2023-11-13 07:12:29 ET
Summary
- On Nov 7, DURECT announced topline results from AHFIRM, a phase 2 randomized, placebo-controlled trial studying larsucosterol for severe alcohol-associated hepatitis (AH).
- The trial did not meet the primary endpoint, i.e. statistically-significant benefits over the placebo on standard-of-care, in mortality or transplant at 90 days, though there are better data from US sites.
- Following the news, the stock dropped ~80% or from $2.58 to $0.53.
- I take a closer look at the data and share my thoughts here.
Introduction
On Tuesday, Nov 7, DURECT Corporation (DRRX) announced topline results from their AHFIRM trial, a Phase 2b randomized, placebo-controlled trial evaluating the safety and efficacy of larsucosterol with severe alcohol-associated hepatitis (AH).
The trial did not meet the primary endpoint, i.e. a statistically significant benefit over the SOC [standard of care] in mortality or transplant at 90 days.
However, for the patients enrolled in the US sites, which account for 76% of the trial, the results are better:
The reductions in mortality at 90 days were 57% (p=0.014) for the 30 mg arm and 58% (p=0.008) for the 90 mg arm compared with SOC.
In terms of safety, there were fewer treatment-emergent adverse events (TEAEs) in the larsucosterol arms than the SOC arm.
Commenting on the data, James Brown, DRRX's CEO said:
We have strong rationale to advance larsucosterol into a Phase 3 registration trial designed with adequate power to detect a statistically significant result using 90-day mortality as the primary endpoint. We look forward to meeting with the FDA to discuss next steps. Based on the strength of the clinical data generated to date, if approved, larsucosterol could save many patient lives.
Nevertheless, the stock market reaction to the news is punishing, with a ~80% drop in the stock price (from $2.58 to $0.53), which was quickly followed by HC Wainwright's downgrade .
In the remainder of this article, I take a closer look at the data and discuss why I think there may be a bullish investment case here.
Mortality Data at 90-days: problematic or promising
For a trial that tracks mortality rates, DRRX's PR is rather unclear or confusing.
Allow me to explain. Please focus on the number of deaths in each group.
The table below shows the mortality data for the SOC, 30mg-group, and 90mg -group, taken from the PR.
( Source ; Color boxes added)
So, in the SOC group (red box), the number of death was 25 =102 x 24.5%
In the 30mg group (purple box), the number of death was 15 =99 x 15.2%
In the 90mg group (blue box), the number of death was 17 =101 x 16.8%
Also from the PR, the mortality data:
It should be noted that these data are from the same trial, and therefore they represent the results from the same groups, i.e. SOC (red box), 30mg (purple box), 90mg (blue box), as shown above.
For the SOC here, there are two mortality rates reported: 25.8% and 24.9%.
So for the SOC group, the first number of death was 27 =103 x 25.8% and the second number of death was 26 =103 x 24.9%
In the 30mg group, the number of death was 16 =102 x 15.3%
In the 90mg group, the number of death was 17 =102 x 16.2%
The table below summarizes the mortality data, reported thus far:
As can be seen here, DRRX's mortality data is unclear and somewhat confusing, namely one is unsure how many deaths actually occurred in the SOC [25, 26, or 27?] and 30mg group [15 or 16?] studied in this trial.
This confusing mortality data is problematic. However, there's a promising aspect too, on which I'll now comment.
As stated at the beginning, the topline data showed that there's no statistically-significant mortality benefit at Day 90, from either dose over the SOC.
However, if one combines both treatment groups, in the green box, using the bigger numbers of the group (n=102) and death (16 for 30mg), then the pooled data (n=204) has a combined mortality rate of 16.2%.
Compare this pooled mortality data (16.2%, n=204) to the SOC (25.8%, n=103), one gets a statistically-significant difference (p=0.045).
Needless to say, this is indeed very promising. More discussion below.
Discussion
Firstly, during their conference call, the CEO said [my paraphrasing] that perhaps it was a mistake to have added the transplant mid-stream to the primary endpoint, as there was an imbalance of transplant number and % between SOC and treatment groups [more in the treatment groups], which may have skewed the results negatively.
For example, when asked about using mortality benefit only [vs. transplant-free survival benefit] in the future phase 3 trial, he responded: "if they lived, they lived!"
I kind of understand and agree with such a view.
If larsucosterol has helped some AH patients live longer or to become stronger [vs. untreated patients] to be able to undergo a transplant and live, it ought not to be counted as a negative thing.
Secondly, for readers who wonder if using the pooled data, as I did above, is clinically meaningful or acceptable to the FDA. There are two examples I can think of:
Example 1: In a cell therapy trial for an advanced cancer where overall survival is an efficacy endpoint, IOVA pooled the results from different cohorts (cohorts 2 & 4) that have the same inclusion/treatment criteria, to support their application.
In DRRX's AH trial, one can argue that when the survival benefit is concerned, the variable in question should be treated or not; and not which dose group the survivors are from.
Example 2: A device for sepsis, the FDA agreed to use the pooled data from two different trials (one completed in 2017; and one ongoing) to see if the device has any 28-day mortality benefit in patients with septic shock ( slide 11 ).
Finance
At the time of the writing (2023-11-12), the company is about to report its Q3 results on Nov. 13, 2023. [So please look out for the Q3 report].
As of June 30, 2023, DRRX had a cash runway of $32M, and a net quarterly loss of $11M, per their Q2 filing in Aug. 2023, which implies a three-quarter cash runway.
Concluding Thoughts
According to DRRX, the AH market opportunities support a >$1B peak sale in the US, which is where AHFIRM trial showed the best data, and where DRRX may conduct their phase 3 trial exclusively.
( Source )
Needless to say, even a modest 10% or $100M will be a significant revenue for DRRX at the current valuation of $15M (or SP $0.53), not to mention many lives saved, if/when larsucosterol is successfully developed, approved, and launched for AH patients.
In my estimation, AHFIRM results seem even more promising than what the company has presented thus far if one considers the pooled data.
There are at least two most significant company-specific risks I can see here:
1. In spite of promising p2a and p2b data, larsucosterol is ultimately not developed successfully and therefore not approved for use in AH or any other indication.
2. As seen from their Q2 report, the company is short of cash and will need to raise money very soon.
In the absence of any partnership or grants, the money will be raised, presumably, through equity offers and perhaps a reverse split is not out of the question for Nasdaq compliance reasons.
Both scenarios, though necessary for the survival of the company, are highly negative for shareholders, existing or new.
For myself, I've taken up a small position (<3% of my portfolio) in DRRX, as I see the potential in larsucosterol saving AH patients' lives. However, I also fully understand how earlier investors may choose to take losses or not risk more money [to average down], following the disappointing p2 news.
For those who consider this company, please remember that R&D biotech is highly speculative and risky, invest prudently according to your own risk tolerance and time frame.
Thanks for reading and all the best!
For further details see:
DURECT: Reading Into AHFIRM Mortality Rates