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Bad News – But Not the Unexpected Kind

Yesterday was not a good day for small companies trying to get drugs to regulatory approval for tough diseases. You may well remember Axovant, a company that I’ve written about several times (most recently here). To recap, AXON was started by a fund manager, who bought a failed Alzheimer’s candidate off GSK, announced that they’d be taking into the clinic again for Alzheimer’s, and promptly went public, raising a bucket of money. The drug, a 5-HT6 ligand, did not appear promising from its earlier data, and it was hard to see why there was hope this time around. That feeling intensified, for those who were paying attention, when both Pfizer and Lundbeck stopped development of  5-HT6 Alzheimer’s candidates of their own. A year ago, I asked “Why, you have to wonder, would anyone hold Axovant’s stock in anticipation of their 5-HT6 results after two similar efforts have both failed?”

That stock, though, went on quite a run over the last couple of weeks, gaining over 25% as investors anticipated the trial results, which were due by the end of the month. I know this because I ended up putting my money were my mouth was on this company – I went short their stock at $19.6 in late August, just in time to watch (rolling my eyes) as it went up. I had to fight off the temptation to short even more of it. It never made it back to the high of its first day of the IPO ($29), but it was a good jump (if you were long!) Of course, if you were long, you probably didn’t take that as an opportunity to sell, either. This position is why I didn’t write about the company until now – although talking up your own positions is a glorious tradition in the stock-blogging world, I didn’t want to be accused of it.

But yesterday morning Axovant announced results, and it was exactly as you might have expected: a complete miss. Just like before on the two other drug of this type, just like before on the same exact drug, just like before on basically every Alzheimer’s compound that goes to the clinic. I covered my own position at $6.475. I am sorry for the people who bought into the hype, and I’m sorry for Alzheimer’s patients and families who had hopes for this compound. But frankly, I see the entire effort as a misuse of funds – Alzheimer’s research would have been better off if the same amount of money had been applied almost anywhere else in the field.

The second round of nasty news yesterday was for PTC Therapeutics (I last wrote about them here and here). They have a compound (PTC124, Ataluren) that they’ve been developing for several diseases, among them Duchenne muscular dystrophy. The problem is, it doesn’t do anything. It’s not just that there’s no evidence that it works, there is significant evidence that it doesn’t. The FDA has turned them down twice, and rightly so, but the company has asked for a panel review to present their case yet again. To the best of my knowledge, they have no new data to argue with, and the FDA’s review documents reflect this situation. To put it mildly.

Ultimately, no positive results from any prospectively planned analyses that are persuasive have been provided with this application. The applicant has presented only the results from numerous post hoc and exploratory analyses that are intended to mitigate two negative clinical trials. In 2011, the applicant claimed that the effectiveness of ataluren had been established based on the post hoc analyses of the ADP population in Study 007. However, when this conclusion was prospectively evaluated in Study 020, the results were clearly negative. This finding directly highlights the frequently misleading nature of exploratory analyses of negative trials. It is arguable that some trends observed in the applicant’s data may warrant further prospective investigation, which the Agency has consistently encouraged the applicant to consider. 

Good. Overall, I’ve liked what Scott Gottleib has been doing at the FDA, but my nagging worry has been that he would be (for my tastes) too permissive. It’ll be reassuring to see that there’s a line to be drawn, and I have no problem seeing it drawn with PTC124. Because it doesn’t work. Having no evidence is bad enough, but solid evidence of failure? Not even the give-patients-hope advocates should be defending that one. The hearing is tomorrow, and it will not go well. It shouldn’t.

(As a side note, if you would like some headshaking evidence of the craziness of the stock-market field known as “technical analysis”, aka chart-reading, I refer you to these guys. They are here to tell you that PTC’s stock is about to head into the “Buy Zone”, based on their chart of its price movements. At no point in the entire thing do they mention any possible factors – like a drug that doesn’t work – that might be causing these wiggles and dips on their beloved charts. No, no – the wiggles and dips are the point. They’re everything. Sheesh).

38 comments on “Bad News – But Not the Unexpected Kind”

  1. johnnyboy says:

    lol on the ‘technical analysis’ crowd – these guys actually make it a point of pride of completely ignoring a company’s fundamentals and products, and only looking at the charts and their algorithms. They can do great when the market is up – but who doesn’t ?

