ImmuPharma share price fall looks unfair

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With analysts almost to a man (and woman) praising ImmuPharma’s phase IIb data from its trial of lupus drug Lupazor the biggest mystery on the London stock market yesterday was why shares in the UK-based company fell sharply.

ImmuPharma’s 150 person trial even drew some favourable comparisons with Human Genome Science’s Benlysta, whose strong positive phase III data has caused its stock to soar. So the 19% decline in the share price was hard to square with the outcome of the trial.

Weaker data

What might have worried some investors was that the full data were marginally weaker than the interim data presented by the group in January, but while that had some impact on the P values attached to the outcome, the difference between the data were not meaningfully different.

Of the 147 patients enrolled in the study 53% on Lupuzor taken once a month showed improvements in symptoms compared with 36% of patients in the placebo group. The drug, which is a T-cell therapy, was importantly also well tolerated and had fewer drop outs than the placebo group.

What makes the share price fall even more puzzling is the fact that when a sub group of moderate to severe patients was analysed, the drug performed even better showing a 62% response rate against 39% for placebo.

Better than Benlysta?

One analyst yesterday even commented: “In terms of magnitude of response this is more impressive [than Benlysta] but in a smaller trial. Arguably it looks better than Benlysta at this point.”

However, the results of the study may have been clouded in the eyes of some observers by the group changing the format of the study early on to exclude patients with lab measures, such as raised auto antibodies, and instead focus on clinical measures including arthritis.

Even so it should be borne in mind that these are still very notable data for this notoriously hard-to-treat disorder and that Benlysta managed to fail to meet its primary endpoint in phase II trials, causing many to write the drug off a few years ago.

Profit taking

The positive data, combined with almost all analysts keeping their buy ratings and some even increasing their price targets, indicates the fall had more to do with investors taking the opportunity to take profits.

In the preceding days to the unveiling of the data, shares in ImmuPharma had shot up dramatically, rising by about 20% over the course of one week. The fact that the share price fall has been almost exactly that indicates that maybe there was a little bit of ramping ahead of the results before some investors consolidated their profits.

For those that believe in the drug, and the data so far has been supportive of Lupuzor being disease modifying, this current weakness in the shares could be a good opportunity to buy, especially if the predictions of its blockbuster status are to be trusted.

Additionally, some in the market are predicting that if the next set of phase IIb studies that partner Cephalon is due to start soon, the US group may decided to buy out its much smaller partner (Cephalon secures lupus deal as late-stage projects mount, February 03, 2009).

Few catalysts

But investors getting in now will have a relatively long wait for new data on Lupuzor. In what was obviously a disappointment to some, earlier this month at an R&D day Cephalon said it while it would be starting phase IIb trials it would not be in a position to make a decision on the phase III trials before the end of 2011, something that could push approval out until 2015.

Robin Campbell, analyst at Edison, argues that this indicates that the group is taking a sensibly thorough approach to developing the drug. However, it has not impressed investors hungry to enjoy the kind of share price returns shown by Human Genome Sciences, which has seen its stock surge ten-fold since July.

The prospect of few catalysts to raise the share price in the near future is most probably another factor behind investors using the data as an opportunity to take profits.

Two or three heads better than one

On the surface the later-than-expected launch of Lupuzor will mean that if Benlysta does get approval next year it will have become the standard of care in the field, and Lupuzor could have an uphill battle to take market share away from it.

But many in the market believe that given the very diverse symptoms of Lupus vary massively from patient to patient and even day to day, there is room for more one drug. Plus, because the three currently in development, including UCB’s epratuzumab, have different mechanisms of action, they could also be used in combination. 

As such, if Lupuzor continues to produce impressive data, the drug not only stands a very good chance of gaining approval, but should also be a commercial success.

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