Xbiotech's potential upside vs. downside
Xbiotech (NASDAQ:XBIT) has presented the abstract of its European Phase III trial of Xilonix to treat patients with metastatic colorectal cancer (mCRC) refractory to standard treatment at the ESMO GI (European Society for Medical Oncology) 2016, early July. The abstract has shown a 76% relative increase in clinical response rate (CRR), associated with a 2.7-fold increase in median overall survival (11.5 vs. 4.2 months responders vs. non-responders), an increase in Lean Body Mass (LBM) and an improved Quality of Life (QoL) with little safety concerns, all surrogate parameters for anti-cancer activity and prolonged survival - see ESMO Press release and my previous SA article.
This abstract came under scrutiny by the discussant, an executive member of the ESMO, at the same conference, questioning whether those results "…is any benefit in translating this trial into practice." - press release ESMO .
Others, like Adam Feuerstein, right away played on the above criticism, taking down Xbiotech's results - see here, here. In my opinion I still do not have an explanation on how Adam Feuerstein was able to tweet about the OS data before those were presented, other than receiving it from an insider. His tweet was made one day before the scheduled presentation that the Congress - see agenda to compare. In addition, neither on the presentation slide nor on the press release of the discussant issued by ESMO was a declaration of conflict of interest. It goes without saying that the discussant- obviously together with another colleague and executive director of ESMO - are biased towards Xbiotech and Xilonix. Both were prominent figures in clinical trials of Regorafenib and Lonsurf (trifluridine/tipiracil), currently the only two drugs approved for last-line treatment in mCRC refractory to standard therapy. In my opinion such a bias should have been declared. Furthermore, the discussant held several positions with big pharmaceuticals, including Regorafenib's Bayer AG (OTCPK:BAYZF, OTCPK:BAYRY)- see CME information from Medscape.
Regorafenib was approved by the European Medicines Agency (NYSEMKT:EMA) in 2014, although having questionable risk/benefit-balance - EMA assessment report.. The EMA commented the benefit-risk-balance as follows: "…All together, the clinical relevance of the results appears to be modest. However, in the intended population of patients with metastatic colorectal cancer having exhausted all currently available therapeutic options, the benefits of regorafenib are considered to outweigh the risks associated with its use…"
Other vocal twitter users promised to uncover all major red flags, but failed to keep up with their promises. Not only were unfunded allegations (e.g. the CEO stealing his own both in order to avoid repair costs) spread across the web, but also data were interpreted only to their favour - part 1, part 2, but part 3 was not published and ever since then it has been quiet from that source. In contrast, Xbiotech has bravely responded to those allegations and kept promise, to discuss and reveal all scientific data on their European Phase III trial in an appropriate scientific setting - see interview with Xbiotech in Xconomy. This was fully achieved with the most recent publication in the Lancet Oncology. Nevertheless, Xbiotech's share price kept dropping, currently hovering around USD 10.00. Short interest increase ever since then to 5.4mln shares, approximately 24% of float.
There is one important issue in my opinion that critics of Xbiotech don't understand. The European Phase III trial was neither designed nor powered to show a statistically significant improvement in overall survival. The primary endpoints, lean body mass and quality of life, collectively known as clinical response rate, that had been developed in connection with the regulatory authority, were achieved. Although overall survival was only measured for safety analysis, the trial results showed a significant improvement in overall survival among responders to the drug. This outcome underlines the importance of the fact that symptoms recovery especially in late stage cancer patients refractory to standard therapy leads to a better quality of life and prolonged survival. A separate fast-tracked global study to measure improvement in overall survival is currently ongoing with the U.S. Food & Drug Administration (FDA). Interim results of the latter to be expected Q1 2017 whereas the full results should be published by the end of 2017 - according to a Q&A session
Xilonix (MABp1) a new standard in the management of advanced colorectal cancer at a cheaper cost than available alternatives
The most recent publication in the Lancet Oncology revealed Xbiotech's trial results showing an statistically significant ~3-fold increase in median overall survival not only in those achieving primary endpoints vs. not achieving primary endpoints, but also for those receiving only the active treatment vs. placebo, although overall the overall survival data remains difficult to interpret . But it was shown that reaching the primary endpoints 33% vs. 19% with gains in lean body mass, +1.4kg MABp1 vs. 0.07kg placebo p=0.00044 and quality of life, +4.32 score MABp1 vs. -6.98 score Placebo p=<0.0001, correlated with prolonged survival. Moreover, responders showed improvement in physical, role and emotional function score as well as in fatigue, pain and anorexia score p=<0.0001. In the appendix data show that neither score alone was responsible in a prolonged overall survival, but rather that achieving several scores together put even more weight on the importance of lean body mass and quality of life on survival. Such a correlation is also supported by a trial in Chinese patients on peritoneal dialysis.
