Stockwatch: Some Failed Drugs Never Die, They Just Find New Investors

Drugs that have failed in clinical studies often come back for another go, making the same mistakes for a new cohort of investors who missed the first failure. The global pandemic is also enabling this for once- or twice-failed drugs.

ANDY SMITH OFFERS A LIFE SCIENCE INVESTOR'S PERSPECTIVE ON BIOPHARMA BUSINESS

As the life science sector prepares to live up to the expectations that it will save the world from the coronavirus pandemic, it is worth considering why some of the drugs being studied didn’t work the first time in their lead indication. Sometimes, a failure is just a failure.

Cytokinetics’ Consistent Heart Failure Failure

Cytokinetics, Inc. and its partners Amgen, Inc. and Servier SA recently reported the results of the Phase III GALACTIC-HF study of omecamtiv mecarbil in heart failure patients. The 8,256-patient study met its composite primary endpoint of a significant difference over placebo in cardiovascular (CV) death or heart failure events (such as hospitalization). The key secondary endpoint of CV death, however, was missed. While social media commentators busied themselves with the modest 8% difference in the primary endpoint being driven only by fewer hospitalizations, eagle-eyed observers spotted that the effect size over placebo was much smaller than the 15% judged to be clinically relevant by Amgen in July.

Whatever the initial critique, investors were unimpressed. Cytokinetics’ stock price finished the week down 36.4%, against a 6.5% rise in the NASDAQ Biotech Index. The analysts from HC Wainwright and Truist Securities were also quick to add salt to Cytokinetics’ and Amgen’s wounds, when they respectively downgraded both stocks. 

Omecamtiv mecarbil previously failed an earlier clinical study in heart failure, so long-serving investors would not have been surprised by the latest failure in a key clinical endpoint. But for those investors new to Cytokinetics, their disappointment was also justified because contemporary experimental drugs in competitive indications need to demonstrate hard clinical outcomes in order to be successfully commercialized and reimbursed.

Overpowered clinical studies – where a large number of patients are required to be sure of detecting a small clinical effect – are a potential red flag to investors. But on the other hand, GALACTIC-HF was also such a large study because it was an event-driven cardiovascular outcomes study. Omecamtiv mecarbil previously failed to demonstrate a difference over placebo in the primary endpoint of breathing difficulty in the 606-patient Phase II ATOMIC-HF study.  (Also see "Amgen, Cytokinetics' heart drug misses goal in Phase II study" - Scrip, 3 Sep, 2013.) Brushing this failure aside, Cytokinetics changed not only the patient population from acute to chronic heart failure, but the dosage form from intravenous to oral in the smaller 488-patient COSMIC-HF study. In another protocol alteration that appeared to ensure opacity, the endpoints of ATOMIC-HF were changed from more tangible clinical measures like breathlessness or death to the surrogate endpoints of cardiac function as measured by echocardiogram, such as left ventricular ejection fraction (p=0.063 in COSMIC-HF). Cytokinetics and its partners justified the investment in GALACTIC-HF by the ‘positive’ results from COSMIC-HF.

Justified Fascination With Outcomes

Today’s competitive environment forced Cytokinetics and its partners back to measuring outcomes in the risky bet formerly known as GALACTIC-HF. Competitor Novartis AG’s Entresto (sacubitril/valsartan) was first approved by the FDA in chronic heart failure in 2015. Despite being included in US and EU prescribing recommendations in 2016 and, unlike Cytokinetics, demonstrating a cardiovascular outcome benefit, its sales were initially slow, generating $170m in its first full year. Entresto only started to gain traction when Novartis negotiated up to 30% discounts for Medicare Part D patients and outcome-based pricing contracts with commercial payers. By 2019, Entresto’s full-year revenues were $1.7bn. Against this competitive backdrop Cytokinetics and its partners were always going to struggle with a label that only demonstrated surrogate markers of cardiac function. So, while GALACTIC-HF was a necessary gamble, it resulted in the uncomfortable discovery that while omecamtiv mecarbil might lead to some ventricular remodeling, those effects alone do not translate into a robust reimbursable outcome. At least, not this time.

Not The Only Failure To Re-Emerge During The Pandemic

The coronavirus pandemic has given biotech companies with long-since failed drugs another opportunity to issue press releases and raise money. In July 2013, Synairgen plc announced ‘positive’ data on its inhaled interferon product SNG001 (interferon-beta 1a) from a 147-patient placebo-controlled Phase IIa study of asthma sufferers with common cold infections. While the primary endpoint was asthma symptoms, Synairgen instead reported surrogate biomarkers of inflammation and antiviral activity. In June 2014, AstraZeneca PLC paid Synairgen $7.25m up front to license SNG001 to treat viral respiratory infections in asthma patients.  (Also see "AstraZeneca bolsters respiratory portfolio with new asthma candidate " - Scrip, 13 Jun, 2014.)

However, in October 2016, AstraZeneca stopped its 220-patient Phase IIa INEXAS study of SNG001 in asthma patients after a low exacerbation rate (the primary clinical endpoint of the study) made “the primary endpoint conclusions difficult.” In April 2017, after a further undisclosed analysis of the INEXAS data that did not meet AstraZeneca’s criteria for progression, all rights to SNG001 were returned to Synairgen.

Indication Switching – Another Term For Failure?

In September 2017, Synairgen switched its clinical plan for SNG001 to chronic obstructive pulmonary disease (COPD) on the basis of in vitro models. A Phase II study of SNG001 in COPD patients was started in February 2017 and, like its asthma study, reported ‘positive’ biomarker data in 10 patients in June 2018. A £2.9m share issue in September 2018 enabled the completion of the second part of the study in a total of 120 patients in the second half of 2019. In September 2020, Synairgen reported a ‘positive’ interim analysis of SNG001 in 109 COPD patients that found a fragile significant difference in peak expiratory flow rate between SNG001 and placebo (p=0.041), but no difference in the breathlessness cough and sputum score. The number of exacerbations – the reimbursable clinical endpoint in which regulators, payers and physicians are most interested – appeared not to have been measured. 

With the emergence of the global coronavirus pandemic in 2020, Synairgen switched again to the use of SNG001 to COVID-19 patients with a £14m share issue to fund another two-part study. The first 101-patient hospitalized portion reported ‘positive’ results in July in some secondary efficacy measures, where the statistics (p=0.046) were as fragile as SNG001 in COPD, and results on the primary endpoint seemed to have been absent.

Synairgen has apparently taken many leaves out of Cytokinetics’ book by conducting small clinical studies using surrogate biomarker endpoints, reporting fragile statistics and brushing off previous failures by diverting investor attention to the same product, but in shiny new indications. In Cytokinetics’ and Synairgen’s area of expertise – where interesting but minor biological effects are divorced from hard clinical outcomes – there appears to be no reason why third, fourth or fifth times won’t be a charm.

Andy Smith gives an analyst and former investor's view on life science companies. He joined the independent research house Equity Development in October 2019 having previously been an analyst at Edison group and a Senior Principal in ICON PLC’s Commercialization, Pricing and Market Access consulting practice. Smith has been the lead fund manager for four life science–specific funds, including 3i Bioscience, International Biotechnology and the AXA Framlington Biotech Fund, and was chief investment officer at Mannbio Invest. He was awarded the techMark Technology Fund Manager of the year for 2007 and was a global product manager at SmithKline Beecham Pharmaceuticals until 2000.