Firstly, I would like to start this post by promoting another blog – specifically Trail to a Texas Trial. For anyone who is passionate about Rett Syndrome, it is powerful and emotional reading. I received a rather scathing retort from Melinda Lancaster, the owner of the site and the mother of a girl named Katelin who is suffering from Rett Syndrome, and was enrolled in the NNZ-2566 trial.
Since I care deeply about the patient advocacy side of the biopharmaceutical industry, I am pleased to draw attention to her journey in the interest of providing balanced perspective.
Based on a lot of emotional backlash following my post on Neuren (ASX:NEU) a week ago, I would like to clarify a few matters and respond to some of the comments I received in a structured fashion. I will try to do so in a serious and clear way – rather than with any degree of flippancy – since this is clearly not an amusing matter for many readers. It is also, incidentally, not an amusing matter for me either. I write these posts with the goal of trying to provide a counterweight to the unsubstantiated, glowing and often irrelevant-to-misleading information that is published by ASX-listed life sciences companies. I don’t hold a financial interest and I don’t trade – or make trading recommendations – on my posts (though, sometimes I wish I could). As a relative “outsider” to the Oz/Kiwi biotech scene I have no organisational, employment history, relationship history or grudge to bear to any of the companies I write about, including Neuren.
There are 7 topics I would like to cover about Neuren in this post:
- A review of the basic science behind Neuren
- Neuren’s publication track-record
- The “Phase II” study of NNZ-2566 and what it means
- FDA “orphan”, “fast-track” and “breakthrough” designations
- Neuren’s ASX disclosure track record
- Neuren’s lack of clinical focus
- Neuren’s lack of effective corporate governance structure
Before I address these topics I also want to make it clear that my goal is not to pummel the stock or hurt a drug development program that is clearly important to many people. What I want to see is the company conduct its activities in a way that is befitting of shareholders and patients. In my opinion, the track record of this company is mediocre at best, and it can do far better.
It has to do better if it is to be successful.
1) The Biology
The overall idea of Neuren’s technology is not completely ridiculous and my goal is not to assassinate the clinical drug candidate – only clinical data can do that (when it is published…). At the heart of Neuren’s strategy is the premise that Insulin-Like Growth Factor-1 (IGF-1), an insulin-like hormone, has cellular rejuvination/protection characteristics because it effectively acts as “regulator” to human growth hormone and impacts a lot of key cellular mechanisms around survival and proliferation (i.e. ATK/cell cycle). Basically the role of IGF-1 is increasingly understood as being of the key “switches” for activating the proliferation of cells in our body. As a simple illustration, dwarfism is associated with an under-production of IGF-1, and conversely acromegaly occurs where excess IGF-1 production means that cellular growth goes unchecked.
In diseases like Rett Syndrom and Fragile X, genetic mutations may (and I say may because it is not yet fully proven and there are conflicting claims) impact the level of IGF-1 in the brain which may be important in providing both a neurodevelopmental (growth of neurons) and neuroprotective functions (protection of neurons from cytokines that are the result of inflammatory / autoimmune processes). The idea has been around for well over a decade and seems to work well in animal models (I will discuss that in the next section).
The problem with IGF-1 as a strategy for drug development is that it is a (small-ish) protein and its bioavailability is disputed when consumed orally . Delivery is important for a product that is going to undergo long-term use because a lifetime of injections isn’t all that appealing, especially in challenging patient populations. I personally think there is plenty of evidence that IGF-1 (and analogues) has a reasonable degree of oral bioavailability because of the sheer number of bodybuilders that swear by its anabolic properties, but then plenty of people inject it too. Fundamentally, for a patient population that needs to rely on maintaining a level of IGF-1 for critical health, oral delivery is not the most robust way. Especially because it is very common for patients with Rett or Fragile X to have gastrointestinal disorders that may further negatively impact oral bioavailability.
To really get one’s systemic IGF-1 levels up, an intramuscular or subcutaneous injection is absolutely the way to go. Unfortunately there are two general problems with this approach when trying to boost central nervous system (CNS) levels of IGF-1. The first is that a large systemic dose of IGF-1 probably isn’t desirable from a long-term dosing safety perspective and it is generally accepted that there are enhanced risks to elevated systemic IGF-1. The second is that getting the right amount of IGF-1 into the brain relative to a systemic dose is tough, partially because of the half-life of IGF-1 (it only circulates for a short time before getting metabolised) and partially because the blood-brain-barrier (BBB) penetration of the drug is only a fraction of the systemic dose and you would thus need to give quite a large dose to get it into the brain.
