Allon pays the price for binary biotech strategy

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The Canadian biotech minnow Allon Therapeutics did all it could to focus squarely on its lead project, davunetide, ensuring that it had just enough cash to complete its pivotal trial and putting in place funding that it could immediately tap should the study succeed.

Unfortunately it was all in vain, and davunetide’s failure to show any effect whatever in progressive supranuclear palsy prompted a 94% share price collapse. Stock market considerations aside, the interesting part of the clearly negative result is what it might mean for the developers of other neurological conditions characterised by impairment of the tau protein.

Davunetide had been the most advanced of a handful of projects tested specifically against progressive supranuclear palsy (PSP). With nothing else in the pipeline and a market cap barely above its C$3.2m ($3.3m) of third-quarter cash the best Allon can hope for now is that a promising private business might take advantage of its Toronto listing in a reverse takeover.

Rare brain disorder

PSP is a relatively rare brain disorder characterised by visual disturbance resulting from a progressive inability to coordinate eye movements, and serious problems with the control of gait and balance.

The dementia is classified as a tauopathy, meaning that, like Alzheimer’s disease, it is thought to be related to defects of the tau proteins that are abundant in the CNS. Davunetide was thought to afford neuroprotection by stabilising microtubules, and Allon had reported success in affecting tau pathology in preclinical and early clinical trials.

However, the latest phase II/III study, in 313 PSP patients, gave not even the slightest glimmer of hope. Davunetide was inert in primary endpoint measures of cognitive and functional improvement, as well as failing in all secondary endpoints.

Allon suggested patients might have been too advanced in the course of disease, the tests were not sensitive enough, or the drug was insufficiently absorbed. But it did not gloss over the disappointment, saying davunetide would be canned, and with cash just to the second quarter of 2013, “all options” regarding its assets will be considered.

Earlier this month it had filed a shelf prospectus to raise up to C$50m, but given its current share price an equity offering must be out of the question. The company lists no other clinical-stage projects in its pipeline.

There are no approved disease-modifying treatments for PSP and the disease tends to be treated with levodopa. Beyond davunetide EvaluatePharma finds just two clinical projects – TauRx Pharmaceuticals’ tau aggregation inhibitor methylthioninium and Santhera Pharmaceuticals’ idebenone. TauRx recently started a phase III study frontotemporal dementia, a condition related to PSP.

Broader repercussions?

Given that PSP is related to other dementias such as Parkinson’s disease, it will be interesting to see whether davunetide’s failure has any broader repercussions.

Tau’s purported involvement in neurodegeneration has led to effects on tau being measured in recent studies of the late-stage Alzheimer’s projects solanezumab and bapineuzumab. The former showed flickers of efficacy but no effect on tau, while the latter did reduce tau but had no clinical activity.

There had been some hope, for instance, that the tau approach in Alzheimer’s might offer an alternative strategy given the doubts surrounding the amyloid-beta hypothesis. In any case the value of interpreting changes in biomarkers is debatable.

Analysts at Canaccord had earlier said that Allon’s investment case rested on a licensing deal for davunetide and an early-2014 launch. They had pencilled in sales of C$338m by 2018 in the US alone, but did caution that there was inherent risk.

Further analysis of the phase II/III data should prove informative, although there can be no doubt that for davunetide, and perhaps for Allon as well, it is the end of the road.

Study Trial ID
313 progressive supranuclear palsy patients, phase II/III NCT01110720

To contact the writer of this story email Jacob Plieth in London at jacobp@epvantage.com or follow @JacobEPVantage on Twitter

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