Sesen’s corporate spin amounts to nothing

According to Sesen Bio Vicineum was a shoo-in for US approval this month. What went so badly wrong?

It is often said that biotech investors should take corporate announcements trumpeting positive FDA interaction with a pinch of salt. On Friday Sesen Bio reminded the markets that this still holds true as it was slapped with a complete response letter for its lead asset, Vicineum.

While some might recall that Vicineum has a decidedly chequered history, more recent investors have clearly been caught unawares, as shown by Sesen’s sizeable share price fall. It appears that Sesen itself had fuelled unrealistic enthusiasm, in July claiming that a late-cycle meeting with the regulator had gone well, and later reporting that 97% of Vicineum’s US sales force had already been hired.

Double dip

Not only that, but Sesen gave investors two opportunities to drive its stock down. On Friday its shares lost 57% on a statement revealing the complete response letter, and saying the FDA had requested additional clinical and statistical data and raised manufacturing issues stemming from a recent pre-approval inspection.

This morning the other shoe dropped when Sesen held an analyst call at which it admitted that it needed to put Vicineum through a whole new confirmatory clinical trial, which would push a filing resubmission out to 2023. The group’s stock opened off an additional 30%.

The indication in question is BCG-unresponsive, non-muscle invasive bladder cancer, a use in which Keytruda secured US approval in January 2020. Perhaps the FDA took the view that, with the Merck & Co drug available, Vicineum’s Vista trial was no longer sufficient to support approval; notably, Vista started enrolling in August 2015, years before Keytruda was approved.

While the precise nature of the problems has not been confirmed Sesen today appeared to put the blame on increased scrutiny at the FDA and the agency’s lack of a permanent commissioner. However, the need for a new clinical trial suggests major problems with the data generated in Vista, whose unveiling two years ago had already caused Sesen problems (Sesen learns a lesson in investor relations, January 4, 2019).

Sesen told analysts that there was still no good comparator in the market for this cancer type, and thus the precise design, size, scope, duration and patient population in the confirmatory study had yet to be agreed. This will be discussed at a type A meeting with the FDA in the fourth quarter.

Vicineum is a fusion protein that targets Epcam, which Sesen says is expressed on cancer cells, and delivers a cytotoxic exotoxin payload. Sesen itself, meanwhile, is the result of the 2016 reverse merger of Viventia, the originator of Vicineum, and Eleven Biotherapeutics, a listed group that had previously focused on ophthalmology.

Body language

Until Friday Sesen’s body language suggested that Vicineum's approval was a formality, and the sellside played up clinical data from Vista showing a 40% complete response rate, on a par with the 41% Keytruda generated in the Keynote-057 trial.

Hopes for Vicineum were fuelled by a July 13 meeting with the FDA that Sesen called productive: there was no requirement for an advisory panel or post-marketing confirmatory trials, and there was apparently agreement on a “timeline for supporting information to be submitted” regarding remaining manufacturing questions.

And Sesen backed its own bullishness by announcing that, remarkably, 34 of 35 sales reps had already been hired in July, a month before Vicineum’s August 18 Pdufa date. The enthusiasm was clearly misplaced; either the group had misunderstood or was overblowing the nature of its interaction with the FDA, or the agency has had some huge internal U-turn.

Having raised money for Vicineum’s launch Sesen has around $150m in the bank, but those newly hired sales reps had best not get too comfortable in their seats.

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