The good news is that although the liver is the main “systemic” producer of IGF-1 (in healthy people), specific CNS cells also endogenously produce IGF-1 – specifically neurons and glia. Basically, the brain makes its own supply. In the case of neurons, IGF-1 may have a role in regulating synaptic communication, as well as a neuroprotective effect by promoting cell proliferation, just as it does elsewhere in the body. It is also postulated that insufficient endogenous CNS production of IGF-1 results in excessive proliferation of microglia – the brain’s “cleaner” cells – essentially resulting in damage to normal brain tissue because these cells produce cytokines as part of their immune signalling, which in turn induces cell death, which in turn induces the proliferation of more microglia (to clean up the mess)… in a downward-spiralling feedback loop. This is why IGF-1 and neurodegenerative diseases such as Alzheimer’s might be interesting because there seems to be a strong association with microglia and plaque formation/proliferation.
Neuren has taken this concept to a further degree by determining that one of the metabolites of endogenous IGF-1 in the brain is a small (tri)peptide called glycine-proline-glutamate or GPE. Essentially GPE is a small cleaved part of the IGF-1 protein. It doesn’t actually bind to IGF-1R (receptor) but it does seem to have some sort of implication in neural signalling and lab experiments have demonstrated with reasonable conviction that this is the case. Of course cells in a dish and lab rats are not humans, and many experiments in neural plasticity and dopaminergic signalling that have shown great promise in rodents, don’t remotely extrapolate to humans.
The real purported advantage of Neuren’s GPE analogue – called NNZ-2566 – is that it is a stabilised version of the GPE peptide that has better pharmacokinetics (i.e. hangs around longer so dosing is better), has oral bioavailability (instead of injection) and does a better job at crossing the BBB so a systemic dose gets into the brain with relative ease. It’s also supposed to be more stable, which obviously has some practical commercial implications (packaging, storage). To be clear, however, the actual mechanism of action of GPE/GPE analogues is not understood and has so far not been convincingly demonstrated to work in humans.
Neuren’s Phase III GPE study to look at its neuroprotective properties in cardiac patients treatment of cognitive impairment in patients undergoing cardiac surgery with bypass) was a failure. I believe that the prevailing consensus is that this was simply a badly designed study. I personally think not only was it a badly designed Phase III study, but the Phase II study wasn’t sufficiently powered to make the appropriate decisions for Phase III. From what I can glean from the scant information that is available – and it is scant.
And quite frankly – this is a huge part of the problem with Neuren. They lack credibility because they don’t publish their clinical data. As discussed in the next section I have been unable to find any peer-reviewed analysis of any clinical trial results to date. If I am wrong please tell me, but I made a reasonable effort. This is part of the reason why people like me look at Neuren’s proliferation of ultra-orphan indications and “blue sky” applications like neuroprotection for concussion with a huge degree of skepticism. TBI drug trials have an incredibly small chance of success because they are extremely tough to clinically validate – and now Neuren is asking us to believe that all these other applications are a worthy use of shareholder capital without having fully published and disclosed the historical experience with its therapeutic paradigm, failures or otherwise.
Is this trust issue really so difficult to understand?
2) Neuren’s Publication Track Record
Most bona fide baby biopharma companies, particularly with a strong institutional research foundation, pride themselves on the academic literature they create. It is an important part of capturing mindshare and it serves a necessary function both for knowledge dissemination and commercial traction for new drugs. When you go to the Neuren corporate website and look for publications, you will find none – or specifically, the publication section of the website is pending. It has been pending for a while.
A quick search on PubMed for NNZ-2566 (as an identified clinical candidate) reveals a total of 6 publications, all pre-clinical publications in various fairly standard rat models. A broader PubMed search for glypromate also reveals 35 papers, from a variety of academic groups, all basic science (and some pretty old). There are no clinical publications evident as far as I can see. Finally, reviewing the entries for NNZ-2566 on clinicaltrials.gov, including the most recent Rett Syndrome Phase II study, also reveals that no clinical publications have been noted as part of Neuren’s public clinical trial disclosure.
I’m sorry to say it, but this raises significant red flags for me. Normally publication is a source of internal conflict in a company with strong academic founders. In every company I have ever been involved with (and there have been quite a few) the academics are always busting at the chops to publish their data and show that the technology works. Clinical translation is, after all, the ultimate kudos to a researcher. But despite almost 10 years (longer if you consider the academic background) I see no noteworthy evidence of clinical publication from the Neuren clan. There is no good commercial reason for this, and plenty of bad ones. It is also totally inconsistent with academic behavior for science that works.
