BOSTON ( TheStreet) -- The Biotech Stock Mailbag is open. @Ted_Sand asks: "What do you think the outcome will be for $KERX phase III trial? Do you think there will be good iron results as well?" Keryx Pharmaceuticals ( KERX) is expected to announce, any day now, results from a long-term safety and efficacy study of its experimental phosphate binder Zerenex in kidney dialysis patients. The Zerenex data are actually past due already ... tick tock. I'm fundamentally bearish on Keryx because I doubt the company's ability to turn Zerenex into a commercial success. For the traders out there, this means I'm assuming the Zerenex long-term study yields enough positive data for the drug to be approved. The recent pop in Keryx's stock price is unsurprising but it's also unsustainable because Zerenex sales will eventually disappoint. I want to make this distinction clear because so many of you are short-term biotech traders.
G-d forbid Keryx announces negative results from the Zerenex study. Ouch. My opinion of Keryx has been consistent for some time. Here's what I wrote last June: A phase III study is under way with results expected before the end of the year ... there is a good chance that Zerenex works, based on previous studies. ... Unfortunately, Zerenex is likely coming to market in late 2013 or early 2014 at the same time as generic phosphate binders. Both Sanofi's Renagel/Renvela (the market leader with $537 million in sales) and Shire's Fosrenol will be largely replaced by cheap generic versions just as Zerenex tries to compete. ... The likelihood that dialysis providers will eschew cheap, generic phosphate binders in favor of a premium-priced product like Zerenex is low to nil. Biotech investors: Click here to visit TheStreet's 2013 FDA and EMA drug approval decision calendar. Let's go over the design of Keryx's long-term safety study because it's a bit complicated. The study starts with a two-week washout period in which kidney dialysis patients are taken off their current phosphate binder. The study then moves into the Safety Assessment Period in which patients are randomized to treatment with either Zerenex or an "active control" consisting of currently approved phosphate binders -- PhosLo or Sanofi's ( SNY) Renvela. Patients are then followed for 52 weeks, during which compliance and serum phosphorous levels will be monitored. Remember, these drugs are designed to bind to and lower serum phosphorous, which is elevated to unsafe levels in dialysis patients. Once the 52-week safety period of the study is complete, patients enter the Efficacy Assessment Period. Patients are randomized to Zerenex or a placebo for four weeks. The primary endpoint of the study will be a change in serum phosphorous levels from week 52 to week 56. Since this is a "withdrawal" study, we should expect to see serum phosphorous levels in placebo patients rise over the four weeks of the efficacy stage while patients who remain on Zerenex should maintain the lowered phosphorous levels observed during the 52 weeks of the safety stage.
The difference in phosphorous levels between Zerenex and placebo needs to be statistically significant in order for the study to be deemed positive. Keryx has already run shorter phase III studies of Zerenex demonstrating lowered serum phosphorous levels so there's little reason to believe the long-term study will produce contradictory results. Zerenex is an iron-based phosphate binder, which is different from competing drugs. Dialysis causes patients to become anemic, requiring treatment with intravenous (IV) iron and erythropoietin-stimulating agents (ESAs) like Amgen's Epogen. Keryx believes Zerenex can grab a significant share of the phosphate binder market if the drug boosts patient iron stores enough to reduce IV iron and/or ESA use. Along with measuring serum phosphate, the long-term Zerenex study also assesses changes over time in iron levels (ferritin and TSAT levels) and changes in IV iron and ESA use. These are key secondary endpoints of the study.
Note, the study has 13 pre-specified secondary endpoints, according to a detailed summary published in Hemodialysis International last year. Wait to see the iron data that Keryx discloses, but I'd be cautious about over-interpretation. The study does not control for either IV iron or ESA use, which makes it harder for Zerenex to show a benefit. Zerenex is iron-based so it will be no surprise to see improvements in ferritin and TSAT levels, but at what cost? Iron causes lots of constipation, so make sure to pay attention to the safety data and toxicities reported by Keryx. Also, there will be considerable debate about what constitutes a meaningful reduction in IV iron and ESA use -- if any is observed. That's a question for the FDA to settle when it comes to putting together Zerenex's label. Given the "modest" iron benefit observed in prior Zerenex studies, I'm skeptical Keryx can collate enough data to convince FDA -- and dialysis clinics, more importantly -- that there's compelling financial reasons to choose Zerenex over cheaper generic alternatives. Johnnyboy writes: "Any clue why Sangamo Biosciences ( SGMO) has doubled in the last couple of weeks on no news? I like the company and I think their technology is promising but pivotal results are months if not years away. Is this another case of stock pumping before they announce new financing?"
