InflaRx Tanks 91.79% As IFX-1 Phase II Trial Flops, Provides Bargain Buy For Competitor ChemoCentryx

About: InflaRx N.V. (IFRX), Includes: CCXI
by: Cory Jubinville

InflaRx's drug IFX-1 performed equal or worse in patient groups compared to a placebo in Phase II clinical trial for skin disorder Hidradentis Suppurativa.

Fear that Avacopan, developed by ChemoCentryx to target the same C5a inflammatory pathway, will follow a similar fate as IFX-1, ChemoCentryx's stock price sank over 20%.

The mechanism of action for IFX-1 and Avacopan to target the C5a inflammatory pathway are fundamentally different. Avacopan appears to be a more promising and effective treatment.

ChemoCentryx's stock price could rebound following Avacopan Phase III clinical trial results this summer, offering ChemoCentryx as a potential buy low candidate.

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InflaRx, IFRX, monoclonal anti-body IFX-1 targeting C5a

Results for InflaRx’s (NASDAQ: IFRX) Phase II clinical trial of IFX-1, a monoclonal antibody (mAb) targeting C5a to treat Hidradentis Suppurativa (HS), indicate IFX-1 exhibits no, to significantly worse patient outcomes when compared to a placebo. Established February 2018, InflaRx’s clinical trial followed patient groups over 16 weeks, assessing end-point outcomes via an HS Clinical Response (HiSCR) score. Estimated completion of this study was expected in March 2019, providing a red flag that results may not have been what InflaRx initially expected.

C5a serves as a potent chemoattractant for neutrophil migration towards a potential injury site, leading to their subsequent release of TNF-α, a strong inflammatory marker, substantial increases in reactive oxygen species, and damage to resident cells. With the role of inflammation becoming increasingly more evident in a wide array of disorders from cancer to autoimmune disorders to even autism, C5a represents a valuable therapeutic target with diverse benefits.

Circulating C5a levels in HS patients are significantly higher than in unaffected individuals, suggesting C5a and inflammation influence HS progression, serving as potential targets to mediate the disorder. InflaRx seeks to use the IFX-1 anti-C5a mAb to sequester free C5a, thus preventing neutrophil recruitment to HS lesions. Oddly, a potential flaw with this clinical trial lies in the fact that C5a actually negatively correlates with HS severity — that is, while all HS patients have significantly elevated C5a levels compared to unaffected individuals, mild HS patients have much higher circulating C5a levels than patients with severe HS. InflaRx’s IFX-1 trial enrolled moderate to severe HS patients. If C5a acts only early in HS development, it is likely that InflaRx may have missed the mark on early HS intervention in these already moderate to severe patient groups.

In contrast to yesterday’s posted results, an earlier clinical trial of IFX-1 exhibited profound success in weekly intravenous doses of 800mg. InflaRx’s recent failed clinical trial instead provided a biweekly regimen of IFX-1. The elimination half-life of therapeutic mAbs sit between 18 to 21 days, potentially leaving a biweekly dose of IFX-1 at pharmacokinetic levels too low after 14 days to effectively sequester C5a and inhibit neutrophil migration to HS lesions.

ChemoCentryx (CCXI), a competitor of InflaRx, also seeks to target the C5a pathway to develop drugs as a direct replacement for ailments currently requiring anti-inflammatory steroidal treatments. Their small molecule drug CCX168 (Avacopan) to treat the rare disease ACNA-associated vasculitis currently sits in a Phase III clinical trial expected to conclude this month. Unlike IFX-1 which targets free C5a directly, Avacopan instead targets the C5a receptor (C5aR). Phase II results of Avacopan in a 30mg twice daily dose exhibited upwards of 95% C5aR inhibition on neutrophils, and suppression of a pro-inflammatory response. This is an extraordinarily powerful result in that the success of C5a pathway inhibition relies heavily on preventing this ligand-receptor interaction. IFX-1’s ability to be a successful treatment banks on its ability to effectively bind to and sequester highly fluctuating levels of C5a ligand over time — essentially acting as a reactive treatment. Meanwhile, Avacopan needs only to remain bound to the much more stable C5a receptor — acting more successfully as a proactive treatment. ChemoCentryx is also testing the waters in a newly formed Phase II clinical trial examining Avacopan as a treatment for HS as well. This Phase II trial is set to conclude next May 2020.

While InflaRx still sits upon a small mountain of €153 million in liquid assets (a net current asset value per share of ~$5.57, up from its current stock price of $3.13 at market open Friday), its future success hinges on either the effectiveness of their anti-C5a monoclonal antibody as an anti-inflammatory treatment, or their ability to pivot in an entirely new direction. On the other hand, while operating at a loss of $0.23 per share, ChemoCentryx has a much more diversified pipeline with at least four other fundamentally different drugs in development targeting a wide array of disorders from auto-immune diseases to cancer. Should Avacopan fail during its Phase III trial as well as in its two other Phase II trials for C3 Glomerulopathy and HS, ChemoCentryx has further options to fall back on.

Fear that Avacopan will follow the same fate as IFX-1 led to CCXI falling over 30% from $11.08 to as low as $7.50 pre-market on Wednesday. Down 20.94% to $8.76 at market close, CCXI may represent valuable buy as it potentially rebounds following release of Phase III results this summer.

Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in CCXI over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.