As I have said, if I have missed something (and I am not talking about conference presentations) please let me know. I will be embarrassed if it is the case, but then if it that hard to find, maybe I shouldn’t be.
3) Neuren’s Phase II Study in Rett Syndrome
I will make my usual caveat that I am not a clinical trialist but what I am about to write has been substantiated by others who are, and I believe it is reasonably accurate. Most of my practical experience is also in oncology and there is no doubt that CNS drugs have some unique challenges, some of which I understand and some of which I don’t.
Let’s start with the background – ignoring the failed Phase III GPE study, which we will call a “proof-of-concept” for the purpose of looking forward at the company with a somewhat rose-tinted lens In terms of NNZ-2566, the engineered analogue of GPE (Neuren’s current lead candidate) we have seen two Phase I studies conducted in healthy volunteers, namely NCT01420042 and NCT00961779 (females only). A total of 63 patients were involved in these two studies, but since they are RDBPC studies this means that roughly 30 patients would have been dosed with the actual drug.
Now to me, the development of NNZ-2566 at this point is already a little bizarre. Why on earth do a randomized, placebo controlled study in Phase I? The whole purpose of Phase I is to understand the toxicity / adverse event (AE) profile of the drug, perhaps as a function of dose escalation. In a situation where a mechanism of action is well understood, it might be reasonable to do a Phase I/IIa study that combines some efficacy measures with the basic safety profile but this is not the case for GPE, and very seldom the case for CNS drug development because of the typical practice of initial Phase I investigation in healthy volunteers. Not to put too fine a point on it, but when you are testing a drug in patients that don’t have the condition you ultimately expect to treat, an RDBPC strategy is irrelevant, meaningless and a waste of money (and a waste of volunteers!).
The good news is, that the Phase I data, however sensibly it may have been obtained, seemed “ok”. Though as far as I can tell we have no published data, only announcements (and maybe a conference presentation). So I am entirely taking this at face value – again, to repeat, a fundamental issue I have with Neuren.
Now moving ahead to the Phase II study in Rett Syndrome. This study (NCT01703533) is more like a conventional Phase II study, in terms of the management of a control arm. A dose escalation in patients with the disease is more common in Phase II studies for CNS drugs than, in say, cancer drugs (where we almost never conduct Phase I studies in healthy volunteers and we usually know MTD going into Phase II). Neuren obviously learned something of the pharmacokinetics from the Phase I studies and felt satisfied with the safety profile (good!) which made it desirable to study the higher dose cohort as well (70 mg/kg). Ultimately what this meant was that about another 30 patients were actually dosed with the drug.
At the outset, there are several things about this study that are challenging to me, from the trivial to the complex. Basic things like excluding patients with clinically significant gastrointestinal complications is a really high bar for Rett patients because the majority of later-stage patients have such problems, so this would have very likely skewed the recruitment toward younger (relatively) patients. Even the fact that a strawberry-flavoured substrate was used seems kind of stupid given the prevalence of heightened allergenic response in this patient population, particularly milk, egg, nut and berry allergies.
The second problem with this study is the incredibly broad inclusion criteria in terms of the age of patients and the range of severity allowed (10-36). This effectively captures patients that are both in the plateau and the motor degeneration phase, and covers a huge neurobiological “range” and variety of clinical symptoms. That’s probably ok for a dose escalation study to try to get dosing right, but to meaningfully determine a benefit, the patient population is just too broad. Moreover, between the control arm and the use of two different doses, it basically means that in each of the three “cohorts” you have only roughly 20 patients. Again, given the “spectrum” of patients that will be included, this is going to be tough from a statistical vantage.
The third major issue is that the period of clinical observation is incredibly small. This really is a basic safety study – in fact, safety is the primary end-point. Therefore to infer any clinical (and behavioural) benefit in a patient population with an observation window this small is absurd, especially in females. These are patients that have an incredibly volatile and challenging life. A longer study period to capture the behavioural variability is absolutely required. Now, I don’t discredit claims from people like Melinda Lancaster who swears by the efficacy of NNZ-2566 on her daughter, but the masking for this study included the caregiver (presumably Melinda) and so she doesn’t in fact know whether her girl actually got the drug. If Ms. Lancaster was in fact unblinded for some reason, then I have very little confidence in the robustness and objectivity of the clinical study – full stop.
