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  • Mast Therapeutics (MSTX): MST-188, The Next Orphan Drug To Get Adopted. 1 comment
    Jul 8, 2013 11:36 AM | about stocks: MSTX

    Orphan drugs have been all the rage recently, Sarepta Therapeutics (SRPT) rocketed from $3.30 to $45 in just three months after presenting results for Eteplirsen, its novel orphan drug for Duchennes Muscular Dystrophy. Aegerion Pharmaceuticals (AEGR) has nearly tripled since January after the FDA approved its orphan drug, JUXTAPID, for Homoozygous Familial Hypercholesterolemia (HoFH), a rare, fatal disease. Enter Mast Therapeutics (MSTX), (formerly Adventrx Pharmaceuticals) which now has the most advanced new molecule, MST-188, in a phase three clinical trial, for the treatment of the highly unmet orphan indication, sickle cell disease (SCD) vaso-occlusive crisis. Mast Therapeutics also has plans to develop MST-188 for complications of arterial disease (ALI).

    Sickle Cell Disease

    Sickle cell disease, SCD is a group of inherited red blood cell disorders. Healthy red blood cells are round, and they move through small blood vessels to carry oxygen to all parts of the body. In someone who has SCD, the red blood cells become hard and sticky and look like a C-shaped farm tool called a "sickle". The sickle cells die early, which causes a constant shortage of red blood cells. Also, when they travel through small blood vessels, they get stuck and clog the blood flow. This can cause pain and other serious problems such infection, acute chest syndrome and stroke. Sickle cell disease (SCD) affects millions of people throughout the world and is particularly common among those whose ancestors came from sub-Saharan Africa; Spanish-speaking regions in the Western Hemisphere (South America, the Caribbean, and Central America); Saudi Arabia; India; and Mediterranean countries such as Turkey, Greece, and Italy.

    It is estimated that:

    • SCD affects 90,000 to 100,000 Americans.
    • SCD occurs among about 1 out of every 500 Black or African-American births.
    • SCD occurs among about 1 out of every 36,000 Hispanic-American births.
    • SCT occurs among about 1 in 12 Blacks or African Americans.

    People with SCD have less access to comprehensive team care than people with genetic disorders such as hemophilia and cystic fibrosis. More than $1.0 billion is spent annually in the U.S. to treat patients with SCD It is estimated that, in the U.S., sickle cell disease results in over 95,000 hospitalizations and, in addition, approximately 69,000 emergency department treat-and-release encounters each year. When a patient with sickle cell disease makes an institutional visit, vaso-occlusive crisis is the primary diagnosis in approximately 77% of hospital admissions and 64% of emergency room treat-and-release encounters.

    Big Pharma Interest in SCD

    In October 2011, Pfizer signed a $340m development deal with GlycoMimetics obtaining exclusive worldwide rights to its investigational compound GMI-1070. The compound is a pan-selectin antagonist currently in phase 2 development for the treatment of vaso-occlusive crisis associated with sickle cell disease. More recently in November 2012, Novartis signed an option deal with Selexy for its phase 2 novel drug for SCD, SelG1, which is an anti-P selecting antibody. The deal is valued at up to $665m in upfront, acquisition and milestone payments.

    FDA Orphan Drug Status

    The Orphan Drug Act (ODA) provides for granting special status to a product to treat a rare disease or condition upon request of a sponsor. The combination of the product to treat the rare disease or condition must meet certain criteria. This status is referred to as orphan designation. Orphan designation qualifies the sponsor of the product for tax credits and seven years of market exclusivity. A marketing application for a prescription drug product that has been designated as a drug for a rare disease or condition is not subject to a prescription drug user fee unless the application includes an indication for other than a rare disease or condition. MST-118 has received orphan drug designation for SCD in the U.S. and the EU

    MST-118-SCD

    MST-188 (formerly ANX-188) is a purified form of a nonionic, triblock copolymer (poloxamer 188). It is an investigational agent that binds to hydrophobic surfaces on damaged cells and improves membrane hydration and lowers adhesion and viscosity, particularly under low shear conditions. MST-188 has the potential to reduce ischemic tissue injury and end-organ damage by restoring microvascular function, which is compromised in a wide range of serious and life-threatening diseases and conditions. Mast is developing MST-188 as a treatment for complications arising from SCD.