Comments on the publications rightly points out that patients with metastatic colorectal cancer "… throughout the course of their disease, many patient s have symptoms related to inflammation, such as fever, fatigue and anorexia. Inflammation might play an important part in resistance to treatment and in tumor growth." Furthermore, the commenter, Timothy J. Price, explains that " The symptom-based endpoint used by Hickish and colleagues could become a standard in trials of salvage therapies, where gains in overall survival are generally small. For example, in studies of trifluridine/tipiracil and regorafenib to treat metastatic colorectal cancer, median overall survival gains of 1.4-1.8 months have been noted compared with best supportive care, which has led to debates about clinical relevance…" Dinarello already emphasized the importance of the highly inflammatory IL-1a family member (and thus MABp1 targeting IL1a) especially in late stage cancer patients in his publication "Interleukin-1a neutralization in patients with cancer", printed in the Lancet Oncology 2014.
It's also worthwhile noting that 61% of the placebo patients crossed over to MABp1 after 8 weeks of study into an open-label extension. Although these patients were not included in the overall survival analysis and thus, makes the survival analysis more difficult to interpret, such a cross-over just demonstrates how patients and clinical doctors appreciate the study drugs risk-benefit-profile. In comparison, only 1.5% (4 out of 255) switched in the Regorafenib Phase III trial - most probably due to its high rate of serious adverse events.
The European Medicine Agency issued in its 180 days list of outstanding issues to the company major objections among other to the risk-benefit justification - see 8K. The market, including some prominent followers, reached as if this was a marketing authorization denial, slamming the stock from USD 13.00 to below USD 10.00 in mid-December 2016. Its notable to mention that such a 180days list of outstanding questions is a standard procedure and very common within the regulatory process of a marketing authorization.
Given the most recent analysis of the data in the publication, a negative opinion on the risk-benefit assessment from the regulatory body seems to be unjustified. Xbiotech's lead candidate has reached its primary endpoint together with indisputable low safety concerns. In addition, the company received approval for its current production facility by the EMA.
In addition, the interim results of its Global FDA Phase III study for patients with advanced colorectal cancer, might also serve towards an approval by the European counterpart. Not last because this study includes also European centers.
Reviewing the compelling publication and results in the lancet oncology, I suppose Xbiotech will be able to address the latest list of outstanding questions with the European Medicine Agency. This should be achieved in particular with the support of Europe's leading colorectal cancer patient organization. Their CEO, Jonalta Gore-Booth, commented the latest findings as "… a treatment for advanced cancer that helps improve patient health…, has been long awaited!". It should be in the utmost interest of the European Medicines Agency to approve Xilonix as it produces better results at a cheaper price than currently available alternatives, also due to its new low-cost and efficient production facility. The latter should even further pressure the regulatory body to approve this drug, especially in the stressed health care system of Europe.
There is also a support possible through the interim's analysis of the FDA study, should results show a preliminary statistically significant improvement in overall survival. In addition to this, Xbiotech still has a comfortable amount of cash and a diverse pipeline (S. aureus incl. MRSA, acne etc.) of potential products - latest 10-Q, company presentation.
Given all of the positive key points mentioned above and all the negative sentiment which has been around this stock for a while, I conclude that the upside is far greater than the downside. The downside is limited as a negative opinion in my view is priced in already. Further to this there is a substantial amount of shares short, which at some point will have to cover their position. In contrast, should the compelling data of the latest Phase III trial convince the regulatory body by February or March, the stock could shoot up to its old highs between USD 20.00-30.00. Accelerated by short coverage, my last price target of USD 55.00 might not be so far away.
Disclosure: I am/we are long XBIT.
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.
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