Sanbio brings its Japanese retail fans down to earth

Most biotech investors in the west are well aware of the high failure rate of projects aiming to treat stroke. The message looks like it might have been lost in Japan, however, where strong buying had caused stock in the Tokyo-listed Sanbio to more than triple since last October.

Today the company brought its followers crashing down to earth when it revealed that the event they had been waiting for, readout of a phase II stroke trial of the regenerative cell project SB623, was a bust. Sanbio, which at today's close in Tokyo was worth a staggering $5.3bn, should tomorrow open considerably lower.

October’s euphoria had been triggered by readout of a separate mid-stage study of SB623, in traumatic brain injury. That trial had been billed as the largest ever of a stem cell therapy in this setting, and though it was said to have met its primary endpoint Sanbio’s failure to back the claim of success with any disclosure of statistical analysis should have rung alarm bells.

Donor-derived

SB623 is an allogeneic mesenchymal stem cell therapy administered through surgery into the brain, with the aim of promoting regeneration of damaged neuronal cells. The stroke study was in the chronic setting, having enrolled subjects six to 90 months post stroke.

Though the primary endpoint here used the same metric as the traumatic brain injury trial – the Fugl-Meyer motor scale (FMMS), which measures recovery after stroke – this drew a blank. The ≥10-point FMMS improvement at 24 weeks for the two cell dose levels tested was not statistically different versus placebo, Sanbio said.

Disclosure of the stroke result will have caught some by surprise: just two weeks ago, at its JP Morgan conference pitch, Sanbio was saying data were expected “by July 2019”. Irrespective of timing, the result will come as a shock to investors who had bought shares in the run-up to the data.

According to one buyside source Sanbio’s bankers had been promoting the stock heavily – a fact reflected in the consensus sellside forecasts for 2024 sales of SB623: $815m for the stroke indication alone.

Sanbio’s market cap ballooned to a point where the group yesterday accounted for 11.8% of Tokyo’s “mothers” index of startup companies. Japan’s general enthusiasm for regenerative medicines is a result of the country’s expedited approval pathway, which Sanbio still intends to pursue with a filing next year for the smaller traumatic brain injury indication.

Reneuron read-across?

After the failure attention will turn to Reneuron, a microcap UK biotech that is also developing an allogeneic stem cell therapy for chronic stroke.

The project is coded ReN001, and after a long delay it began its US Pisces III study last week, aiming to enrol 110 subjects at six to 12 months after stroke and measuring improvement on the modified Rankin scale versus sham surgery. While SB623 cells are bone marrow derived, ReN001 comes from an immortalised neural cell line.

Stifel analysts, who cover Reneuron, today argued that Sanbio’s failure had limited read-across to ReN001, casting doubt on the Japanese group’s FMMS endpoint and on the dosing levels; ReN001 is to be given at up to 20 million cells.

Another important difference concerns expectations: Reneuron is today worth a mere $8m.