In short, as I understand it, there are a whole range of reasons why Rett subject variability can change within a month period. Even just the hope and joy of participating in a clinical study could change the atmosphere and stress within a family dynamic, and have a real beneficial effect on a patient participating in a clinical study. I have no personal experience of Rett or Fragile X patients but I have seen it happen plenty of times in other disease settings.
Lastly, the FDA’s response to the Breakthrough designation application. I am going to talk more about these designations in a minute, but for a company to end up in a situation where the FDA doesn’t agree with the statistical methods used, is a sort of awkward matter. To be fair – and to be clear – none of these FDA programs are a slam-dunk in terms of certainty. However if Neuren had planned to apply for Breakthrough designation on the back-end of this study, it would have been very reasonable to agree with the FDA first (even in a non-binding meeting) what an acceptable statistical strategy would be. When I “hark” on about my lack of confidence in Neuren’s clinical planning and decision-making, I can’t help but reflect for a company that has a failed Phase III under its belt and a set of stakeholders with painful experience from the QRXPharma debacle, that we are still seeing these kinds of situations arise.
To conclude on this particular matter, I am not saying that Neuren’s Phase II Rett study was meaningless or valueless, I am saying that to me its hard to understand how a company would expect to really get anything out of the study except a safety signal at a higher patient dose. I think the beauty of broad patient inclusion in such a dose escalation is precisely to raise a red flag whether the higher dose has issues in a certain sub-population – or maybe if the dose range for a particularly clinical severity classification shows some kind of potential optimisation. The secondary end-points in terms of behaviour modification are as much about properly detecting an AE as anything else – in fact they are only about AEs as far as I am concerned in this instance.
4) FDA Designations
The easiest way to understand the importance of FDA designations such as “Orphan“, “Fast Track” and “Breakthrough” is to read the current industry guidance. It’s not terribly gripping reading but it’s digestible. The short version is this.
FDA’s Orphan status is almost entirely based on the definition of the patient population (prevalence of <200,000 people). In the entire history of applications for orphan designation, more than 70% have been granted. It’s been an extremely successful program and has been transformational to drug development. One could be even a little cynical and, based on many drug approvals in recent years, come to the conclusion that pharmaceutical companies (and certainly investors!) would much prefer to develop an orphan drug than tackle something with a major clinical population. Given that Neuren is focused on syndromes like Rett and Fragile X, there is almost no contention of orphan status. In short, I am implying – nay stating – that the FDA’s grant of orphan status to NNZ-2566 is absolutely no reflection on the quality of the company, or the quality of the program.
FDA’s Fast Track status is step further. It is not based on the “rarity” of the patient but the extent of the unmet clinical need. Here again, although incredibly valuable for a company like Neuren (as it comes with the promise of a higher-degree of collaboration and engagement with the FDA) it is really less a reflection on Neuren’s commercial or development performance, and more a reflection of the lack of success in the field. Here again, particularly given the termination of programs in Fragile X by Roche and Novartis, and the major lack of therapeutic options for Rett Syndrome, this application would not have been a hard case to make. I note that by now, the orphan and fast track status process is reasonably well understood.
The “Breakthrough Status” is somewhat less understood because there is less experience with it and the guidance is a little less clear. But in essence it is all about the data. The real point of breakthrough status is that the early clinical experience with a drug candidate is so compelling, and with such unmet need, that it deserves further expedited status. In the past two years there have been a couple of dozen drugs granted breakthrough status, but almost all had significantly more clinical experience than Neuren’s program (i.e. clear efficacy). I do note that in the oncology setting (which is many of those drugs) it is possibly an easier process than for a CNS drug. CNS drugs are just tough to develop.
5) Neuren’s ASX Disclosure Track Record
I am very consistent in my position on this. I don’t like what Neuren – and many other ASX-listed companies – do. The ASX listing rules, in many regards, do not fit the business communication needs of a biotechnology or pharmaceutical company and although academic studies have seemingly pooh-poohed any implication that biotech/healthcare companies are the worst abusers of both ASX disclosure rules and the highest recipients of trading queries, I would argue differently.
When Neuren posted the ASX disclosure on the 30th December last year that it had applied for the FDA’s orphan drug and breakthrough status, it was committing the lowest form of public relations stunt. Basically this was an opportunity to send an end-of-year note to shareholders, but in an incredibly glowing forward-looking fashion. In my opinion, inappropriately so. It was also made essentially 10 days before the most important global healthcare conference, the JP Morgan Conference in San Francisco (something that was not mentioned whatsoever in its response to the ASX regarding a price query a few days later). Moreover, it has been suggested to me by a number of people that Neuren’s decision to “transparently” publish the FDA’s refute of breakthrough status was and example of its integrity and indeed something the company didn’t have to do.
