AEterna Zentaris Inc. (USA) (NASDAQ:AEZS) Is Down, But Probably Not Out

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AEterna Zentaris Inc. (USA) (NASDAQ:AEZS) is taking a major hit premarket, having put out data from its lead trial after hours on Wednesday. The data relates to a drug called Macrilen (macimorelin), and the company was investigating it as a potential evaluation therapy (basically, a diagnostic) for growth hormone deficiency in adults (AGHD). As yet, it doesn’t look like Aeterna has made a decision as to the future of the drug, but whatever that future may be, it’s almost certainly going to dictate the company’s near to medium term bias. With this in mind, and ahead of us getting a final word on the asset, here’s a look at the drug in question and an attempt to pick apart the data to try and see whether there’s anything worth salvaging.

Here goes.

The drug, as mentioned, is called Macrilen, and it’s going after AGHD. This one is a tough indication. Over the years, we’ve watched a large number of companies try and pick up some approvable data in late stage trials, and more often than not, while the data impresses earlier stage, it disappoints when investigated as part of a wider patient sample. Obviously, the same thing has happened here, but what went wrong?

The drug is a novel synthetic small molecule, acting as what’s called a ghrelin agonist. that is orally active and stimulates the secretion of growth hormone (GH). Ghrelin is a peptide hormone that has a large role in many different body functions. It’s called the hunger hormone, colloquially, as it stimulates the hunger feeling and then suppresses it when someone is hungry and full respectively. It plays an important role in a person’s perception of sexual desire and gratification. It’s central in addiction forming. It also produces growth hormone. It’s this latter quality that Aeterna was attempting to harness in its Macrilen therapy. Basically, by stimulating Ghrelin, the company hoped to evaluate how active the secretion of the growth hormone is. If it’s underactive, Aeterna’s drug could determine whether a patient has AGHD or not.

The theory is pretty sound, and as mentioned, just as with many other investigations of this type, there was plenty of early stage data to reinforce the hypothesis. Fast forward to top line phase III release, however, and things aren’t so plain sailing. The company used what’s called the insulin tolerance test (ITT) as a control. This is a test that’s already widely used as a diagnostic in this (and many other indications) but Aeterna felt that its Macrilen treatment could improve on the current SOC tests.

The endpoint seems pretty convoluted, described as follows:

The diagnostic would be succesfull if…the lower bound of the two-sided 95% confidence interval for the primary efficacy variables was 75% or higher for percent negative agreement with the ITT, and 70% or higher for the percent positive agreement with the ITT

Broken down though, it’s not that complicated. It basically says the study needs to come up with a similar proportion of negative results and a similar proportion of positive results as the ITT, slightly weighted towards the negative results.

The numbers came out, and the company hit on the negative results, but missed on the positive results. Both criteria needed hitting for an endpoint hit, so with the latter missing, the overall primary endpoint of the study is classed as missed.

So what’s happening going forward?

As mentioned, the company hasn’t really given out much info other than to say the standard “we are evaluating the data so we can make a decision about the future” sort of thing. With that said, management has stated that it is going to redirect its resources to its second lead asset, a drug called Zoptrex, which the company is currently investigating in a phase II for prostate cancer and a phase III for endometrial cancer. This suggests to us, that there’s no real forward path for Macrilen, at least near term.

What does this mean?

Well, Macrilen wasn’t the be all and end all, and there’s probably more long term value in the oncology side of the company’s pipeline. It’s a disappointment, and as such, it’s no real surprise that the company has taken a hit. That said, the more than 30% decline is probably a nit of an oversell.

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