Anthera springs back to life but more surprises likely

Anthera Pharmaceuticals has seen its share price bounce back impressively this week, more than doubling to $1.60 in two days, following the release of further data from a seemingly unsuccessful phase IIb trial of its lupus candidate blisibimod. Twin setbacks, on the lupus product and cardiovascular drug varespladib, had battered the share over the past six months, leading to an 89% decline to below cash levels.

This week's surge was prompted by statistical confirmation of efficacy in a tightly defined population, which the company had already said it planned to test in pivotal trials. However, the road could be a long and lonely for the California group – a partnership is probably not in the offing based on the failure of blisibimod to meet its primary endpoint in the mid-stage trial. A phase III trial will cost an estimated $60m, and with just two quarters of cash left it is clear that more funding will be needed. Thus this will not be the last episode of market volatility for Anthera.

Slip sliding away

There is no doubting that Anthera is a ghost of its former self – plenty were gambling on success for varespladib, with shares trading above $8 as recently as February. The first plunge came when a data safety-monitoring board announced that it was pulling the plug on a varespladib trial in acute coronary syndrome because of a lack of efficacy (Anthera shares fall on failure of heart drug, March 12, 2012). Acute coronary syndrome has been a difficult one for drug therapy, so it was always the more high-risk of Anthera’s clinical assets.

Blisibimod was Anthera’s second shot on goal, and one thought to be the better hope because lupus is a relatively underserved disease – Human Genome Sciences’ Benlysta being the first new drug in 50 years – and because blisibimod was viewed as potentially more potent than Benlysta (Event – Anthera looking at a year of catalysts, February 23, 2012).

With the announcement that blisibimod had failed to meet its primary endpoint – a statistically significant reduction in the systemic lupus erythematosus responder index – shares plunged another 69%, to 81 cents. On Friday, shares were trading at 71 cents, valuing the company at $29.2m, compared with cash reserves of $42.3m as of March 31.

Investor interest was revived to a certain extent this week by a new analysis of the data, showing that significantly more severe patients taking blisibimod than those on placebo achieved an eight-point improvement in their disease activity scores; in the words of the company, when lupus patients respond to blisibimod, they respond very well.

This detailed analysis is a thin reed to lean on, but the company thinks it can help guide phase III trial design. What executives must do now is explain how they will pay for it.

The end is nigh

Writing after the first set of data were released, analysts from Canaccord said partnering would be out of the question, but considered the results better than the share price plunge had indicated. Given lacklustre results and a dwindling cash pile Anthera is not in a position of strength to negotiate favourable terms.

Thus a financing would seem to be needed, if indeed it can be pulled off. The latest boost in share price, albeit to relatively low levels compared with earlier this year, could provide an opportunity to sell new shares. However, another slip back today, down 10% to $1.44 in early trade, suggests that many investors remain to be convinced that the new data have cleared the path forward for blisibimod.

Canaccord estimates that a phase III trial would cost $60m, meaning that Anthera would need to raise an amount roughly equal to its market cap to fund it. However, a financing might not need to fund the study fully; it may just need to be sufficient to improve the company’s negotiating position as it searches for a partner.

Whatever the case, the release of the new analysis was opportune and satisfied Anthera’s need to pump up its share price. It will not be surprising to see an attempt at fundraising in the coming months; the size might reveal executives’ view on whether they can strike a partnership before phase III concludes.