Achieving US approval of an orphan drug on the basis of a single-arm trial is not necessarily the easy win many executives and investors like to suppose. That is the lesson of Chiasma (NASDAQ:CHMA), which saw its acromegaly pill rejected because it lacked a control group, setting the company back by at least two years.
The Massachusetts-based group is fortunate in one way, in that it has just initiated a double-arm trial aimed at a European filing. However, executives said they will not know if that design can be sufficiently altered to address FDA concerns until they can meet with regulators. In the meantime, a cost-cutting plan to stretch Chiasma’s cash runway is in the offing.
More study needed
Shares fell 63% to $3.75 yesterday, following the group’s announcement after Friday’s market close of the FDA complete response letter for Mycapssa, and an unusual, second press release yesterday providing further details about the regulators’ request of a new trial.
The company said the FDA wants a double-blind, randomized, controlled trial. The Mpowered study for European approval is an open-label trial comparing Mycapssa, an octreotide acetate pill, with injectable somatostatin analogues, so a substantial amendment may need to take place for Mpowered to meet the FDA’s requests.
Chiasma’s chief executive, Mark Leuchtenberger, said FDA officials did not raise any objections to the single-arm design of the phase III US-targeted trial before it was initiated, nor did they say the design would prevent the filing of a new drug application, although the “interpretability and sufficiency of the results” were flagged as a review issue.
Nonetheless, the group now is looking at remaining a developmental stage company for a couple more years, requiring some cash conservation. Mr. Leuchtenberger said its $134m cash pile at March 31 would have been sufficient to fund its commercial plan through the end of 2017 had the FDA approved its candidate.
Making orphans of orphans?
Given the pace of the last few years, it may come as some surprise to pharma observers that so far in 2016 there has been just one US approval of a new agent that carries an orphan drug designation – that was Elusys Therapeutics’ anthrax treatment Anthim, a product that will be mainly sold to the government.
This is well off the pace of 2014 and 2015, which saw approval of a total of 26 small molecule or biological agents with orphan indications approved (see table).
One of the justifications for escalating biotech valuations in the 2012-2015 boom was the development of orphan drugs, or, more specifically, the low development costs, relative ease of approval and high profitability of these candidates.
It may be just a coincidence that the boom has receded at the same time as there has been a lull in orphan drug approvals, and a slowdown of this nature is probably not unprecedented. It is too soon to predict that the Mycapssa decision is a sign of a tougher FDA, but that will come as little balm to Chiasma investors, and could be a warning for those betting heavily in the orphan space.