    After completing the acquisition of Synthrx, Inc. in April 2011, Mast Therapeutics (formerly Adventrx Pharaceuticals) acquired the worldwide rights to ANX-188, (formerly PP-188) a potential treatment for patients in sickle cell crisis, which is a severe and painful condition often with life-threatening complications. An earlier patient phase 3 study, which was completed by Glaxo SmithKline, (the prior sponsor) was published in JAMA, (n=249). This trial narrowly missed its primary endpoint, duration of crisis, (p=.07) in patients of all ages but in the pediatric (<16 yrs old) sub-population, (n=73) the drug was associated with reducing the duration of painful episodes by 22 hours (p=.01). Using a Kaplan-Meier post-hoc analysis of the proportion of patients <16 years old remaining in crisis, yielded a highly statistically significant p=.007 and showed a clear separation in the time curves. MST-188 appears to have a favorable safety profile with no differences between the 2 treatment groups in the overall incidence of adverse events and no evidence of increased risk of bleeding during the treatment period.

    Based upon the much higher response rates observed in pediatric patients in the prior trial, on January 30, 2013, Mast Therapeutics initiated a forty center, randomized, double-blind, two-arm, placebo controlled, pivotal phase 3 clinical study, focusing only on pediatric patients ages 8-17 (n=388). The primary endpoint of the trial is the reduction of the duration of vaso-occlusive crisis in SCD patients. Using a two-sided alpha of .05, the study is 90% powered to detect a 16 hour difference between treatment arms. The secondary endpoints will compare re-hospitalization rate (for vaso-occlusive crisis) within 14 days of initial discharge from the hospital and the occurrence of acute chest syndrome within 120 hours of randomization. This phase 3 trial will take approximately 24 months to complete and assuming a successful outcome, a potential product launch in 2015.

    As part of its discussions with the FDA, Mast Therapeutics committed to conduct a parallel QTC/QTc study of MST-188 to obtain additional safety data. This single center, double blind,randomized study initiated dosing on February 11, 2013. Sixty patients were to be enrolled and the study will assess whether MST-188 has an effect on QT prolongation. The study was scheduled to complete dosing in the first quarter of 2013 with results expected to be announced in the middle of the year.

    MST-Acute Limb Ischemia (ALI)

    On February, 28, 2013 Mast Therapeutics announced its plans to develop MST-188 in the complications of arterial disease, initially as an adjunct to thrombolytics in acute limb ischemia (ALI), a complication of peripheral arterial disease. ALI is a progressive circulatory problem in which obstructed arteries reduce the blood flow to tissues peripheral arterial disease affects an estimated 8 to 12 million people in the United States and there is significant morbidity and mortality.

    R. Martin Emanuele, Senior Vice President, Development, said: "Data from experimental models demonstrate the potential for MST-188-188, when used alone or in combination with thrombolytics, to improve outcomes for patients with thrombotic arterial disease, whether manifesting as acute limb ischemia, stroke or some other variant. Studies in animals and humans suggest that ANX-188 can shorten time-to-thrombolysis, improve blood flow, delay re-occlusion and reduce reperfusion injury, each of which may improve the effectiveness of existing thrombolytic agents." Santosh Vetticaden, Chief Medical Officer, said: "We plan to evaluate the potential of MST-188 in arterial disease initially by evaluating it in acute limb ischemia. Near-term goals include seeking orphan drug designation for ANX-188 in ALI, meeting with FDA to discuss our development plan in ALI and, assuming FDA agrees with the plan, initiating a phase 2, clinical proof-of-concept study in late 2013 or early 2014. Currently, we estimate that third-party costs to conduct this study will be approximately $2 million and that it will take approximately 15 to 18 months to enroll. Ultimately, we plan to leverage the data in ALI to find a partner to develop MST-188 in larger indications within arterial disease, such as stroke."

    On March 25, 2013, following a positive opinion adopted by the Committee for Orphan Medicinal Products (COMP), the European Commission designated MST-188 as an orphan medicinal product. Brian M. Culley, Chief Executive Officer, said: "Now that we actively are recruiting patients in EPIC, our pivotal phase 3 study of MST-188 in sickle cell disease, we intend to pursue strategic alliances more aggressively. We believe orphan designation and the expectation of 10 years of marketing exclusivity in the EU will enhance partnering interest in Europe. In addition to enabling development in multiple countries and enhancing the overall commercial opportunity for MST-188, partnerships will help fund its development within the U.S." Mr. Culley continued: "Our recently announced plans to investigate MST-188 in acute limb ischemia, a complication of peripheral arterial disease, also may bolster our partnering efforts. Indeed, we already have been approached by at least one pharmaceutical company that wished to discuss our near- and long-term plans in arterial disease, which we announced just three weeks ago."

