IFRX - InflaRx Is Not Worth Chasing Following Emergency Use Authorization

2023-04-10 08:33:38 ET

Summary

• InflaRx's Gohibic received Emergency Use Authorization (EUA) from the US FDA for treating severe COVID-19 cases.
• Gohibic, an anti-C5a monoclonal antibody, may reduce mortality rates and the need for renal replacement therapy in COVID-19 patients.
• The treatment carries a risk of increased serious infections due to suppression of the immune response.
• Despite the EUA, concerns regarding the generalizability of the clinical trial results and disparities in patient severity raise doubts about FDA approval.
• The current recommendation for InflaRx is to "Hold" as further data is needed to determine the treatment's effectiveness and potential for full approval.

Introduction

InflaRx ( IFRX ) is a clinical-stage biotechnology company that is focused on developing first-in-class inhibitors of C5a and C5aR, which are factors involved in the progression of various autoimmune and inflammatory diseases. The company's lead product candidate, vilobelimab, is an intravenously delivered monoclonal antibody that selectively binds to free C5a and has demonstrated promising clinical activity and tolerability in multiple clinical settings, including in the treatment of pyoderma gangrenosum, a chronic inflammatory skin disorder. In addition to PG, InflaRx is developing vilobelimab to address a wide range of complement-mediated diseases with significant unmet medical needs, such as severe COVID-19 and cutaneous squamous cell carcinoma. The company is also developing other products, including IFX002 and INF904, for the life-cycle management of vilobelimab and for the development of orally administered small-molecule inhibitors of C5aR.

Recent events: InflaRx's shares have surged almost 200% since the US FDA granted Emergency Use Authorization for the company's COVID-19 treatment, Gohibic (vilobelimab) , on April 4. The decision was based on encouraging findings from a phase 3 trial, which demonstrated that the treatment resulted in a significant decrease in all-cause mortality among mechanically ventilated COVID patients who were critically ill. InflaRx intends to seek full FDA approval by submitting a Biologics License Application and also aims to make the drug accessible in Europe.

The following article will focus on Gohibic for the treatment of COVID-19.

Financials

Let's first begin by reviewing the company's most recent financial report . In 2022, InflaRx's research and development expenses increased by $2.1 million to $44.4 million, while general and administrative expenses increased by $3.5 million to $18.0 million. The company received other income of $23.5 million from grant payments related to the development of Gohibic for COVID-19. InflaRx's net financial result increased to $3.2 million in 2022, and the company incurred a net loss of $33.9 million, or $0.77 per common share. The company had total available funds of approximately $101.9 million as of December 31, 2022, and its net cash used in operating activities decreased to $39.6 million in 2022.

Gohibic: A Promising Treatment for Cytokine Storm in COVID-19

Gohibic is an anti-C5a monoclonal antibody that targets the C5a fragment, a crucial component of the complement system that plays a pivotal role in immune responses. In COVID-19, cytokine storms can lead to excessive immune reactions causing severe inflammation, organ failure, and even death. By reducing inflammation, Gohibic has the potential to mitigate cytokine storm effects and improve clinical outcomes, including lower mortality rates and reduced need for organ support therapies like renal replacement therapy.

However, by suppressing the immune response, Gohibic can increase the risk of serious infections. When the immune system is dampened, it becomes less effective in responding to invading pathogens, which can lead to an increased risk of infections caused by common bacteria or opportunistic pathogens that a healthy immune system would typically control. In severe cases, these infections can be life-threatening.

Study Shows Gohibic May Reduce Mortality and Need for Renal Replacement Therapy in COVID-19 Patients

From October 1, 2020, to October 4, 2021, a study ( PANAMO ) involving 369 COVID-19 patients was conducted to evaluate the impact of Gohibic. In this study, 178 patients were selected to receive Gohibic, while 191 patients were given a placebo. Due to a randomization error, one patient was removed from the primary analysis, leaving 177 patients in the Gohibic group and 191 in the placebo group, totaling 368 patients.

The two groups had comparable baseline characteristics . Most patients in both groups were aged 40-65 years, with a similar proportion of patients over 65 years old. However, the placebo group had a higher proportion of patients on the WHO 8-point ordinal scale score 7 (69% vs. 59%), indicating more severe disease and the need for ventilation and additional organ support. Both groups received similar prior and concomitant medications, including dexamethasone or systemic corticosteroids, baricitinib, and tocilizumab. The use of remdesivir was also similar in both groups, with 5.6% of patients in the GOHIBIC group and 5.8% in the placebo group receiving the medication.

On the 28th day, all-cause mortality was recorded in 31% (54 out of 177) of the Gohibic group and 40% (77 out of 191) in the placebo group. Kaplan-Meier estimates indicated a mortality rate of 32% for the Gohibic group and 42% for the placebo group. Although the primary analysis didn't achieve statistical significance (p=0.094), several sensitivity and post-hoc analyses revealed that Gohibic significantly lowered all-cause mortality at 28 days.

At day 60, all-cause mortality was recorded in 35% (62 out of 177) of the Gohibic group and 46% (87 out of 191) in the placebo group. The age-adjusted Cox model, stratified by site, had a p-value of 0.082. However, a predefined analysis without site stratification demonstrated a significant reduction in all-cause mortality at 60 days (p=0.016). Gohibic was also linked to a decreased need for renal replacement therapy (p=0.042).

