This is not the start Clementia wanted to its life as a public biotech company. Not only do investors have to accept that should its sole clinical asset, palovarotene, reach the market it will likely do so with virtually no patent protection, they must now contend with the drug’s failure in a mid-stage trial.
Palovarotene, a Roche cast-off, is in development for the ultra-rare bone disease fibrodysplasia ossificans progressiva, and its composition-of-matter patents expire in 2021. Investors who pumped $138m into Clementia’s August 2017 flotation were willing to overlook this detail, but they proved less tolerant yesterday, sending the shares off 21% on the phase II miss.
The mid-stage trial is highly relevant in the context of palovarotene’s phase III Move study, which is already under way. Move tests chronic palovarotene dosing, with an increase during flare-ups, which is the same setting as that tested in part B of the phase II trial that Clementia reported yesterday.
Unfortunately, the primary outcome measure, change in heterotopic ossification at 12 months, showed only a 28% reduction versus historical control. Leerink analysts had been looking for at least a 65% effect, given that this is seen as the threshold for approval in the Move study.
Clementia went to great efforts to gloss over the primary endpoint failure, trumpeting the study’s success on a secondary measure – new flare-up site heterotopic ossification at 12 weeks – which showed a 91% benefit favouring palovarotene.
The company also said the primary data had been skewed by one of the 33 subjects, and this argument probably represents its best shot at convincing the market that Move can still succeed. This outlying patient had experienced extraordinary bone formation, but failed to meet the phase II requirements of a “flare-up” that would have justified a dose increase.
The bull case is that under the phase III protocol this subject would have received treatment, and the remaining 32 phase II subjects yielded a 12-month heterotopic ossification reduction of 65%. Still, this only just meets the approval threshold, and efficacy will be expected to decline when moving from phase II to the more stringent phase III setting.
Palovarotene, a retinoic acid receptor (RAR) gamma agonist, has other problems too: its IP position is weak, largely because it has been around for quite some time. Roche had tested palovarotene in 825 subjects with chronic obstructive pulmonary disease, but discontinued it when it failed in this indication.
Clementia says it has secured additional IP, of the far less secure method-of-use type, claiming coverage as far as 2034, as well as licensing next-generation RAR gamma agonists from Galderma. It might also be helped by the fact that ultra-orphan disorders tend to be far less prone to generic challenges than mass-market conditions.
The Roche licence has fairly modest terms, calling for clinical and regulatory milestones of just $51m, $1m of which has already been paid, plus a low-teens royalty. The market might also be hoping that if palovarotene is developed successfully Roche might be keen to buy it back through a takeover of Clementia.
The phase II data suggest that more evidence of efficacy will be needed before this scenario has a chance to play out.