Key highlights: Safety of trofinetide re-confirmed with no...

Key highlights:

• Safety of trofinetide re-confirmed with no treatment-related adverse events. All doses of trofinetide was found to be safe and tolerable.
• Trial did not meet its efficacy endpoints. There was no difference between trofinetide and placebo on the 3 core efficacy measures. There were several confounding factors which the company believes led to this.
• Key confounding factors were a) Despite randomisation more number of patients with severe injury were in the drug arm than the placebo arm. Though the statistical analysis adjusts for this variability somewhat, it does not fully compensate for this disadvantage in the drug group; b) lower exposure of patients to trofinetide than had been envisaged. This was due to a higher than expected clearance of drug from patients due to the patients being subject to high levels of IV fluid replacement and diuretics. This fact coupled with the dose of trofinetide in the trial being comparatively low to start with potentially accounted for the lack of difference in clinical benefit vs. placebo.
• On an exploratory efficacy measure of cognitive function called Repeatable Battery for the Assessment of Neuropsychological status (RBANS), the company observed a superiority in drug arm over placebo.
• The company along with the US Army medical experts will conduct further analysis of the INTREPID trial data especially around the remaining multiple exploratory efficacy measures and biomarkers to assess cognitive functioning.

Next steps for TBI program and the concussion (mild TBI) program

• Neuren and the US Army are conducting further analysis of the Intrepid trial data to help them to ascertain the path forward for the program. The feasibility of funding and conducting another trial would be considered based on identification of the patient population likely to respond to the trofinetide treatment, the optimum dose level and the optimum duration of treatment. Other discussions would be around potential efficacy endpoints.
• The ongoing Phase II concussion trial being conducted by NEU and the US Army has also been put on hold until the detailed analysis of the INTREPID trial data has been conducted and the company and the US Army have had a chance to consider its findings especially around optimum dose levels.
• The company was partially funding the concussion trial themselves, therefore with the hold on the trial, the resources will be redirected towards the rett and fragile X programs.

Our Comments on the results

• The trial did not meet its efficacy endpoints which is disappointing, however it reaffirmed Trofinetide’s excellent safety profile. The drug when given intravenously was found to be safe and tolerable as previously seen with oral delivery of the drug in Rett and Fragile X trials.
• We note that INTREPID was the first clinical trial designed by NEU ahead of its Rett and Fragile X Syndrome trials back in 2009. Since then the company has made inroads and greatly expanded its understanding about the safety and mechanism of action of trofinetide.
• As such, it’s worth noting that the dose used in the TBI trial is significantly below the high doses used in Rett and Fragile X trials. The high dose being trialled in the currently ongoing Rett Paediatric Phase II trial will have doses as high as 200 mg/kg with a longer duration of treatment, while the dose used in the TBI trial was 20 mg/kg followed by 1,3 or 6mg/kg per hour. In previous trials we have observed a dose dependent relation with efficacy for trofinetide. This opens the possibility of NEU and the US Army considering significantly higher doses and potentially longer duration of treatment to ensure that a patient has much higher exposure to drug, which can be sustained despite the patient being subject to IV fluid replacements.
• While we do not want to read too much in the positive preliminary benefit seen with Trofinetide on the exploratory RBANS efficacy measure, it does suggest the possibility that the benefit could be potentially enhanced with higher doses. Benefit on exploratory measures such as this could help Neuren to identify the likely responder population to trofinetide.
• We note that the TBI program has been funded by the US Army (grant funding US$24.5m). NEU to date has used its shareholders funds primarily for the development of the Rett and Fragile X programs.
• Going forward we continue to believe that the further development of TBI will be contingent upon the US Army continuing to fund the program.
• From the tone of the announcement, the preliminary data points and the fact that there is no other treatment approved for TBI, we expect that if a feasible path forward exists for trofinetide, there is reasonable likelihood that the US Army would continue to support the program.
• We expect the company will be in a better position to give guidance on that once additional data analysis is completed.

Our view on NEU’s outlook

• We were looking for positive results from the TBI trial to further strengthen Trofinetide’s licensing package ensuring a potential licensee would pay up for the TBI indication as well.
• Having said that, we did not believe that the licensing of trofinetide was dependent on the TBI results and as such the results from the TBI trial was not expected to be a binary event for the stock.
• The primary focus of Neuren is in its orphan drug indications for Trofinetide where in both Rett Syndrome and Fragile X syndrome the company has delivered successful Phase II results. Most importantly, the Rett and Fragile X results have provided proof of concept and have positioned Trofinetide to be trialled across other autism spectrum disorders.
• Given that context, although we are disappointed with the INTREPID trial results, we continue to have a positive view on the outlook for Neuren as an orphan drug play. We continue to believe that Trofinetide has attractive licensing prospects based on the positive data from Rett and Fragile X trials. We believe NEU is in discussions with various pharma companies on trofinetide as evident from the appointment of US healthcare specialist Leerink Partners earlier this year as their corporate advisor.
• In our view the stock is oversold and provides an attractive risk/reward buying at these levels given the licensing opportunity of Trofinetide across various orphan autism spectrum disorder indications.