Richard Sater's  Instablog

Large price swings frequently occur when Biotech companies release data from a Phase III study..  If primary endpoints do not reach significance, NDA submission to the FDA is unlikely.  Strong results with good safety data bring the drug one step closer to approval.  Narrow hits and misses or safety concerns result in continued uncertainty until longer term data or a second phase III becomes available. 

These can be binary events for smaller companies that have only one lead candidate, often resulting in price drops greater than 50% or increases greater than 200%.  Larger companies, not dependent on one or two candidates, are unlikely to see price changes greater than 10-20 % after release.  A lag period of 1 to 3 months is common between study completion and topline data release.  More complete data is typically presented at conferences 3 to 6 months later.  Before phase III data is released, bets on a company’s future are placed based on the more limited results from earlier phase II studies.  

BioMS
BioMS (MS on Toronto Exchange and BOMSF.PK on OTC) completed their study of MBP8298 (also known as dirucotide) in late May 2009 and topline data from the MAESTRO-01 study will be released shortly.    This study compared dirucotide to placebo in 553 patients with secondary progressive multiple sclerosis.  The primary endpoint compared the time to sustained worsening of disability using a standard scale.  From Phase II studies, dirucotide appears to be a very safe medicine and needs to be infused only twice a year.    Secondary progressive multiple sclerosis (without relapses) has no current treatment and FDA approval for this indication could lead to sales over 1 billion/year. 

BioMS and Lilly (LLY) entered into a global licensing and development agreement on December 17, 2007 regarding dirucotide.  BioMS received upfront payments of $87 million and will have potential development and sales milestones of $410 million and possible further escalating royalties. 

Multiple Sclerosis
With about 400,000 patients, MS affects more than 1 out of every 1000 Americans.  About 85% present with relapsing remitting MS (RRMS) and half of these eventually develop secondary progressive MS (SPMS).  The other 10-15% present with primary progressive or progressive relapsing multiple sclerosis.   Thus, there are about 160,000 patients in the US and Canada with SPMS.  There are currently 6 FDA approved medicines for MS:  Betaseron (Bayer;BAYRY.PK), Avonex (Biogen Idec, BIIB), Copaxone (Teva), Rebif (Merck KGaA, MKGAY.PK), Novantrone (Merck KGaA and generic) and Tysabri (Elan and Biogen, ELN, BIIB).  These treatments have efficacy for RRMS and some also for the relapses of early SPMS.  However, there are no current medications that are FDA approved for non-relapsing SPMS.  Thus, dirucotide will not effect use of other MS drugs much.

Clinical Studies
We have data from two phase II studies, one small study involving 32 patients with progressive MS and another involving 218 patients with relapsing remitting MS.   In the first, smaller, study, there was no significant difference in disability progression between placebo-treated and dirucotide-treated patients.  However, when the 20 patients who had at least one copy of either MHC HLA DR2 or DR4 were evaluated separately, there was a significant difference in disability progression between treated and untreated patients.   The MINDSET-01 phase II study in RRMS enrolled 70% patients with either HLA DR2 or DR4 and the study planned to examine all enrolled patients and this subset of patients separately.  They were followed for 15 months.  The primary endpoints of relapse rate reduction and MRI changes were not met in either the whole population or the HLA DR2/DR4 subgroup.   However, the secondary endpoint of reduced disability progression was met in the treated HLA DR2/DR4 subgroup.  Patients with one or both of these genes comprise 50-70% of MS patients.  Thus, there are about 100,000 potential secondary progressive MS patients in the US and Canada and about 200,000 worldwide.   

MAESTRO-01 and MAESTRO-03 are similar studies in the EU and US, respectively, with > 500 patients each.  Secondary progressive MS patients, who have at least one copy of either DR2 or DR4, were enrolled and treated with either 500 mg IV dirucotide every 6 months or placebo.  MAESTRO-01 ended in late May and MAESTRO-03 will end in late 2010.  As BioMS is currently trading at $2.35 and has a market cap of about 215 million dollars (252 million CAD), the topline data release shortly will lead to a huge swing ---- but in which direction?

Hints from prior studies
The purported mechanism of action for dirucotide is immune tolerance induction.  This implies that repeated infusions of this molecule should induce a potent anti-inflammatory response by down-regulating the immune system’s attack on myelin.  However, inflammatory MRI changes were not reduced in the MINDSET study.  Also, relapses, that should have been reduced by tolerance induction, were unaffected by dirucotide.  Could there be another non-inflammatory mechanism of action that is more specific to the secondary progressive degenerative process?  That is possible, but neuroprotection is hard to prove and difficult to establish in a one or two year study.  It is just as likely, or more likely, that the effect on disability noted in the first phase II study was random chance in a small subgroup of only 20 patients.  Thus, I believe there is a high likelihood that dirucotide will miss its primary endpoint in the MAESTRO-01 study and that its stock price will drop by half or more.  Absence of a trend would doom the product and BioMS.   Lilly would just take a small hit, write off the program and move on.  

Hopefully, I’ll be proven wrong as SPMS patients who no longer have relapses need a safe medication that can retard disability progression.  If MAESTRO-01 hits with great numbers, then the similar MAESTRO-03 study should also meet endpoints and submission to the FDA could occur in early 2011.  If that occurs and the drug is approved, dirucotide could be used by up to 50,000 SPMS patients in the US and Canada within two to three years of approval and a similar number in the ROW.  That would lead to sales well over 1 billion a year.  Even after LLY takes the lion’s share, milestone and royalty payments would drive BioMS share prices to impressive gains.  If one believes that the trial has a better chance of succeeding than I do, then the ‘pot odds’ would support an investment decision.   I’ll sit this one out. 

Disclosure:  No position in BioMS or Lilly.  Long Elan.  I have served as a speaker and/or on advisory board for Biogen and EMD Serono (Division of Merck KGaA).