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After a seven-year research odyssey into central nervous system diseases, Allon Therapeutics (NPCUF) will soon report pivotal clinical data for its davunetide drug candidate for the treatment of progressive supranuclear palsy, an early onset movement disorder and dementia that has no effective therapy.

"This is the largest therapeutic trial ever run in the PSP population, and we have strong scientific data to back the study," CEO Gordon McCauley says in an interview with BioTuesdays.com. "We have orphan drug designation, fast track status and a special protocol assessment from the FDA. This is a completely unmet medical need, with no approved treatment. So, if we get the data we think we'll get, we expect to be in a position to submit for marketing approval."

At the core of davunetide's development is what's known as the tau pathway. Tau is a protein that holds together microtubules in neurons, in much the same way that railway ties hold tracks together. Microtubules are essential for the transportation of nutrients and the structure and function of neurons.

"In almost every neurodegenerative disease, these tau proteins undergo tau hyperphosphorylation, changing shape and falling off microtubules and forming neurofibrillary tangles," Mr. McCauley says, referring to one of the hallmarks of Alzheimer's disease.

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Fundamental Mechanism of Action

"What we've shown to date is that davunetide crosses the blood-brain barrier, reduces tau hyperphosphorylation, stabilizes microtubules and appears to restore neuronal structure and function."

In a series of earlier Phase 2a studies, davunetide demonstrated efficacy on working memory, short-term memory, activities of daily living, cortical thinning and a biomarker of neuronal function and integrity. More than 400 patients have been dosed with davunetide, and with a fully enrolled pivotal study, it is the most advanced tau therapy in the world.

While the company didn't specifically measure tau in cerebrospinal fluid in the Phase 2a trials, Mr. McCauley points out that the studies were in diseases where tau plays an important role, saying "…at least as far at the pathology is concerned, and PSP is a pure human tauopathy, tauopathies being diseases where the aggregation of the tau protein plays an important pathological role. So, it is well established that tau pathology results in various tau disease presentations that are quite distinct like Alzheimer's and PSP, for example."

But rather than tackle a big market CNS disease like Alzheimer's, Allon is going after an orphan disease, PSP, as the most logical and quickest way to bring a treatment to patients.

"Over the past 10 years, Big Pharma has spent something like $25-billion without getting a novel entity approved in Alzheimer's disease," he points out. "So, we decided that as a small company, we weren't going to try to solve the problems that Big Pharma couldn't."

Among those problems is a heterogeneous Alzheimer's population, where a drug that may work on amyloid-beta deposits in the brain may not be sufficient to show efficacy if it doesn't also work against neurofibrillary tangles, for example. Moreover, finding a therapy for Alzheimer's has been compounded by the slow decline of Alzheimer's patients, which averages 8 ½ years between diagnosis and death.

On the other hand, the typical PSP patient is of 45 to 65 years of age, and the average time from diagnosis to death is about 3 ½ years. Patients initially develop movement disorders similar to Parkinson's disease, are treated with levodopa, as are most Parkinson's patients, but do not respond and soon develop other symptoms like vertical gaze, a classic symptom of PSP which is not seen in Parkinson's.

Mr. McCauley says the only pathology PSP patients have is tau pathology, on which Allon's drug appears to work. "So, if you go looking for a homogeneous tau population to enroll in a study, it's PSP."

About the company's Phase 2/3 pivotal study, which is reporting before the end of the year, he says Allon adopted "very tight inclusion/exclusion criteria, which were designed in favor of early disease PSP," he notes, adding that at some later point in disease progression, a drug probably isn't going to have an impact. "Our trial has exactly the patients we wanted."

The trial has enrolled 300 subjects, randomized one-to-one, at 47 sites in North America, Britain, France, Germany and Australia. They are receiving 30-mg of davunetide twice a day or placebo. Primary outcomes will use an established PSP rating scale (PSPRS) of 28 measures of movement and cognition, and the Schwab and England Activities of Daily Living (SEADL) scale. Secondary outcomes include a clinical global impressions (CGI) scale, which scores clinicians' impressions of patients, and brain imaging by magnetic resonance tomography (MRI).

"If we see significance on PSPRS and SEADL, our view is we should be in a position to submit to the FDA for approval," Mr. McCauley figures. "We would certainly look forward to the Agency's advice and guidance. However, from my perspective, it's hard to come up with a circumstance where if we show consistent efficacy, it would be ethical to run another study, because if you know a compound works, and there is no other therapeutic option, you can't give patients a placebo in a second trial."

He also says the trial is generating a great deal of data that could go a long way to strengthen davunetide's label and support rapid approval from European regulators. With a positive outcome, Allon would likely use a second generation version of davunetide to tackle a big CNS disease like Alzheimer's. "But we'd almost certainly do that with a partner," Mr. McCauley points out.

As part of its commercial strategy, Allon has consulted about 125 clinicians and insurance payers in the U.S. and Europe to determine that the prevalence of PSP is about 25,000 in the U.S. and 40,000 in the EU. "In addition, we also understand referral behavior, prescribing behavior and pricing we could expect for davunetide," he adds.

"Clinicians told us that if approved, davunetide would be clinically appropriate for 84% of their patients," Mr. McCauley says. "That tells you the scope of the unmet medical need." According to Mr. McCauley, pricing davunetide conservatively suggests a potential market above $700-million. "Some of our potential partners think we're low by half, so it's a pretty attractive market."

Mr. McCauley says Allon's "preferred strategy" is to be actively involved in the commercialization of davunetide in the U.S. "Our bias is you really don't have a business unless you're selling something. The characteristics of the market are exactly the kind of first commercial entry you would want to have. PSP patients are highly concentrated with movement disorder specialists, and there is a discrete number of neurologists that would prescribe davunetide. We think you could go after the U.S. market with a sales force of about 70 reps; it's a beautiful little market."

The company has had in-depth partnering discussions with Big Pharma, specialty pharma and drug companies specializing in orphan drugs in the U.S., Europe and Japan. "There is a very large group of companies interested in post-data deals," he says. "We'll do the best deal for our shareholders at a time we believe is best."

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Balanced Clinical Development Strategy

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: Primary ticker for this story is NPCUF