Until day 60, both Gohibic and placebo groups reported treatment-emergent adverse events (TEAEs) in 91% of patients, with serious TEAEs in 59% and 63% of patients, respectively. The frequency, severity, and type of events were similar between the two groups. However, patients receiving Gohibic had a greater likelihood of developing severe infections.

To sum up, Gohibic has shown potential benefits in lowering all-cause mortality, particularly within 60 days, and reducing the need for renal replacement therapy among COVID-19 patients. Despite not achieving statistical significance in the primary analysis, various sensitivity and post-hoc analyses have provided support for Gohibic's potential advantages. The safety profile of Gohibic was comparable to the placebo group, but with a higher risk of serious infection. Further investigation may be necessary to confirm these findings and gain a deeper understanding of the role of Gohibic in the treatment of COVID-19.

Emergency Use Authorization for Gohibic Brings Benefits and Risks for COVID-19 Treatment

In light of InflaRx receiving an Emergency Use Authorization (EUA) for Gohibic, there are both benefits and risks to consider. EUAs enable the use of medical products during emergencies when there are no adequate, approved, and available alternatives.

Benefits of the EUA for Gohibic include:

1. Expedited access to a potential treatment for COVID-19, which may reduce mortality rates and the need for organ support therapies, such as renal replacement therapy.
2. The ability to gather more real-world data on the efficacy and safety of Gohibic, which can inform future decisions on its approval and use.

Risks associated with the EUA for Gohibic include:

1. The possibility that the treatment's long-term safety and efficacy have not been fully established, as EUAs are granted based on limited data.
2. Potential challenges in transitioning from EUA products to approved alternatives once the public health emergency is over. This may involve proper dispositioning of products, labeling materials, or other aspects of the authorization.
3. The risk of EUA termination or revocation if circumstances change, such as if the public health emergency ends or if new information on the safety or efficacy of Gohibic emerges. In such cases, the use of Gohibic may be discontinued or restricted.

My Analysis & Recommendation

Apart from the lack of significance in the primary analysis, two major concerns arise from the data. Firstly, only one out of twenty patients in the clinical trial received remdesivir, which is considered the clear standard-of-care for COVID patients and is typically initiated before intubation. This raises concerns about the generalizability of the study's findings. While it's true that some COVID patients may require immediate intubation upon presentation to the emergency department, this is not the norm. Therefore, the low use of remdesivir in this trial could impact the applicability of the study's results to real-world scenarios.

Secondly, the baseline data show that the placebo group had more severe patients than the treatment group, with a higher percentage requiring both intubation and organ support, such as vasopressors for blood pressure management. This disparity could have biased the data to favor the treatment group, potentially confounding the study's results. Further analysis is necessary to fully understand the impact of these factors on the study's conclusions.

Despite Emergency Use Authorization being granted, I have doubts about Gohibic receiving FDA approval due to uncertainties surrounding its effectiveness. In addition, healthcare providers are unlikely to prioritize Gohibic over more established treatments. Thus, I do not anticipate Gohibic to be a revenue game-changer for InflaRx, despite the recent bump in market capitalization. Overall, while Gohibic shows promise for severe COVID-19 infection, I do not see it being granted full approval and broad use until further data is collected. Therefore, my current recommendation for InflaRx is to "Hold" off on buying it. Individuals who are currently invested may benefit from taking some shares off the table, as I expect the InflaRx share price to stabilize near its pre-EUA levels.

Risks to Thesis

When the facts change, I change my mind.

There are several factors that could change my negative stance on InflaRx:

1. FDA approval: The FDA may grant full approval based on the available data alone. This could occur if the FDA determines that the benefits of Gohibic outweigh the risks and uncertainties in the current data. Such an approval would likely lead to a significant increase in the adoption and use of Gohibic in COVID-19 treatment, which could positively impact InflaRx's revenue and market position
2. Positive clinical trial results: Future clinical trials may provide stronger evidence of Gohibic's effectiveness in treating COVID-19 and other inflammatory diseases. If new studies demonstrate significant benefits and address the concerns raised in the PANAMO trial, the FDA may grant full approval for Gohibic, boosting InflaRx's prospects.
3. Expansion into new indications: If InflaRx can successfully demonstrate the efficacy of vilobelimab in treating other complement-mediated diseases, the potential market for the drug could expand significantly. This could lead to additional revenue streams and improved financial performance for the company.
4. Partnerships and collaborations: InflaRx could enter into strategic partnerships or collaborations with other pharmaceutical companies to accelerate the development and commercialization of its products. Such partnerships may provide additional resources, expertise, and funding to support the company's growth.
5. Stronger financial performance: If InflaRx manages to improve its financial performance through increased revenues, cost control, or more efficient operations, the company's outlook could become more favorable.
6. New product development: InflaRx has other products in its pipeline, such as IFX-002 and INF-904. If these products demonstrate promising results in preclinical and clinical studies, the company's prospects could improve.
7. Mergers and acquisitions: If InflaRx is acquired by a larger pharmaceutical company or merges with another firm, it may gain access to additional resources, expertise, and funding to support its growth.
8. Changes in the competitive landscape: If other treatments for COVID-19 or complement-mediated diseases fail to demonstrate efficacy, or if new safety concerns arise, Gohibic may gain a more favorable position in the market.

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