Monday brought with it plenty of volatility in the biotechnology space and – as the markets open in the US for a fresh day of trading on Tuesday – it looks as though we’re set to see a spillover of this volatility going forward. Here’s a look at what companies moved, why they are moving and what we’re looking at going forward from each.
The companies we’ve got in our crosshairs today are Regulus Therapeutics Inc. (NASDAQ:RGLS) and Coherus BioSciences, Inc. (NASDAQ:CHRS).
First up, then, Regulus.
During the session on Monday, Regulus reported that it will be discounting its study of a drug called RG-101, which is the company’s lead development asset, in a target indication of hepatitis C. Last year, the FDA placed a clinical hold on the study based on the fact that a couple of patients had developed a condition called hyperbilirubinemia, which is a type of jaundice that derives from a patient having too much bilirubin in the blood. When red blood cells break down, bilirubin forms. Normally, the body can dispose of it effectively to stop build up. For some reason, however, in patients with hepatitis C that took RG-101, this removal was inhibited.
When the company announced the hold, markets assumed that there would be a resumption relatively near term. When the company subsequently announced, at the start of this year, that the hold remained in place, sentiment shifted to uncertainty. With the latest announcement, this uncertainty is compounded and confirmed.
The program will no longer go forward, with the drug discontinued. The company speculated as to the cause of jaundice in the release detailing the discontinuation, with inhibition of conjugated bilirubin transport by RG-101, impaired baseline bilirubin transport in HCV patients and the preferential uptake of RG-101 by hepatocytes, all being blamed. It doesn’t really matter too much now, however.
The company is down a little more than 16% on the above-detailed situation and the parallel announcement that AstraZeneca plc (ADR) (NYSE:AZN) informed the Regulus that it will terminate the development program for another one of the company’s assets, a drug called, AZD4076 (RG-125) for the treatment of NASH in Type 2 Diabetes/Pre-diabetes, with rights returned to Regulus.
Not a good day for the company and its shareholders. As a silver lining, it cuts burn considerably, so we should see a reduced necessity to dilute as the remainder of the company’s pipeline matures.
Next up, Coherus BioSciences.
This one’s similar in nature to the above described Regulus situation. The company announced on Monday that the FDA has issued a complete response letter (CRL) for its Biologics License Application (BLA) for CHS-1701. The drug is designed as a biosimilar to an already approved (and widely established) drug called pegfilgrastim (Neulasta), which is currently marketed by Amgen, Inc. (NASDAQ:AMGN). The drug is bone marrow stimulant designed to reduce the side effects of chemotherapy and radiation treatments and a couple of companies (Coherus and Mylan) are pushing to get respective biosimilar assets approved. The request that the agency has put forward is reportedly a request for a reanalysis of the data submitted as part of the BLA, with the specific dataset required being that which demonstrated that the drug can induce an immune response in patients. There’s also some manufacturing info needed to be submitted as part of the reapplication, though this shouldn’t pose too much of a problem.
So what’s the impact?
Well, if Coherus had to carry out a new trial, things would be much worse than they are. As it turns out, it shouldn’t have to, so the downside is limited to time (as opposed to cost). There is some time pressure here (as noted, this one isn’t the only one trying to get a Neulasta biosimilar to market) but so long as the analysis doesn’t take too long, it shouldn’t really affect the path to commercialization.
Based on this relatively limited impact, the decline seen on the back of the release isn’t quite as harsh as it might otherwise have been. The company lost a little over 23% throughout the session on Monday but recovered somewhat to pick up a 5% bounce pre-market on Tuesday. We expect this one to recover further as markets buy up the dip ahead of resubmission.