BIOGUIDE BRIEF: PHARMAXIS – ‘MISSED BY THAT MUCH’ OR DID IT?
July 10th 2010 07:25
Wednesday June 23, 2010
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MARC SINATRA’S BIOGUIDE BRIEF: PHARMAXIS
Pharmaxis investors who were rushed for time yesterday and only read the first three paragraphs of the results of the second phase III trial of Bronchitol in cystic fibrosis (CF) patients would have gone to sleep very easily last night.
Those that took the time to read the fourth paragraph, however, would have had the words of Maxwell Smart ringing in their ears, “missed by that much”. Sleep would have come less easily for this group of investors.
For the record, the trial results were not that bad, with a range of secondary endpoints all demonstrating significant improvements.
However, when a company buries the main message, that the primary endpoint was missed, in the fourth paragraph of an announcement, alarm bells ring in the ears of investors.
If a company is willing to bury highly important information, what other information isn’t being released?
Obviously, a balance needs to be struck between what is and isn’t released and how announcements are structured to protect investors’ interests, but going too far does not ease the minds of investors. It just unsettles them.
That doubt is probably why Pharmaxis’ share price has ended up where it is, when most analysts, this one included, felt the share price would only fall 10 to 20 percent.
The key piece of data in all of this is that although Bronchitol did narrowly miss its primary endpoint in the second 318-patient phase III trial with a p-value of 0.059, it quite convincingly hit this end-point in the first 324-patient phase III trial with p < 0.001.
One possible reason for this discrepancy is the greater use of dornase alpha (Pulmozyme) in the second phase III study, where 75 percent of patients were on the drug compared to 55 percent in the first phase III study. Patients taking dornase alpha in the first trial showed a smaller, but still significant improvement in lung function compared to the study group as a whole.
The data Pharmaxis has produced on Bronchitol overall demonstrates that it is safe and effective. Coupling this with a patient group that is in dire need of new treatments, I cannot see the US Food and Drug Administration knocking it back.
This is also the view of Pharmaxis chairman Denis Hanley who told Biotech Daily: “I don't think the FDA will exclude registration on the basis of a technical data point on the placebo side of the equation. They will do a thorough analysis.”
The higher use of dornase alpha in the second phase III trial may have caused that “technical data point” Hanley is referring to.
While I do think that Bronchitol will get the FDA okay, I also think the data is telling us that Bronchitol is not a miracle drug for cystic fibrosis (CF) sufferers given the somewhat conflicting phase III data sets.
Nebulised saline which is thought to act in a similar manner to Bronchitol has been shown to increase lung function in CF patients and has been around for years, but it has had significant compliance issues among users.
From a side effect and ease of use point of view, Bronchitol does appear to have a significant edge over nebulised saline.
Having said that, of the 324 patients enrolled in the first phase III trial, only 170 felt compelled to enter the open-label phase of the trial where all patients received Bronchitol.
While the vast majority of the patients who opted not to enter the open-label phase of the study may have come from the control arm, whether this is the case or not isn’t clear. This number would tell us a lot about the likely take-up of Bronchitol among CF patients once it is on the market.
Those who managed to buy Pharmaxis shares today below $2 and especially those who bought at $1.655 have probably gotten a very early and valuable Christmas present.
Yesterday’s results are a speed bump, albeit a chassis rattling one, on Bronchitol’s march towards FDA approval.
Focus should now switch to the likely take up of Bronchitol by cystic fibrosis sufferers.
Regulatory approval is great, but sales are the be all and end all.
Marc Sinatra
Analyst
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