Sangamo shares are up about 60% since the start of the year, not quite a double but still very strong. I saw CEO Ed Lamphier present at the J.P. Morgan Healthcare Conference earlier this month. He tells a compelling investment story about Sangamo's research into "zinc-finger" proteins -- customized drugs that can turn genes on or off in order to treat and cure disease. Zinc-finger proteins work in plants and in the lab. Sangamo has yet to prove the technology works effectively enough in people. A first stab at a therapy designed to regrow nerves in patients with diabetic neuropathy was unsuccessful. Sangamo has now turned its attention to SB-278. The therapy is designed to genetically alter a patient's T cells to eliminate a protein known as CCR5 used by HIV to invade and infect cells. Without CCR5, cells are much more resistant to HIV infection. Sangamo refers to SB-278 as a potential "functional cure" for HIV because if it works, HIV-infected people might be able to halt treatment with anti-retroviral drugs like those marketed by Gilead Sciences. For newly infected people, treatment with SB-278 could delay or prevent the need for HIV therapy. Cool stuff. Sangamo has presented some interesting, early data on SB-278 but nothing that demonstrates definitive proof. What we've seen so far from SB-278-treated patients is short-term increases in CD4+ T-cell counts, but is that enough to justify stopping or delaying anti-retroviral therapy? Sangamo's challenge is complicated by the potency of existing HIV drugs, which are capable of reducing viral loads to undetectable levels. Sangamo is conducting phase II studies of SB-278 with interim results expected in the first half of the year and full results before the end of the year. Anticipation for these important data is probably what's driving investor interest in the stock right now. There's a possibility that Sangamo snags a late-breaker presentation slot at the 2013 Conference on Retroviruses and Opportunistic Infections (CROI), scheduled for March 3-6. This is the most important HIV research meeting of the year, so presentation of SB-278 phase II data would be a big deal for Sangamo. Expect to hear something about a CROI presentation (or not) at the end of January.
Lisa H. asks: "What is your outlook for Threshold Pharmaceuticals ( THLD) in pancreatic cancer now that Celgene ( CELG) has underwhelmed with Abraxane results? I think this is good for Threshold. Do you agree? Appreciate your response." Celgene left the door open for a competing pancreatic cancer drug or regimen, so that's a plus for Threshold. Were the Abraxane data underwhelming? I don't think that's necessarily true. As reported Tuesday, Abraxane plus gemcitabine yielded a median overall survival of 8.5 months compared to 6.7 months for gemcitabine alone -- a 1.8-month or 8-week survival benefit that was highly statistically significant. The result was either in line or on the low end of expectations, depending on whom you talk to. Median overall survival is easy to understand, but it's not the best way to measure a cancer drug's overall efficacy. Median means middle, so with median overall survival, you're getting a snapshot from a small slice of patients enrolled in the study. Better to look at the study's hazard ratio, which compares the benefit of an experimental drug to its control over the entire trial. A hazard ratio of 1 in a survival trial means no benefit for a drug over its control. Overall survival is the same. What you're looking for is a hazard ratio less than 1, with a smaller hazard ratio equating to a larger survival benefit. The overall survival hazard ratio in Celgene's Abraxane pancreatic cancer trial is 0.72. There's nothing underwhelming about that result.
Interpreted another way, you can say Abraxane reduced the risk of death by 28% compared to control. The Abraxane hazard ratio for overall survival is not as strong as the 0.57 hazard ratio observed in the FOLFIRINOX study. At the median, FOLFIRINOX boosted overall survival by four months over gemcitabine. However, FOLFIRINOX -- a cocktail of four chemotherapy drugs -- is much more toxic and harder for pancreatic patients to tolerate. Getting back to Threshold. Recall, in the phase II study reported last year, the high dose of TH-302 plus gemcitabine yielded a median overall survival of 9.2 months compared to 6.9 months for gemcitabine alone -- a difference of 2.3 months. Looks good relative to Abraxane. But the overall survival hazard ratio for TH-302 was just 0.95 -- not robust at all.
Threshold says survival data from its phase II study were impacted negatively by patients who crossed over from the control arm to receive TH-302. Point taken, but still, TH-302 will need to improve its performance in the ongoing phase III study in order to produce results competitive to Abraxane. I'll also warn again that data generated by phase II trials are generally stronger than what emerges from larger phase III trials. Case in point, Celgene reported median overall survival of 12.2 months from the phase I/II single-arm study of Abraxane plus gemcitabine. Obviously, this result weakened in the phase III study. I wouldn't be surprised to the same happen to Threshold's TH-302. Amarin ( AMRN) announced the commercial launch of Vascepa on Thursday, which prompted @JackBrada to tweet, "There goes #5 on your 13 for '13." He refers to my list of 13 biotech stock predictions for 2013, of which No. 5 states, "Amarin delays the commercial launch of its triglyceride-lowering fish-oil pill to the second quarter due to manufacturing and supply issues. Vascepa sales fail to meet lowered expectations." I was wrong on part one of my Amarin prediction but I still have a shot a partial credit if the Vascepa launch is slow. Nothing I've heard from Amarin management yet about launch expectations makes me fear being wrong about the second half of Prediction No. 5. I'll report on Vascepa prescription and sales data if/when they become available from IMS Health and Wolters Kluwer. Amarin management may comment on the Vascepa launch when the company reports fourth quarter and year-end at the end of February. @GerardNocia asks: "Any thoughts on Aeterna Zentaris ( AEZS) and the upcoming mm
multiple myeloma data?" Yes, perifosine failed in colon cancer -- the drug's best shot at success. Keryx abandoned the drug, returning rights to Aeterna Zentaris. For some reason, Aeterna decided to continue on with the multiple myeloma trial, even though patient enrollment was already painfully slow (suggesting little interest from doctors or patients). My thoughts? Perifosine will fail in multiple myeloma just like it did in colon cancer. This isn't exactly a non-consensus prediction, judging by Aeterna's stock price as we head into the expected interim results due this quarter. -- Reported by Adam Feuerstein in Boston. Follow @AdamFeuerstein