  2. johnnyboy says:

    And since I’m a man (troll?) of few words, I’ll just copy-paste the comment I made in your last post on Axovant, as it’s still very much applicable:

    “Ramaswamy, Theranos’ Holmes, Moderna’s Bancel – the key to get investment these days is to master Silicon valley-speak and get chummy with their VCs. The science is secondary at best.”

    I’d love to be proven wrong on this, but haven’t yet.

    1. Curious says:

      2 Down, 1 to go. Ramaswamy and Holmes rumbled, how long till Bancel’s time’s up?

  3. yuri says:

    Sadly, the irrational can sometimes last longer than your logical position can bear the margin call.

  4. Magrinho says:

    AXON and PTC are a good study in contrasts. PTC is a company that genuinely believes that there is value in ataluren and is trying hard to find it.

    On the other hand, AXON, and all of the “vants”, are a financial engineering play. Selling crap in shiny packages to itchy investors/VCs is easy right now.

    1. Hap says:

      Yeah, but finding what isn’t there doesn’t do anyone any good. You’re supposed to look at what is there, not what you wish were there, and not choose what data to look at after the fact.

      At some point, repeated stupidity becomes hard to distinguish from malevolent intent. They generally end up in the same place. That’s how science (is supposed to) work(s) – to make it as hard as possible to fool yourself, even in the presence of persistent mental fallacies that lead you to do so. If you choose to ignore them…you’re not really as far from evil intent as you’d like to be.

      1. ACR says:

        Hap–“At some point, repeated stupidity becomes hard to distinguish from malevolent intent.” That statement is perfect for so many current situations. I’m going to gleefully (re)use it every chance I get.

        1. tangent says:

          Sometimes called “Clark’s Law” (easily confused with the “Clarke’s” on which it was based) or “Gray’s Law”.

  5. Ilya Yasnyy says:

    You should have also mentioned Genocea putting down its HSV vaccine.

    Do you think that Sarepta will end up the same way as PTC?

  6. Anon says:

    One has to wonder when Glaxo sold it’s right to Axovant’s Mr. Vivek Ramaswamy for a 5 million dollars for this piece of junk (yea, you heard me right other wise why would Glaxo put it on the market?), this bad news was on its way. All it did to Harvard dude was to use his PR skills to raise money in millions more, enrich many along the way, raise hope and move on. Scam artists are everywhere and we can rank Mr. Vivek Ramaswamy next to Liz Homes of Theranos fame.

  7. Charlie Kilian says:

    That technical analysis is pretty funny. You don’t even have to try to understand the finance. Just read the narrative at a high level. Headline: “Stock could be heading into the buy zone” Body: “These indicators, which I will explain at length to pad my article, suggest maybe yes. But these indicators, which I will again explain to the same purpose, indicate maybe no. Hopefully, this analysis has offered up some useful perspective. I get paid to say nothing.”

  8. Emjeff says:

    PTC Therapeutics should have gotten Janet woodcock on board – these are the types of applications she apparently likes to get involved in…

  9. Lane Simonian says:

    Since this may be the last phase three clinical trial results for Alzheimer’s disease for awhile, I will unload a bit. Pharmaceutical companies are playing a type of shell game with investors (although investors have to accept some of the responsibility for buying into it). The effort is made to convince investors that their drug will succeed where other drugs failed relying upon the same mechanism because they are doing something different: they are starting earlier, they are pairing their drug with Aricept, they are using a different dose, they have a stronger antibody which better reaches the brain, they restricted their trial to people who almost certainly have Alzheimer’s disease, etc.

    Without correctly addressing the right mechanism, you never will get good results however. Cysteine oxidation and tyrosine nitration are the likely key factors in Alzheimer’s disease. Drugs that slow down the process leading to oxidation and nitration will slow down the disease for awhile (Aricept and Namenda, for instance). Drugs that reduce levels of amyloid only remove one factor that causes nitro-oxidative stress and thus may only delay the onset of the disease and its initial progression. Drugs that target tau improve neurotransmissions but do not increase levels of neurotransmitters themselves. Drugs that try to modulate receptors and enzymes involved in memory and learning (such as Axovan’ts intepirdine) will not work because those receptors and enzymes have already been damaged by oxidation and nitration.