I disagree – I think it would have been not only damaging to shareholder relations but unethical to not do so, because of extent of prior forward-looking statements. In short, the company screwed itself. Grown-up companies announce when the FDA has granted some sort of status or conferred a benefit, not when the paperwork has been submitted. It’s even more deplorable than announcing patent application filings. No matter how robust the case, the FDA just isn’t that predictable. In the US you would be incessantly ridiculed for doing an amateur stunt like that.
Overall, I would like to see a cleaner and more sophisticated communication strategy going forward for the company, especially given the emotive nature of patient populations such as Rett Syndrome or Fragile X. I would especially like to see a bit more scientific robustness and clinical sensitivity in the way that the results of very early stage studies are communicated. Patients need hope, but they need hope from claims that are backed up by data. Who do we trust right now, Neuren or the FDA?
Well, the FDA is far from infallible but at this point, it’s probably a safer bet for patients.
6) Neuren’s Lack of Clinical Focus
It is my opinion, but the company has too many irons in the fire. With a sub-$20m balance sheet, it’s hard to see how the company is going to effectively prosecute the current set of frankly daunting clinical studies. The concussion study, for example is ~130 patients. Given the clinical data capture involved, I can’t imagine per-patient costs of less than $15-20,000. I look at the different clinical trial descriptions and I have to shake my head at the scatter-gun approach. The skeptic in me basically thinks this is about promoting a notionally broad and hence ‘valuable’ development strategy to assuage shareholders, rather than a focused commitment to solving a particular clinical problem.
And what of the data interaction between studies? Supposing that the concussion and brain injury studies don’t show any efficacy – what effect will it have on the orphan programs? Or vice-versa? If the company really believes that its drug can tackle both Rett and Fragile X (despite the fact that they are biologically distinct syndromes), then it will be far more productive and lucrative to nail those indications quickly and get them partnered. Having a proper engagement with the FDA and channeling those financial resources into clinical trials that could actually show the statistics to achieve breakthrough status should be the goal.
Neuren should stay clear of concussion / TBI. I just can’t see those indications as being anything other than an extremely long, hard road with a very high probability of failure. To me, the failed Phase III study is a lesson somehow already forgotten.
7) Neuren’s Lack of an Effective Corporate Governance Structure
There is no doubt that Richard Treagus is a heavy hitter in the Aus/NZ biotech scene and has deservedly earned his reputation for being shrewd and aggressive. The problem is that this is a public company and it has a hugely compromised board. Treagus is an Executive Chair and is clearly in the driving seat in terms of company leaders. None of the other NEDs are independent, either by virtue of shareholding or co-involvement with other boards and business relationships.
In short, in addition to lifting its game in the way it articulates itself, I would – if I were a shareholder (which I am not) – want to see a board structure that is more likely to be conducive to more robust decision-making and external communication. We have a big chief in Treagus, I would like to see an independent chair(wo)man counterweight that is capable of effectively standing up to him, and an appropriately independent board. A non-conflicted external medical advisory board would also be desirable, particularly for the ultra-orphan programs.
To be clear, I am not implying that the company has engaged in inappropriate behavior from a governance vantage, but if it is to convince shareholders that its go-forward strategy is robust, this would be a great way to help inspire confidence.
In summary, although I remain skeptical about whether NNZ-2566 … aka Trofinitide … will really deliver in any of its indications, my goal is not to destroy the hope that patients have in this drug. Particularly the Rett and Fragile X community. My objective is to point out some areas where the company is possibly underperforming with the goal of improved outcomes.
It’s true that these comments are my own opinions, reflect my own beliefs about how a company should be run, and may not count for much in the eyes of anyone who owns shares in Neuren much less the leadership of the company. But I am also frankly tired of the lack of objective analysis and reporting of these companies, and the market tolerance of sloppy behavior. A big part of the reason why I think Australia still doesn’t have a great biotech industry is because we allow mediocrity in the hope of making a few easy dollars on a punt. There are even entrepreneurs that are very happy to accommodate that toss of the dice by pushing forth equities that simply don’t deserve access to public capital.
I’m not saying don’t buy or don’t hold Neuren stock. I am suggesting that if you really want to make money out of this company, start being an active shareholder and start asking some basic questions about why they consistently don’t live up to expectation.
Awesome Photo Credit: Ryan McGuire. http://www.gratisography.com/. I note that I replaced your pickles with worms, but I still think it is your beautiful art, and I thank you…