Galapagos announces topline data from knee osteoarthritis trial

Galapagos NV (GLPG) reported positive data from its ROCCELLA Phase 2 trial with GLPG1972/S201086. The company is collaborating with Servier for this program. Galapagos reported that the data did not show any signal of activity and the trial failed to meet its primary objective.

ROCCELLA is a global, double-blind, placebo-controlled, dose ranging trial. It aimed to assess the efficacy and safety of three different once-daily oral doses of GLPG1972/S201086 in treating knee osteoarthritis. Dr. Walid Abi-Saab, Chief Medical Officer of Galapagos said, “While we are disappointed that ADAMTS-5 inhibition by GLPG1972/S201086 proved not to make a difference in this trial, we want to express our gratitude to all participating patients and investigators. This study result, while not what we hoped for, does add to the body of knowledge to help fight OA, a disease with substantial unmet medical need.”

The primary endpoint of the trial was to show the efficacy of the drug candidate in reducing cartilage loss of the central medial tibiofemoral compartment of the target knee. The trial would have met its primary objective if even one dose had shown the impact after 52 weeks of treatment. The effect had to be measured through a quantitative MRI. The change from baseline to week 52 in cartilage thickness was -0.068mm, -0.097mm and -0.085mm for the low, medium and high dose, respectively. For the placebo group, the change was measured at -0.116mm. None of the treated groups showed statistically significant advantage over the placebo.

Even for the secondary endpoints such as clinical outcomes, the drug candidate failed to show statistically significant different results. However, GLPG1972/S201086 was found to be generally well-tolerated by patients in this Phase 2 trial.

ROCCELLA trial recruited 932 patients in 12 countries across the world. Galapagos had the responsibility to carry out trails in the United States whereas Servier took the charge for remaining 11 countries. The US trials had 326 patients while remaining global trial recruited 606 patients.

Patients were treated for 52 weeks and their mean disease duration was 7 years. The study population was aged between 40 to 76 years and the mean age was 63 years. 70 percent of the participants were female.

Servier is an international pharmaceutical company and is based out of France. It is governed by a non-profit foundation. The Group allocates nearly a quarter of its total revenue every year for research and development purposes.

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Analysis: Galapagos is a cash rich company with $6.26 billion cash and namesake debt of ~$31 million. The market capitalization is only 1.5 times the cash balance with the stock price at $128.83 as of last close on 10/16/2020, near low of the 52 week range of $112 and $274.03. It is the right time to take a position or increase shareholding in this established company.

Investment Thesis: Galapagos has robust product portfolio and strong development pipeline. However, the latest news may give short term jitters to the stock. The company also recently reported positive news for its drug candidate filgotinib.

Evelo provides updates for EDP1815 in Atopic Dermatitis and Psoriasis trials

Evelo Biosciences Inc. (EVLO) announced dosing its first patient for Phase 2 clinical trial evaluating EDP1815 for the treatment of mild to moderate psoriasis. The company also reported completing enrolment for the Phase 1b clinical trial cohort evaluating EDP1815 in mild to moderate atopic dermatitis. The drug candidate is an investigational oral biologic in development for the treatment of inflammatory diseases.

EDP1815-101 is a double-blind, placebo-controlled Phase 1b trial. It seeks to assess the safety and tolerability of EDP1815 in healthy volunteers and patients with psoriasis or atopic dermatitis. The cohort enrolled 24 patients and randomized them on 2:1 basis to be given 2.76g of the enteric capsule formulation of EDP1815 or placebo once daily, for 56 days. The primary objective is to assess its safety and tolerability while secondary objectives include key validated markers of atopic dermatitis. Some of these markers are Pruritis Numerical Rating Scale, Eczema Area and Severity Index and SCORing Atopic Dermatitis.

EDP1815-201 is a double-blind, placebo-controlled, dose-ranging Phase 2 trial and it aims to evaluate three doses of the enteric capsule formulation of EDP1815 versus placebo. The trial recruited 225 patients with mild to moderate psoriasis over a 16-week treatment period. The primary objective of the trial is to assess the mean reduction in Psoriasis Area and Severity Index (PASI) score at 16 weeks. The secondary endpoints included various clinical measures such as Lesion Severity Score and Dermatology Life Quality Index. The company expects the interim data from the study to be out by mid-2021.

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EDP1815 is a strain of Prevotella histicola and has been selected for its specific pharmacology. The drug candidate has already reported positive Phase 1b interim clinical data in two cohorts of patients with mild to moderate psoriasis.

Analysis: Evelo’s candidate is targeting the market of therapies for atopic dermatitis that had sales of $4.1 billion in 2019 and is estimated to reach $5.09 billion by 2025 at a CAGR of ~4.34%. Over 56% investors in the company are PE/VC firms whereas public holding is less than 15%. The company’s market capitalization is $226.07 million with stock price at $4.93 on 10/16/2020, which is near low in a 52 week range of $3.01 and $8.30. There is a short interest of 8.7% with 1.73 million shares to cover in 10 days. Total shares outstanding are 46.14 million. The company has debt of $32.58 million. Cash balance of $90.17 million is good for a runway of about a year.

Investment Thesis: the stock is suitable for investors with high risk appetite. The company is currently in the process of testing its lead drug candidate EDP1815 for a wide range of conditions including COVID-19.

CTI BioPharma initiates NDA process for Pacritinib

CTI BioPharma Corp. (CTIC) announced the commencement of a rolling New Drug Application (NDA) submission to the US FDA. The NDA pertains to approval of pacritinib as a treatment for myelofibrosis patients with severe thrombocytopenia. The company recently announced the outcome of its pre-NDA meeting with the FDA where both the parties agreed to use available data from the completed Phase 3 PERSIST-1 and PERSIST-2, and the Phase 2 PAC203 trials.

Pacritinib is an investigational oral kinase inhibitor with specificity for JAK2, IRAK1, and CSF1R. The kinase profile of the drug candidate suggests that it may be useful in other conditions such as myelodysplastic syndrome, chronic myelomonocytic leukemia and acute myeloid leukemia.

Myelofibrosis is a type of bone marrow cancer that leads to formation of fibrous scar tissue. Adam R. Craig of CTI BioPharma said, “Today we are pleased to announce the start of a rolling NDA submission that seeks to address the important unmet medical need of myelofibrosis patients with severe thrombocytopenia, a population that includes both front-line treatment-naïve patients and patients with prior exposure to JAK2 inhibitors.” Myelofibrosis patients with severe thrombocytopenia have a very few treatment options available to them.

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CTI BioPharma is a biopharmaceutical company, and it focuses on developing and commercializing novel targeted therapies for blood-related cancers.

Analysis: CTI Biopharma’s drug candidate addresses a combined market of Myelofibrosis and Thrombocytopenia worth over $10 billion. The company’s stock surged with the commencement of the rolling marketing application. At last close on 10/16/2020, the stock was $3.17, near high of the 52 week range between $0.62 and $3.68. The stock grew nearly three times in the past year. Wall Street analysts are bullish with a price target of $6. The company’s cash burn in fiscal 2019 was $43.3 million. Present cash balance of $70.11 million is good for a runway of a year and half but may not be sufficient for the anticipated commercial launch in 2021 for which the company has already started pre-commercial activities.

Investment Thesis: The stock has seen a steep run up in its price in past couple of days. This news is expected to provide further impetus to the stock’s upward trajectory. However, the long term investors may wait for some meaningful pullback.

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