    To treat Alzheimer’s disease, inhibit the receptors and enzymes leading to nitro-oxidant stress and scavenge nitro-oxidants. In the process, the damage done by nitration and oxidation can be partially reversed and in turn Alzheimer’s disease can partially be reversed.

    1. Anon says:

      Lane, you’re hubris, ignorance and arrogance are worse than that of any other pseudo-scientist I have seen. Except that you won’t even bother to test your hypothesis, you just claim it as fact. Go away and test it, or just go away period.

      1. Lane Simonian says:

        Others have tested the use of methoxyphenols for the treatment of Alzheimer’s disease and have been relatively successful.

        I need approximately $200,000 dollars to test the hypothesis myself. Unfortunately, they don’t dole out that kind of money for a “pseudoscientific” clinical trial in the United States. So for the time being all I can do is watch one pharmaceutical company after another turn the same stone over and over again and get the same result.

        1. Some idiot says:

          I’m actually with Lane on this one. Not because I necessarily agree with him, and I would also personally go for a different style ;-)…

          BUT… considering the mountains of cash that have been burnt to ash in the name of Neurodegenerative diseases without the slightest shred of clinical evidence to suggest that a useable treatment is around the corner, well, I am inclined to believe that attempts to shut up a dissenting voice could be seen as the work of someone with a narrow mind… I am also a firm belief that (constructive) criticism is a good thing, but requires presenting a good alternative. Otherwise risks looking like someone shouting in the wind for no real useful purpose…!


        2. Anon says:

          “I need approximately $200,000 dollars to test the hypothesis myself. Unfortunately, they don’t dole out that kind of money for a “pseudoscientific” clinical trial in the United States.”

          You could easily raise that kind of money on Kickstarter or Gofundme with just a fraction of the effort you’ve put into trying to convince real scientists on this blog without any data of your own over the years. But I suspect you would rather not be proven wrong, hanging onto your beliefs like a religious fanatic.

  10. Justin J says:

    “The markets can remain irrational a lot longer than you can remain solvent. “

  11. Real News says:

    I posted this in the prior blog entry about Axovant back in January. Now that there is an updated blog post, I’ll repost it again:

    I’ve got a boss I now report to who has no pharma experience. He was brought onboard to shake up the status quo and catalyze “innovation” into the company and do some industry disrupting things. I get emails all the time of things we should be doing. All it is doing is making me sick in the stomach. Not surprisingly, Ramaswamy is the subject of one of these emails, in one of his innovation reports to the executive committee no less. It is so easy for people with no pharma experience to get seduced when the press writes glowing articles about the latest innovator. Does anyone remember Theranos and Elizabeth Holmes?

    Not more than a few hours after that email, Axovant reported the results of its Phase 3 MINDSET study. It will be no surprise to readers of this blog that the results were negative. The stock price is down 73% right now.

    Innovation my a$$.

    1. Rich Rostrom says:

      Maybe someone could circulate an e-mail noting that AXON is down to $7, and point out that if it was “hot” at $25, when the boss hyped Axovant, it must be a real bargain now…

  12. Paramus says:

    The Axovant result was good, it was good for science and good for pharmacology! Everybody with any experience knew it would fail. I once saw Ramaswamy telling a group of Neuroscientists and experts in Alzheimer’s how to discover drugs, what a joke! Just remember the next time you see an investment opportunity in an area you know little about that sounds really good, it is probably a Ramaswamy selling the Investment.

  13. Uncle Al says:

    It happens the other way, too, DOI:10.1038/nature12650 A ~$5 to make, $100 to sell 5 ml bottle of 2 mg/ml lanosterol solubilized with hydroxypropylated ß-cyclodextran eye drops will topical application uncrystallize common cataracts in 40 days. Toss the empty bottle. About a million US cataractous eyes/year are implanted with intraocular lenses. A vertically integrated ~$5 billion/year industry could become a $0.1 billion cashflow funneled down to a very few of the wrong people, ophthalmologists vs. Lanomax (VETERINARY USE ONLY!).

    The FDA is livid! Veterinary meds are beyond its reach. I know of no humanitarian effort to replace pre-op studies and diagnostic procedures, surgery. post-op, and follow-up (YAG laser capsulotomy) with a bottle of eye drops – including advocacy of “developing” countries, Bill and Melinda Gates. (Diabetic cataracts may be outliers re the Maillard reaction).

