Apologies in advance for what is a fairly long post…
In the usual stream of announcements and news feeds yesterday, I read the ASX release from Phosphagenics (ASX : POH) regarding their Oxycodone PHN study. Now I don’t comment much on this company, despite the fact that they are fairly visible in the public domain. About six months ago I made a brief comment on POH and their “re-formulation” activities and I think it is fair to say that I basically don’t believe this is a real company.
It is my personal opinion is that the TPM technology is a scam. Therefore what is there to really talk about?
But yesterday’s ASX announcement fired me up a little bit and it’s always pleasurable to see a smooth soundbite from Paul Gavin with lots of forward-looking statements to whip-up retail investor excitement in yet another half-finished project. In all earnest, probably the only really meaningful part of the release was legal disclaimer about the “Inherent Risks of Investment in Biotechnology Companies.” I personally think that if POH is going to put this disclaimer at the bottom of their ASX disclosures they should also add a line something along the lines of “There is also a risk that the management team will continue to mislead shareholders and make claims about clinical development outcomes that are, at best, unsubstantiated.”
POH has, for many years, positioned itself as a leader in drug delivery on the basis of the platform technology “TPM“. Even TPM doesn’t get a robust definition, but basically it is a mixture of phosphorylated forms of vitamin E. If you aren’t a science nerd, you don’t have to worry too much about what this means, except that it basically means a form of vitamin E that may have some useful biological properties (it’s more “amphiphilic”, which means it penetrates complex biological environments “better”). Indeed some of Esra Ogru’s original scientific research was about exploring these interesting forms of vitamin E that absolutely do play an important role in biology. The principal claim to fame of TPM over the years has been as a permeation enhancer – that is, technology that enables drugs to better cross the skin into the bloodstream (because of its “amphiphilic” nature) and, as such, the company has elected to go head-to-head with reformulated versions of a bunch of widely used drugs in the hope that their technology will make them work even better.
The company has a long and illustrious history dating back many years, of impressive announcements for clinical trials using many different “formulations” of drugs we use every day. Yet despite having raised about $100m, a dozen clinical studies and some astonishing public disclosures, the company has yet to actually progress a meaningful product into late-stage development (I will talk about the diclofenac gel product below – in my view it doesn’t count). This, in turn, inspires a whole raft of questions that I think the company owes shareholders a good answer to. Let’s take a look a the various bits of POH, the company that truly has a missing “O” in it’s stock ticker.
TPM – Targeted Penetration Matrix, er… Tocopheryl Phosphate Mixture, er…
Most platform technologies that come out of academia have a raft of studies and literature behind them. Not the case with TPM. Some basic (and very reasonable) searches on PubMed essentially reveal that (at least as far as Paul Gavin (CSO) is concerned, it hasn’t been a particularly prolific decade. A few questions on the basics of the science:
1) Is the mechanism of action of TPM actually understood or validated?
2) What publications, if any, verify the properties and characteristics of TPM?
3) How does TPM compare to other “permeation enhancers”?
4) Does adding TPM actually improve the drug matrix itself?
The crazy thing about this company is that despite all the money that has gone into it, and all the “studies” conducted for different drug applications, the core technology itself basically hasn’t seemingly been studied or validated in any meaningful way. Remarkable. I really want to know whether TPM is any better than a whole host of permeation enhancers out there that are used in food and cosmetic applications every single day.
This would have been a very big deal, if it were true. As early as 2006, POH had announced that insulin had been delivered transdermally in a clinical study. Making insulin highly bioavailable without needles is something that a lot of people have tried, whether inhaled (as per MannKind and Pfizer), shot across the dermal barrier using hyper-velocity particle delivery (as per Powderject) or implanted (a la Medtronic). Literally billions have been spent on trying to solve this problem. Today, this doesn’t even get a mention on the web site as far as I can see.
5) Why has this “groundbreaking” gel not been developed further?
