- Dermira announces failure of two phase 3 studies treating patients with acne.
- Opportunity still exists with the PDUFA date for DRM04 treating patients with hyperhidrosis.
- Dermira still has another product in the pipeline that targets atopic dermatitis, with results expected by the first half of 2019.
- The financials are set to run operations until the first half of 2019.
On Monday, Dermira (NASDAQ:DERM-OLD) announced that it had failed two phase 3 trials using its topical gel olumacostat glasaretil (DRM01). Both of these trials were treating patients with acne. It is really bad that the company did not succeed in either study, but that doesn't mean that it is the end of the company. It has another clinical candidate heading up for potential FDA approval. Considering these other programs have the potential to turn things around, I think that Dermira still has a shot at success.
Phase 3 Results
The two phase 3 studies that had both failed to achieve the co-primary endpoints are CLAREOS-1 and CLAREOS-2. The first co-primary endpoint dealt with a change from baseline in inflammatory and non-inflammatory lesion counts. The second co-primary endpoint was the amount of patients that achieved at least a two-grade improvement from baseline with a final grade of 0 or 1 on the five-point Investigator's Global Assessment scale. Each endpoint was looked at after the patients were treated with DRM01 over a 12-week period. The topical gel from Dermira was not able to beat a control gel on any of the endpoint measures. With this in mind, Dermira stated that it was likely to halt any further development with this prorgram. In my opinion, this was a necessary move. There is no further reason to keep throwing money at this program. That's because there was no salvageable data. DRM01 was shown to be either equivalent to or slightly better than control, but not statistically significant to it. To spend more money on this program would be a total waste. This was a long-shot type of a trial anyways. That's because last year other biotech companies had failed to garner positive data for their respective acne trials as well. Other biotech companies that failed studies for acne were Foamix Pharmaceuticals (FOMX) and Novan (NOVN). Both of these companies had failed late-stage studies in early 2017.
The failure of this late-stage study for acne is a huge blow, however, there is a possibility to stage a comeback. That's because Dermira has another program using a treatment known as Topical anticholinergic (DRM04) for hyperhidrosis, which is a disease characterized by excessive sweating. The good news with respect to this program is that it has already passed a phase 3 trial. It is expecting to be reviewed by the FDA on June 30, 2018. In addition, Dermira has a phase 2 study treating patients with atopic dermatitis. Results from this phase 2 study are expected to be released by the first half of 2019. As you can see there is still a chance for Dermira to recover with the other clinical programs that it has.
Dermira has cash and cash equivalents of $551 million as of December 31, 2017. The company believes that its cash on hand should be sufficient to carry it well into the first half of 2019. That is the same time period when the company is expected to report its results for its phase 2 atopic dermatitis study. In addition, it is possible that Dermira might be able to obtain a partnership by then for the hyperhidrosis program. If that were to happen, then its cash on hand would be greatly enhanced.
Despite the phase 3 trial failures, I believe there is still an opportunity available to make gains from Dermira. If anything the hyperhidrosis program has been greatly de-risked because it has already passed a phase 3 trial. The PDUFA date in June 30, 2018 will likely push the stock higher. There is still some risk involved with respect to this company. That's because there is no guarantee that the FDA will approve the drug. In that case, there isn't another program in late-stage studies. The other program with atopic dermatitis would be the last candidate left in the pipeline in that situation. I still think that Dermira is worth a look as a speculative investment.
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Terry Chrisomalis is a private investor in the Biotech sector with years of experience utilizing his Applied Science background to generate long term value from Healthcare.
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