    Proactive predatory pharma would find a different way to solubilize a satisfactory intermediary metabolite re the 19-step conversion of lanosterol to cholesterol and diffusion through the cornea and lens bag.

    1. Chris Phoenix says:

      What about cataracts caused by deep-space radiation?

      1. Uncle Al says:

        Industrial organic chemist, materials and processes for human implantables (including IOLs). I developed an interest in the Chinese-authored paper. It is my personal observation that there is an effective, inexpensive cataract resolution worth evaluating prior to surgical intervention. Absence of pH buffering, microbial preservative, and stated osmolality in the veterinary preparation requires talking with an ophthalmologist. Package insert dosing instructions are questionable for off-label administration.

        IOLs could have significantly superior biointerfaces for added ~$1/lens. Maybe in Botswana.

    2. Chris Phoenix says:

      Seems not to work in humans age-related cataracts either.

      They did a test on human senile corneas that had been removed during surgery. Same procedure that showed improvement in animal corneas. No change in the human ones.

      1. tangent says:

        Aw, bummer. I was looking forward to “Go rub your eye on a sheep!” as a legit healthcare recommendation.

        Hm, though — they saw a lot of cataract progression in the lenses, both control and experimental. Lenses left in the eye wouldn’t go all to hell like that in 6 days. So something (the lack of capsule?) about these conditions, but not Zhao et al. and al. and al. seems to be non-physiological and causing artifactual progression.

        Could be the drug does cause some improvement but the effect gets swamped by this artifact.

    3. tangent says:

      Maybe the humanitarians are hoping for a clinical trial before they start dosing? Or is that exactly the thing you’re complaining about, that they’re dithering around with trials instead of SAVING SIGHT? I’m sure you mean well but NGOs can’t afford to skate real close to “Let’s run unofficial experiments on those people overseas, it seems fine and it’s better than what they’ll get otherwise.” Those people overseas look askance at that kind of thing themselves.

      As we know, the FDA does offer ways that a generic can get its price increased after trials for a new indication. What signs do you see, anyway, that they’re livid or would block this drug at the bidding of Big IOL? (If what you see is they complain when somebody labels it suggestively as a human drug, well.)

      Drugs have replaced lucrative surgeries and other procedures before. The iron lung industry got wiped out.

  14. DrOcto says:

    Of course Derek, any stock predictions you might make within biotech would likely become self fulfilling prophecies, given how much weight your opinion carries around here.

    1. Alex G says:

      Derek has the power to simply will drugs into success or failure, it’s true

  15. Postdoctips says:

    If you signed an ‘at will’ contract for your postdoc, with language that also stipulated a period of time for the postdoc contract to be in effect, guess what: that 1 year period means nothing for you but means everything for your PI. It is ‘at will’, so you can be fired at anytime. However, the 1 year basically sets a probationary period for your PI, meaning they can fire you and dodge most ‘ unlawful termination ‘ lawsuits. Essentially, if they dont like your face, they can fire you with the 1 year clause and leave you in the streets. Dont accept that in your contract w/o negotiating.

    1. Some idiot says:

      Just curious… What does this have to do with the current post?

  16. Morten G says:

    Does it really matter that you wrote about Axovant first and then shorted the stock latter? I mean – you’re still potentially influencing the stock price, yeah? Temporality and the internet is weird.

  17. Anon says:

    Next short on AD: AC Immune.

  18. steve says:

    One would think that, with all the foreknowledge on this thread, at least some must have made a fortune selling these companies short.

  19. Anon2 says:

    I feel like Im the only one that noticed the CEO, who is very full of himself (watch his youtube videos and you will see the charisma of an undergrad business student) hired his own brother to be the VP of Medical Affairs…right out of med school

  20. Kelvin says:

    Interesting business model to expect a higher ROI by investing in projects that Pharma has kicked out precisely because their expected ROI is too low! This would make sense only if they know something that Pharma doesn’t about Pharma’s own programs. I call it hubris.

    1. Barry says:

      I don’t think it’s wholly hubris. I think it’s a cynical assessment that there are unsophisticated investors primed to believe that a scrappy outsider is going to show them that Big Pharma isn’t trying very hard and that drug discovery is easy.

  21. Chinedu says:

    Really? Smells like “pump-n-dump” to me. And all kinds of warning flags everywhere. On my first click through on the link, I came across an ad that had “website” spelled as “webiste”. Go figure.

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