Beleaguered Neovacs still has it all to do

When your stock has cratered you have to pull out all the stops when reporting clinical data. Full marks, then, to Neovacs, which today claimed a mid-stage hit in lupus that might cause some investors to see in its puny market cap – just $40m – an attractive low-risk, high-reward play.

The problem is that the French group now needs to convince a partner to take on pivotal work, and pretty strong rose-tinted glasses are needed to see its phase II data as a win. Moreover, any mid-stage clinical effect will wane in the stricter setting of phase III, so Neovacs should not crack open the champagne just yet.

The last lupus company to learn the hard way that a hint of phase II efficacy rarely translates into a pivotal trial success was the UK’s Immupharma, whose Lupuzor project crashed in a pivotal trial (Lupuzor reminds UK investors that there’s no easy money in biotech, April 17, 2018).

Four of five?

Neovacs’ phase II study concerned IFNα-Kinoid, an asset that became its lead when TNF-Kinoid failed in rheumatoid arthritis in 2014. According to Neovacs the trial hit four of five success criteria.

However, it is important to read the data in the context of the study’s prespecified measures. On this score IFNα-Kinoid missed its primary efficacy endpoint, an effect on BILAG, a recognised lupus activity index, but did show statistical significance in reducing an interferon signature – a biomarker.

According to Clinicaltrials.gov the trial had two secondary measures: effect on the SRI-4 responder score – this was also missed – and adverse events, which were said to be less severe with active treatment versus the placebo cohort.

So how does the company claim two additional wins? Firstly, it says the SRI-4 miss is a hit by touting a numerical benefit even though the p value was above 0.05; secondly it introduces a third lupus activity score, LLDAS, according to which IFNα-Kinoid outperformed placebo, with p=0.002.

Neovacs says LLDAS featured as a secondary endpoint, but the study’s Clinicaltrials.gov entry does not mention it. Either way, given that a key co-primary measure was missed, the trial’s powering could render a secondary endpoint hit irrelevant once the appropriate statistical penalty is taken.

True, the biomarker effect Neovacs has seen is important: it backs IFNα-Kinoid’s mechanism of eliciting neutralising antibodies against interferon-α. However, this is worthless unless it can translate into a functional effect on the disease in question; according to the phase II trial such an effect is meagre.

No regulatory discussions

On an investor call today Neovacs insisted that its data were enough to take IFNα-Kinoid into pivotal trials, but admitted that it had yet to discuss with regulators the phase III criteria.

Its shares initially opened up 15%, but were later trading off 8% as reality set in. The company has just €11m ($13m) in the bank, and unlike Immupharma it will not run phase III itself, accepting that it would be impossible to raise the necessary cash in the market.

After Immupharma’s failure the next important lupus readout concerns a phase III trial of Astrazeneca’s anifrolumab, expected shortly. Investors might see Neovacs’ current depressed valuation as worthy of a punt, though without a deal a graveyard shift will beckon.