MRK - Vera: Repurposed Molecule Program Does Not Impress

2023-07-03 13:39:25 ET

Summary

• Vera Therapeutics, Inc. is trying to develop an old molecule it licensed from Merck & Co., Inc.
• Trials conducted years earlier produced unimpressive results.
• While the company has produced some positive data, I am not convinced yet.

Vera Therapeutics, Inc. ( VERA ), a small company developing therapies for immunological diseases, produced “positive” phase 2b data in June, from lead candidate atacicept targeting IgAN and Persistent Proteinuria. Atacicept is a recombinant fusion protein consisting of the Fc region of human IgG1 and the binding portion of TACI. While that may not make much sense to laymen - and it is not required that it does - what is important is to note that atacicept is a legacy molecule, developed 2 decades ago by a small U.S. company, which was then further developed by Merck Serano in a number of indications. However, the molecule did not produce adequate activity, and seems to have been abandoned.

As a 2020 review article informs us:

Atacicept failed to show an effect in multiple sclerosis, optic neuritis, rheumatoid arthritis, and systemic lupus erythematosus. In patients with systemic lupus erythematosus, atacicept led to increased infection rates, but this adverse effect was not seen in the other treated diseases.

Atacicept has been in development since before 2001, and a license to develop it was acquired by Vera through Ares, a Merck & Co., Inc. (MRK) subsidiary. These sorts of molecules have one advantage in that there are no surprises; they are well-studied, and everything is known about them. The disadvantage is that if there was anything worthwhile in them, then, in the last 2 decades, someone would have developed it. That means, nobody must have found it worthwhile.

That being the broad consensus, it is interesting to see the data they presented last month. The study is a phase 2b trial called ORIGIN, a randomized, placebo-controlled trial in IgAN and Persistent Proteinuria. The data presented at the ERA 2023 in a late breaking presentation is 36-week efficacy and safety data. Data showed that the trial met the primary and key secondary endpoints. The primary endpoint was proteinuria reduction at week 24 in IgAN patients at high risk of disease progression. Patients saw reductions in proteinuria and stabilization of eGFR (estimated glomerular filtration rate) through week 36. At week 36, the drug group demonstrated a 43% placebo-adjusted reduction from baseline in proteinuria in a per-protocol analysis, and a 35% reduction in the intent-to-treat analysis. These results are highly relevant because a 30% reduction in UPCR is considered clinically meaningful for improvement of renal function in IgAN patients. Two other approved drugs, Calliditas’ Tarpeyo and Travere’s Filspari, had 31% and 35% reductions, respectively, and received accelerated approvals.

For eGFR, there was a statistically significant and clinically meaningful difference of 5.8 mL/min/1.73 m2 from placebo at week 36.

The most important takeaway from this trial is the safety profile, where atacicept at 150 mg, the highest dose, had a profile equivalent to placebo, and the lower doses actually were safer than placebo. There were no higher infection rates - remember the molecule depletes B cells - and there were no discontinuations or interruption due to low IgG (hypogammaglobulinemia).

The company is now enrolling in a confirmatory phase 3 study. Phase 3 top line data is expected in 1H 2025, BLA submission in the same year, and projected launch in 2026.

Vera is also conducting a phase 3 study of atacicept in Lupus Nephritis, however this trial is based on phase 2 studies conducted by other sponsors. About the USP of atacicept in LN, the company states :

Benlysta (belimumab), a BLyS-only inhibitor, is one of the two therapies approved for patients with LN. Both BLyS and APRIL levels are increased in patients with SLE, suggesting that dual inhibition by atacicept may be more potent than blocking BLyS alone and has the benefit of targeting plasma cells in addition to B cells.

The molecule ran through a phase 2/3 trial under Merck, but it was terminated early after 3 patients developed hypogammaglobulinemia. A prior phase 2 trial also produced unconvincing data, missing the primary endpoint but showing positive data in certain measures and segments.

Vera has a second molecule called MAU868, which is in a phase 2 trial for the treatment of allograft-threatening BKV infection in kidney (or kidney-pancreas) transplant recipients. An earlier phase 1 trial in healthy volunteers showed the drug to be safe and well-tolerated.

Financials

Vera Therapeutics has a market cap of $710mn and a cash reserve of $197mn. In the previous quarter, they spent $25mn on R&D and $6mn on G&A. At that rate, they have cash for 6 more quarters, or well into 2025. However, the company states that their cash will last them into 2026, or beyond the top line data of their lead asset/indication combo.

VERA has heavy institutional and PE/VC ownership, with low to nil retail presence. In recent months, insiders have been regularly buying stock.

Risks

Vera Therapeutics, Inc. is a microcap, and that has its own associated risks such as relatively low trading volume. Company-specific risks include the low iP runway given atacicept is such an old molecule, and the 12-year exclusivity for approved biologics is the only protection they can hope for. Moreover, the data we have seen in earlier trials is at odds with Vera’s own data, so the outcome of the confirmatory phase 3 trial is doubtful.

Bottom Line

Despite the positive phase 2b data, I was not too excited by Vera Therapeutics, Inc. because of the risk factors I just mentioned. I will stick to the sidelines.

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