6) Why have the results of the clinical study not been published, despite a lot of fanfare?
7) How much gel was applied over the skin?
8) Where was the gel applied?
The latter question is particularly interesting because I have heard rumours from several sources (I don’t normally rumour-monger but I will in this instance) that they had to coat the entire torso of a patient with gel to even get a tiny insulin signal in the bloodstream.
As an occasional user of Voltaren gel for muscle strains, I can definitively say (N=1) this is an excellent product. But apparently POH made it even better by mixing it with a little TPM. Indeed, it’s the company’s only real trans-dermal drug delivery “success story” and it is marketed in India as “Voveran TPM”. Nothing too controversial there, diclofenac does penetrate the skin (although various standard formulations help) and mixing it up with a little Vitamin E probably wasn’t going to give a fairly “loose” regulatory agency like the Indian Central Drugs Standard Control Organization (CDSCO) much of a headache. Still, the clinical development behind this product was almost non-existent.
The revenues have been almost non-existent too.
I have only been able to ascertain that two small clinical studies were ever conducted. The first study was an “in house” volunteer study that claimed greater delivery of diclofenac compared with Voltaren gel (the company claimed 7 times greater performance), yet the other study (POH 014-98) that was conducted independently in South Australia (Allan Evans) showed no difference of delivery of diclofenac into the skin when comparing TPM gel with Voltaren. Presumably that’s why I haven’t been able to find a clinical publication. According to a “source” in the Indian pharmacy industry, the label information for Voveran actually summarises the clinical development of the product and contains mention of the “in house” volunteer study. It has been suggested to me that this study, run some time around 2007, was approved by Monash HREC and that the medical monitor was actually Esra’s pediatrician. If that is true, I’d love someone to come forth and confirm it.
The bottom line is that despite two ASX announcements on the 23rd of February 2009 and the 9th of September later that year, suggesting that a Phase I (“in house”) and Phase Ib (external) study had been completed and that the product was proceeding to a Phase II/III IND. My questions, therefore are:
9) Why was the IND never filed?
10) Why were the Phase 2 and Phase 3 studies never progressed?
11) Why has the significantly better performance results of POH gel vs Voltaren gel never been published in detail?
12) Why has no further development been attempted?
The company has made multiple announcements regarding numerous studies conducted with claims that therapeutic quantities of oxycodone could be delivered transdermally for pain relief. Yet the actual product trajectory for this “concept” has been all over the place and the weirdest thing is that they seem to be only studying the patch in a comparatively minor indication of post-therapeutic neuralgia (PHN). What happened to “systemic” delivery? This is actually part of what has become a big inconsistency in the company’s story. On the one hand, if you are going do deliver something like Oxycodone or Oxymorphone, you obviously want to accomplish systemic delivery (oxycodone, a synthetic opiate, is normally taken orally for serious pain relief). The whole point of a “patch” for these kinds of drugs is that you improve control of delivery, offer better management of a “controlled substance” and you make it safer for the patient to take a fairly serious drug.
Early articulation of the technology was all about measuring things in the blood – like insulin. This strongly implies the objective of systemic delivery and so a highly drug-loaded patch was going to be a viable alternative to taking something orally. But a recent scientific publication (a rarity for this company) with Paul Gavin as the senior author, strongly suggests that the TPM technology has minimal ability to achieve systemic delivery. In which case, what the hell was the company doing all those years with things like the insulin project? And then why on earth would you even talk about something like oxymorphone? It just doesn’t make sense.
Oh… and where did 3M go?
13) If the therapeutic drug dose can be delivered transdermally, why has the patch not continued development for general pain management?
14) Why, despite claims of significant results, has the data never been published?
15) Why, if the technology works, is the company only going after PHN?
Back in May we heard about how, despite the fact that the oxymorphone technology apparently works, it would need to undergo reformulation. It took until October to get a deal inked with a German dermal drug delivery specialist. So does it work or does it not? As usual, because there has been no data presented (although Paul Gavin’s paper, noted above gives some clues), the company hasn’t really given any compelling explanation. My questions are:
16) Why is the patch being reformulated? Be specific.
