ImmuPharma (LSE:IMM) currently sits at 10.9p, having fallen from nearly 150p in April prior to reporting that its flagship Lupuzor™ drug had failed to meet the primary endpoint in its pivotal Phase III clinical trial. However, with the lupus drug largely missing its required ‘statistical significance’ due to an unusually high placebo response, ImmuPharma has soldiered on with its efforts to reach commerciality in spite of the setback. Here, chairman Tim McCarthy explains how a new, extensive programme and additional research into the drug’s use in treating other auto-immune diseases could still see it achieve its ‘blockbuster potential’.
Lupuzor™ is designed to treat an incurable autoimmune chronic inflammatory disease called lupus. When a healthy individual’s immune system is under attack, it reacts and creates protective antibodies. However, in lupus patients, the immune system wrongly believes it is under attack and produces what are known as ‘autoantibodies’. These proteins can lead sufferers to experience a wide range of symptoms, including skin rashes, fatigue and arthritis. In some cases, they can lead to organ failure and even be fatal.
Although lupus diagnosis has improved over recent years, the disease’s multi-symptomatic and variable nature made it particularly difficult to diagnose for a very long time. Few drugs exist in the market, and those that do can carry serious side effects. McCarthy tells us that ImmuPharma’s drug works by modulating the immune system rather than attempting to suppress it, making it a much safer option for patients:
‘Lupus treatments aim to address the underlying disease rather than just managing the symptoms. Picture the auto-immune response as a cascade that ultimately leads to the creation of these harmful autoantibodies. Many of our peers have attempted to inhibit the cascade once it has begun. What makes Lupuzor™ unique is that it modulates the immune system preventing the cascade response. This approach stops the production of autoantibodies meaning no symptoms or side effects should occur.’
He adds that Lupuzor™ is expected to be less expensive than GlaxoSmithKline’s Benlysta, the only drug that has been approved in over 50 years, which currently costs patients around $25,000 a year.
After successfully progressing through the first and second round of clinical trials, ImmuPharma’s share price collapsed by 74.7pc in April after releasing the top-line results for its pivotal Phase III trial on Lupuzor™.
In primary analysis of a double-blind trial of 202 patients, the drug demonstrated a superior response rate over placebo (52.5pc vs 44.6pc) and was confirmed to have an ‘outstanding’ safety profile. However, due to a high response rate in the placebo group, this outperformance was not deemed to be ‘statistically significant’. As a result, it failed to meet the trial’s primary endpoint.
McCarthy tells us that, while the results were disappointing, it is not unusual for lupus treatments to struggle in clinical trials. He, along with many industry experts, puts this down to a critical flaw in the methodology of the trial process – designated by the US Food and Drug Administration – which leads placebo patients to respond well due to the nature of lupus itself:
‘Many lupus patients suffer because they struggle to manage their disease without expert support. When they enter a clinical trial, they are seen once a month and advised on how to correctly manage their symptoms and live a more appropriate lifestyle for their disease. This special attention alone can see symptoms improve, even if the patient is receiving the placebo in the trial. The market’s initial reaction to our trial was that our drug does not work, but that is not the case at all. The drug performed as expected, it is just that the placebo response was high, making it difficult to achieve the required statistical significance.’
Far from giving up on Lupuzor™, ImmuPharma immediately began working on ways to continue the drug’s progression following April’s news. Under the request of investigators and patients, it is carrying out a six-month follow-up study, permitting patients from the completed phase III study to continue receiving the drug. These results are due in Q2 2019. Meanwhile, in May, it released additional analysis of the Phase III trial that found a statistically significant reduction in disease activity among the European cohort group, who were antibody positive.
Finally, in September, the firm announced that it had signed an agreement with a specialist provider to distribute Lupuzor™ in what is known as a Managed Access Programme (MAP). The MAP, which ImmuPharma will fund from its existing cash resources, will give up to 500 patients early access to the medication for a minimum of two years, before any regulatory filings.
The programme is longer, more extensive and cheaper than the Phase III trial, which cost c. €10m and was carried out on 200 patients for twelve months. It also gives ImmuPharma access to ongoing results rather than having to wait until the programme has completed.
McCarthy tells us this ‘real-time’ approach allows ImmuPharma to monitor the drug’s effectiveness as the trial unfolds, which, from an investor’s standpoint, means it can deliver regular newsflow throughout the process. He adds that the data generated from the MAP will also be an invaluable addition to the firm’s application for final regulatory approval:
‘Not only will the MAP allow us to help patients ahead of our drug being approved, it will provide us an invaluable set of data that we can put into the application for when we do go for formal approval, at some point in the future. These programmes are becoming increasingly common. Out of the top 20 pharma companies globally, 18 are using MAP on a regular basis to supplement clinical trial data.’
