Athenex (ATNX) went down from $12 to $4 levels after the FDA issued a CRL to the NDA for their lead asset Oraxol for metastatic breast cancer. I covered the science in a recent article. Although I said mostly positive things about ATNX, I did not like the stock enough to recommend it to my subscribers. Neither did I add it to my top 10 list, a list of my highest conviction buys that TPT subscribers have exclusive access to. I have a bias against companies that are ex-US and ex-EU because I think standards are less rigorously maintained in those “ex” geographies. That may not always be the case, but given the FDA’s wording of the CRL in this case, it appears they too think like I do. Athenex is a China origin company, and it seeks approval for its drug in the US, for an American population of patients, but all 45 sites for its phase 3 study were located in 10 South American countries, including Columbia, Guatemala and Honduras.
So it is quite interesting to hear what the FDA says, using diplomatic language, but whose meaning is clear enough:
The FDA recommended that Athenex conduct a new adequate and well-conducted clinical trial in a patient population with metastatic breast cancer representative of the population in the U.S.
If you read between the lines and note the keywords “adequate” and “well-conducted” and add those to the stuff about “US population,” you can probably figure out that the FDA means this: conduct a trial in the US, or in the EU, otherwise we cannot be certain that the trial is either adequate or well-conducted. That seems to be the reading I am getting here.
This reading of the situation adequately explains the gripe seen in the following statement from Dr. Rudolf Kwan, Chief Medical Officer of Athenex:
“We use industry standard, blinded independent center review which is completely independent and totally, the readers are totally blinded and the process are well-documented,” Kwan said during Monday’s conference call. “And it’s frustrating for us to hear that they are concerned about the process, especially having witnessed them, all our process, including process in this aspect, having all put to the clinical sites conducting the study and having all the bioimaging lab that conduct this independent blinded process and still feels that they are unmeasured bias that they cannot articulate clearly. So, clearly, we have to clarify with the agency what constitute unmeasured bias after a total rigorous inspection of the process and the independency of the read.”
In their press release announcing the CRL, the company presented the issues raised by the FDA in this order:
In the CRL, the FDA indicated its concern of safety risk to patients in terms of an increase in neutropenia-related sequelae on the Oral Paclitaxel arm compared with the IV paclitaxel arm.
The FDA also expressed concerns regarding the uncertainty over the results of the primary endpoint of objective response rate (ORR) at week 19 conducted by blinded independent central review (BICR). The Agency stated that the BICR reconciliation and re-read process may have introduced unmeasured bias and influence on the BICR.
So the first issue is myelotoxicity, and the second is bias. The company orders these one after the other, but their importance may not lie in the same order presented by the company. This interesting issue was raised in their earnings call by Jonathan Chang with SVB Leerink, who said:
And second question, it seems like the CRL cites multiple issues here how should we be thinking about the relative waiting (he probably means “weightage” - author) of the FDA’s concerns over each of these issues? I can’t help but wonder if it’s in the reverse order of how it’s listed in the press release? Any color here would be helpful?
Obviously, this analyst also thinks that myelotoxicity is a secondary issue, and the design and location of the trial, as I just discussed, is the FDA’s main concern. Dr. Kwan seems to agree, at least in so far as myelotoxicity being a secondary issue, when he says -
“Myelotoxicity is a known pharmacological effect of paclitaxel... well documented... not surprising things and clinicians genuinely can handle it... so... it’s a surprise to us that they did not accept that by limiting the labeling on the hepatic impaired patients that would address their concern.”
Clearly, both agree that the myelotoxicity issue raised by the FDA can be addressed relatively easily. However, the other concern will surely need a full-fledged trial. Athenex says it hopes this would be a small trial, but I am not convinced that the FDA thinks so.
I do not have a good impression on the stock, short term. The CRL was quite devastating. There is probably no way they can avoid another full scale trial, given what the FDA has asked. They have a problem with safety (neutropenia) and they have a problem with the efficacy (bias). This is the lead indication. There are two other phase 2 indications for this molecule, both will have the same safety problems, although they have some trial locations in either the US or the EU. The company has no other asset in late stage. So this puts the clock back by 2 years at the least, in the worst case scenario where the FDA asks for a large scale new phase 3 trial. This makes investing very risky.
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