17) What is “proof of concept” expected to be able to confirm clinical performance?
“The results of this study are very encouraging considering the relatively small number of patients, and confirm that tretinoin when combined with our TPM® formulation produced directional trends indicative of better performance than Retin-A® against inflammatory lesions in particular. This seems to be a result of our TPM® technology which is corroborated by effects seen in the vehicle formulation containing TPM®. As a result of these findings, the Company will continue development of TPM®/Tretinoin for the prescription market in addition to assessment of a topical formulation containing TPM® as an over-the-counter product”
and CEO Harry Rosen:
“These results will be of significant interest to companies who have been in discussion with us about the potential of TPM® in the delivery of dermatological products.”
18) So what happened with partnership discussions?
19) What is the status of development?
20) Is this another product that is on hold because of undisclosed reasons?
The Current Focus – TPM for use in Animal Feed
Shareholders should be mortified. After years of releases citing billion dollar+ markets, the company has reverted back to …er… animal feed. Actually POH conducted research around animal feed many years ago (also without any apparent commercial success) so why is the company back here again? How is it different from old work – and what happened to the idea that TPM’s value as a permeation enhancer, rather than some sort of a Vitamin E supplement for pigs? Did the company just simply take a page Anatara‘s playbook and decide, “hell, that looks sexy, we should do that instead?”
It’s just so random and bizarre. It’s almost like the company gave up trying to get drugs across the skin and finally decided that eating the stuff was the only way to get it into the system.
I don’t have any questions. This is just stupid.
So, what’s your point, Long Tail?
POH just lacks credibility.
What kind of a company does Phase II studies and then just goes silent about a potential product? The company seems completely unable to take anything into late stage development, and not for lack of funding – the company has raised about $100m over the years. Not only does the company’s product development lack credibility but it also recently announced that it was shutting down its development team. Basically, there is nobody left at the company doing R&D, and clearly not Paul Gavin because he is too busy writing ASX releases. At the start of the year we witnessed a commitment to a new strategy, a new era of transparency and a new team to move the company forward. But what has really happened?
Besides Ross Murdoch, most of the senior management team is the same old crowd. It also looks like some of the “new” management team disappeared with the closure of the development arm of the company. This not only raises a big red flag for me, but it also basically means that the Harry/Esra-era company culture pervades. Frankly, it still amazes me that despite Esra and two other colleagues ending up in jail, that so many of the senior team were found to be “clean”. I’m not necessarily implying that they were actually complicit, but they obviously didn’t have a clue about how the company was operating, or where the money was going. Especially Harry Rosen (understandable, really, given that he was probably too busy swanning about in NY on the company’s dime).
It is my understanding that former co-CEO, Harry Rosen, only agreed to step down after being paid a six figure sum. It will be interesting to see how this is eventually disclosed in the next annual report (I will be watching with interest). Apparently the “without cause” termination conditions disclosed in the company’s remuneration policy were not met, despite major fraud taking place under his “watch” (seems like “cause” to me). It’s also interesting to note that in the 2013 and 2014 annual reports, some staff (like Paul Gavin) also appear to have received 10% or more pay rises for the year. Now, to be fair, Paul’s salary is not terribly offensive, but it’s hard to see a correlation between the pay rises and the output of the company. It’s worth noting that typical “inflationary adjustment” in similar companies was 2-3% in the same period. A bit of hush money perhaps?
If POH is ever to regain any credibility, it needs to be transparent about what it is doing. It probably also needs to do a bit of reconciliation between the money spend, past announcements and current “strategy”. Until then, I take releases like the one the company put out yesterday with a very VERY big pinch of salt.
There are a lot of questions out there, and if any readers have answers or additional knowledge, I am sure POH shareholders will be most grateful for your contribution.