Although he is optimistic that the MAP can support Lupuzor™’s progression, McCarthy says it is not yet clear whether the programme will be enough to cement FDA approval. Traditionally, the regulator must receive two separate Phase III studies with similar results before awarding a marketing license for a drug. However, McCarthy says the regulatory world is changing, adding that the firm’s application could benefit from an ongoing debate between the FDA and industry experts over a lack of approved lupus drugs:
‘The representative body for lupus patients has argued that the FDA should alter the design of trials for drugs because they are currently struggling to find success. If the FDA re-designed the trials to account for the current anomalies then there would likely be a much higher success rate. These discussions are ongoing, and we remain in contact with our regulatory advisers around the FDA’s attitude to the use of MAP data as a supplement to clinical development data in licence applications.’
Once Lupuzor™ has been approved by a regulatory body in one jurisdiction, McCarthy says approval in other jurisdictions should come with more ease and less expense. With c.5m people suffering from lupus globally, including 1.5m in Europe, the US, and Japan, he believes this could see the product become a ‘blockbuster drug’, or, one with sales of more than $1bn per annum:
‘As our drug is unique and inexpensive to manufacture, we should be able to quickly grow market share. If we sold it for under $10,000 per year– just as an example –it would not take long to reach $1bn in revenues. With millions of potential patients around the world, Lupuzor™ could ultimately be a multi-billion dollar-generating drug, effectively and safely treating lupus patients, globally.’
Moving forward, McCarthy says Lupuzor™ could have commercial potential in regions of auto-immune disease beyond lupus. Indeed, because the drug modulates the auto-immune system, it potentially can be used to treat further diseases caused by autoantibodies like rheumatoid arthritis and Crohn’s disease.
To explore this potential, ImmuPharma has been working alongside the drug’s inventor, Professor Sylviane Muller, to carry out early-stage research into other areas of usage. So far, evidence has supported its effective treatment of neuropsychiatric lupus, Gougerot-Sjögren syndrome, and, notably, a chronic nervous disease called CIPD (Chronic Inflammatory Demyelinating Polyneuropathy).
Should Lupuzor™ be licenced to treat lupus, then a process called ‘off-label use’ will allow doctors to recommend the drug to patients with other diseases without necessarily requiring ImmuPharma to apply for further permits. However, McCarthy adds that if ImmuPharma wants to proactively market the drug as a treatment for other diseases, then it will have to return to the regulator:
‘It is not unusual for a drug to be effective in more than one type of disease, it is just that initial clinical development usually focuses only on one area. If Lupuzor™ is approved for lupus then doctors, can recommend it to patients with other auto-immune diseases. However, if we want to proactively market it as a treatment for other diseases, then we need to apply for an additional label. This is potentially a much quicker and less expensive process of achieving regulatory approval as it may not require us to go through all the clinical trials again. The additional future commercial potential of these further applications is very exciting.’
Alongside Lupuzor™, ImmuPharma offers two further potential revenue streams in its Nucant cancer programme and its Bordeaux-based Ureka subsidiary.
Nucant is a drug planned for use in combination cancer treatments, age-related macular degeneration, and diabetic retinopathy. The medication has passed the first phase of clinical trials. Ureka focuses on treatments for type II diabetes and non-alcoholic-steatohepatitis, where it has recently found success in preclinical studies.
In September, ImmuPharma announced a strategic shift that would see it offload both of these secondary operations. Indeed, it has signed the heads of terms for a clinical development collaboration on Nucant with a specialist oncology business called Incanthera.
As part of this, Incanthera will pay a £1m licence payment to ImmuPharma, paid in shares, to take over responsibility for all future development costs associated with the drug. Importantly for ImmuPharma, all future commercialisation revenues will be shared equally between the two parties.
Meanwhile, the Company said it has begun considering ways to divest Ureka while still retaining an interest in any future commercial success. McCarthy tells us the firm’s goal here is to ensure it can focus entirely on developing late-stage assets while maintaining more than one potential revenue stream and making use of its past investment efforts:
‘The heads of terms for Nucant is a great way for us to move the drug on while still getting some return on the money we have previously invested in its progression. We would take a similar approach with the divestment of Ureka, which operates at an earlier stage. Key to this approach is that it allows us to focus fully on Lupuzor™ without necessarily being a one product company when it comes to generating revenues.”
Even after these efforts to spread risk are taken into account, ImmuPharma’s collapse earlier this year demonstrates the fundamental uncertainty of investing in a pharmaceutical stock. However, what could make the business interesting at its current price is that, by writing off Lupuzor™ as a failure, the market may have missed the drug’s superior response rate and its robust safety profile.
If the lupus drug can circumvent its elevated placebo response through ImmuPharma’s MAP and broader industry efforts to alter the FDA’s trial process for lupus medication, then it could still have serious potential. Betting on the drug’s success is, of course, a risk. However, if it turns out to be one that pays off, the possibility of the drug being used to treat other auto-immune diseases in the future adds even more upside. If this sounds interesting, then ImmuPharma could look very interesting with a market cap of c.£13m and a cash balance of £9m (as at 30 June), which in itself reduces the chance of an imminent cash raise.
Author: Daniel Flynn
Disclosure: The author does not own shares in the companies mentioned above