Coronado Biosciences: What Do The Recent Trial Changes Mean For Investors?

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Upcoming events -Phase II European and US data in Crohn's mid-2013

Coronado Biosciences (CNDO) - based in Burlington, MA engages in the development and commercialization of novel biological agents for the treatment of autoimmune disorders and cancer. This company is an early stage biotech currently beginning/running multiple efficacy trials for CNDO-201, pig-whipworm ova, or TSO (Trichuris suis ova), and CNDO-109 is scheduled to begin phase 1/2 immunotherapy this year in highly refractory or relapsed acute myeloid leukemia (AML). The company has been in the news recently with a press release detailing trial changes after an independent data monitoring committee (IDMC) evaluated preliminary data on 120 patients. The IDMC recommended that patient enrollment be increased, and the press release states that they will perform an interim data analysis in mid-2013, when enrollment reaches approximately 250. The IDMC noted "no safety concerns and a positive efficacy trend in its recommendation that the study continue." The stock sold off nearly 10% on the news, on above average volume.

The trial in question, a Phase II in Crohn's disease, is being run by Coronado's European partner, Dr. Falk Pharma. Initially, Dr. Falk Pharma planned to enroll 212 patients with moderate to severe Crohn's disease randomized into four arms (three arms of varying doses of TSO, and one placebo arm). This means each arm, at the time of the analysis, had roughly 30 patients. All things being equal, increasing trial enrollment increases the power of the study to detect smaller differences with statistical significance. Clearly, the fear is that they are increasing the power because they aren't seeing statistical significance in clinical response, the major purpose of the study. While I believe the results may not be statistically significant yet, the sell-off is premature. Without looking at the data we can never be sure, but with such a heterogeneous population like Crohn's disease and 4 arms, proper randomization and stratification is very important. Per previous trials and the clinical trials website, Patients vary widely on a number of parameters: age, background medication, prior medication, length of disease, severity, etc. Increasing enrollment ensures more predictive and meaningful results for the broader population. In addition, the IDMC may have seen a high placebo response (this has been the demise of many drugs), so further powering the study is necessary. The committee could be looking to power secondary endpoints as well.

Overall, with only 120 patients in the interim analysis, a trial with 4 arms in a tough autoimmune disease, increasing enrollment is not necessarily a negative. Coronado has announced plans to begin a US-based Phase II trial this quarter (2Q 2012) in Crohn's, and notably the study plans to enroll 198 people, randomized into 3 arms (2 treatment and 1 placebo). This implies roughly 60-70 patients per arm, more than double per arm what the IDMC saw in its recent interim analysis. Waiting until 250 patients to perform the next data analysis in the Dr. Falk Pharma trial, with 4 arms, is roughly equivalent in comparability.

Clinical Trials - At the risk of stating the obvious, Coronado is not the only pharmaceutical company interested in autoimmune disorders, particularly Crohns. This is an area of research with established endpoints and large clinical trials. Newer biologic treatments (e.g. Remicade (NYSE:JNJ), Humira (NYSE:ABT)) have demonstrated clinical and statistical significance in the course of various trials. How does the efficacy of these drugs in Crohn's compare to the efficacy of TSO, as demonstrated in previous investigator-sponsored trials?

TSO in Crohn's - Numerous studies, both in controlled and uncontrolled settings suggest that use of TSO in Crohn's does indeed confer a benefit in a wide range of autoimmune disorders with an excellent safety profile. In an investigator sponsored trial in 29 patients with active Crohn's (open label) treated every 3 weeks with TSO, 79.3% of patients experienced a significant response and 72.4% experienced remission during the study period of 24 weeks. A response was measured by a decrease of > 100 (a 34% or more improvement) in the Crohn's disease activity index (CDAI) and remission by an absolute CDAI score of under 150. Astute readers rightfully point out that this study may suffer from significant investigator bias, but that may be countered by the fact the CDAI is a clinically validated and relatively objective endpoint. Also, this is far higher than the anticipated placebo response rate, which can be as high as ~30-40% (see anti-TNF biologics below).

Anti-TNF Biologics - At the risk of oversimplifying the clinical trials for these agents, I've focused my attention on the pivotal trials leading to drug approval and labeling. Remicade, a fantastic treatment (full prescribing information) was tried in a similar Crohn's disease patient population:

In a multidose trial (ACCENT I [Study Crohn's I]), 545 patients received 5 mg/kg at Week 0 and were then randomized to one of three treatment groups; the placebo maintenance group received placebo at Weeks 2 and 6, and then every 8 weeks…Patients in response at Week 2 were randomized and analyzed separately from those not in response at Week 2…At Week 2, 57% (311/545) of patients were in clinical response…

Humira, the world's new #1 selling pharmaceutical by sales, is another fantastic biologic agent that is used in Crohn's Disease. How does the efficacy compare? From the full prescribing information of Humira:

As shown above (biological treatment naive, but inclusion criteria very similar), there is a significant placebo response, and noticeably, the criteria (which ultimately led to label expansion / approval) were more relaxed (CDAI of 70 points vs. 100) compared to the criteria used in the TSO investigator sponsored trials. However, as shown by the approved anti-TNF biologic agents, the studies need to be powered enough to demonstrate 20-30% increases in response rate, and 10-25% increases in remission rates. This is no small order for a small, dose ranging Phase II study like the one being conducted by Dr. Falk.

Fundamentals and Financials - With the capital raise of $22.9 MM (net) in June, 2011 and with data pulled from the most recent 10-k indicating approximately $23.2 MM of cash and cash equivalents as of December, 31 2011, CNDO has enough resources to initiate the planned clinical trials this year without accessing the capital markets immediately. Coronado's management team has stated they have no intention of partnering these programs, so it is likely additional funding will come from capital raises. Such a raise could occur in the next few months. As of April 27, 2012, market cap stands at $128 MM, with 18.6 MM shares outstanding.

Conclusion and Future Directions - While it is difficult to argue the increasing enrollment and delay of data release is positive for shareholders, it is not necessarily a negative. However, the fact that no safety concerns were raised in this, larger controlled clinical trial setting is one positive takeaway, as well as a positive efficacy trend. Ultimately, Coronado has multiple opportunities with CNDO-201 with trials in Multiple Sclerosis, Ulcerative Colitis, and Crohn's Disease, as well as a promising immunotherapy treatment with CNDO-109. And while the data news flow may be slow over the course of the year (the milestones shown below are not updated to reflect European Phase II Crohn's for mid-2013), the stock is worth a closer look as a speculative biotech play.

Disclosure: I am long CNDO.

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