elesclomol study. This trend would similarly apply to alopecia, vomiting and diarrhea, but the main point is this: the dose of paclitaxel chosen as control for both the phase II and phase III study is too low for any clinical effect to occur – and so low that even toxic effects hardly occur.
    • Single-agent paclitaxel is not an accepted standard of cytotoxic therapy for advanced melanoma, and so the degree of significance in demonstrating superiority of an experimental regimen over a sub-standard of care is highly questionable. This point more or less reiterates the point made immediately above: is anybody going to listen to even positive data that demonstrates improvement over a clinically irrelevant protocol? Dacarbazine, though hardly a miraculous drug in the treatment of advanced melanoma, is the standard of care, with progression free survival statistics that are similar to those found in the elesclomol phase II trial. It would have been far more valid to have had dacarbazine as the control medication, or to have designed a trial that had three arms (dacarbazine, paclitaxel, and elesclomol + paclitaxel) instead of two. It also would have helped to have designed a trial where the control medication is given at a standard, therapeutic dose.
    Source Material and Correspondence
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    3. Miller AJ et al.: Melanoma. NEJM 2006;355:51-65.
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    8. Murphy PM: Chemokines and the molecular basis of cancer metastasis. NEJM 2001;345:833-34..
    9. Gogas H et al.: Prognostic significance of autoimmunity during treatment of melanoma with interferon. NEJM 2006;354:709-18.
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    11. Korn EL et al.: Meta-analysis of phase II cooperative group trials in metastatic stage IV melanoma to determine progression-free and overall survival benchmarks for future phase II trials. J Clin Oncol 2008;26:527-34.
    12. Bedikian AY et al.: Phase II evaluation of paclitaxel by short intravenous infusion in metastatic melanoma. Mel Res 2004;14:63-66..
    13. Rao RD et al.: Combination of paclitaxel and carboplatin as second-line therapy for patients with metastatic melanoma. Cancer 2006;106:375-82.
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    15. Zimpfer-Rechner C et al.: Randomized phase II study of weekly paclitaxel versus paclitaxel and carboplatin as second-line therapy in disseminated melanoma: a multicentre trial of the Dermatologic Co-operative Research Group (DeCOG). Mel Res 2003;13:531-36.
    16. Balch CM et al.: Final version of the American Joint Committee on cancer staging system for cutaneous melanoma. J Clin Oncol 2001;19:3635-48.

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