    Catalysts:

    Key objectives for the remainder of 2013 include:

    • Announcing results from the thorough QT/QTc study of MST-188, expected mid-year;
    • Soliciting FDA input on our planned phase 2 study in acute limb ischemia, expected in the third quarter;
    • Announcing results of nonclinical studies evaluating the physiologic significance of TEG results observed in prior nonclinical studies funded by the Defense Advanced Research Projects Agency (DARPA) Surviving Blood Loss (SBL) program, expected in the second half of the year;
    • Initiating a microvascular blood flow sub-study in EPIC, expected in the fourth quarter;
    • Initiating a phase 2 clinical proof-of-concept study of MST-188 in acute limb ischemia, expected in late 2013/early 2014;
    • Obtaining orphan drug designation for MST-188 for acute limb ischemia;
    • Submitting application(s) to request funding from the U.S. government to conduct a phase 2 clinical proof-of-concept study with MST-188 for resuscitation of shock following major trauma; and
    • Filling patent applications claiming key aspects of our proprietary manufacturing process.

    On March 28, 2013, Mast Therapeutics engaged ESC Advisors to identify partnering opportunities for MST-188. Brian M. Culley, Chief Executive Officer, said: "Given the high unmet need and limited treatment options, sickle cell disease is experiencing significant levels of interest from strategic partners. MST-188 is now the only new molecular entity in phase 3 development in sickle cell disease. Based on its stage of development, the absence of competitive, novel and late-stage products, its designation as an orphan drug in the U.S. and Europe and its potential utility in additional indications, we believe there will be substantial interest in MST-188 from potential partners, both in the U.S. and globally, and we intend to pursue strategic alliances aggressively. ESC's experience in transactions involving orphan product candidates will complement our internal capabilities and expand the scope of our current and future partnering discussions."

    Other Considerations:

    After the recent offering, Mast Therapeutics has a fully diluted market cap of approximately $60m. As of 3/31/13, the 10Q shows cash and cash equivalents of $32m. With the addition of the $22.9m from the 6/14 offering, cash now totals approximately $55m with zero debt. The Company is trading near its cash level, yet it has a very attractive phase 3 asset in MST-118, in the orphan indication of SCD, which due to trial redesign, has a VERY high probability of success. Mast Therapeutics is also developing the therapy in what could ultimately be a very large cardio indication.

    Mast Therapeutics reminds me a lot of Acadia Pharmaceuticals (ACAD), which had a similar situation and setup. After learning from mistakes made in the design of their failed first phase 3 trial for their parkinsons drug, pimavanserin, Acadia analyzed the data, redesigned a new phase 3 trial and subsequently set up a a new phase 3 trial for success. After reporting positive phase 3 results on November 27, 2012, the stock exploded from $2.30 to over $6.50, and now trades around $18.

    As outlined above, Mast Therapeutics has two shorter term catalysts that could move the stock; announcement of the results from the thorough QT/QTc study of MST-188, expected mid-year and obtainment of orphan drug designation for MST-188 for acute limb ischemia. Longer term, once the stock gets on "catalyst traders" radars, it should experience the typical strong "biotech runup" into the SCD phase 3 clinical trial results.

    Technically, on a short term basis, the stock is severely oversold and is digesting the recent stock offering in the 45c area. There is a gap to be filled at 61c, with major resistance at 75c -81c. On a longer term basis, a move above that major resistance level opens the way to the $1.50-$2.75 area.

    Conclusion:

    Over the last few years, Mast Therapeutics has completely transformed itself, appointing a new management team, board of directors and even changed its corporate name. The Company is dramatically different now with a laser focus on the development of its lead candidate MST-118.

    Reduction of a sickle cell patient's duration of painful episodes is a highly unmet medical need, with only one approved treatment option, hydroxyurea. If MST-188 is successful in the current phase 3 clinical trial, I believe it could become the new standard of care in the treatment for this very painful disorder. Annual U.S. incidence of SCD crisis produces 100,000 hospitalizations, if just 35,000 of those patients undergo MST-188 therapy, annual peak sales could conservatively approach $300m. Assuming a 2015 launch and conducting a conservative NPV analysis yields a current price target in the $2.00-$2.50 range.

    Disclosure: I am long MSTX. I wrote this article myself, this is NOT investment advice, it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with Mast Therapeutics.

    Disclosure: I am long MSTX.

    Themes: Biotech Stocks: MSTX
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  • Mast Therapeutics Inc; A Ten Bagger
    http://seekingalpha.co...
    19 Aug 2013, 05:46 PM Reply Like
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