Last week, the biotech market was in a funk due to the uncertainty around RFK Jr.’s selection to lead the Department of Health and Human Services and its potential ramifications for FDA. Then, Friday night, investors learned that surgeon Martin Makary has been tapped to lead FDA, and all indications are that this appointment should be well received by industry and investors.
Cybin Inc. (NYSE: CYBN), who last Monday announced 12-month open-label data from their Phase 2 major depressive disorder (MDD) study with CYB003, a deuterated psilocybin analog, may wish they held off for a week when industry sentiment had improved. Although the company reported a remarkable 22.7 score reduction at 12 months, after two doses of 16mg CYB003, in the Montgomery-Asberg Depression Rating Scale (MADRS), the market didn’t reward them, and the stock ended down on the week. Granted, these data did come from a small sample size, but when a score change of 2-3 on MADRS is considered clinically relevant, these results should not be dismissed. Equally impressive, 71% of patients treated with 16mg CYB003 were in clinical remission (≤10 MADRS) at 12 months.
These 12-month data build upon the earlier results reported by the company in October 2023, where CYB003 demonstrated a clinically meaningful and statistically significant reduction in the MADRS primary endpoint versus placebo at week three. The 13-14 point placebo-adjusted drop in MADRS with CYB003 came after a single dose. Patients received a second dose of CYB003 at three weeks and were tracked in an open-label extension. Those open-label results, reported at months four and twelve, demonstrated a deepening and persistent response after two doses of CYB003.
Favorable Winds of Change
Cybin investors are undoubtedly disappointed by the market’s reaction to the 12-month data, but fortunately, they shouldn’t have to wait too long for an additional clinical catalyst. The company is scheduled to report data in 1Q2025 from a 36-patient Phase 2 study with CYB004 (deuterated dimethyltryptamine) in patients with generalized anxiety disorder. Furthermore, as we wrote in our earlier note, the overall climate for psychedelics appears to be improving. Janssen’s Spravato (esketamine nasal spray), approved for treatment-resistant depression, will exceed $1bn in sales this year, validating the viability of the commercial model for interventional psychiatric medicines.
The regulatory environment could also improve for psychedelics, with an increasing emphasis on innovation. Whether it is RFK Jr. and his comments over FDA’s “suppression” of psychedelics or ex-biotech executive and now co-head of the Department of Government Efficiency (DOGE) Vivek Ramaswamy’s emphasis on removing “barriers to innovation” at FDA, the winds of regulatory change appear favorable for psychedelics.
Mismanaging Expectations
In our last note on Cellectar Biosciences (Nasdaq: CLRB), we wrote, “Cellectar has poorly managed investor expectations, and the stock reflects investor frustration.” Unfortunately for Cellectar investors, the company continues to mismanage expectations, and the stock has reacted accordingly, recently flirting with a 52-week low. On their 3Q2024 call, the company pushed the NDA submission timelines for their radiotherapeutic, CLR 131, from YE2024 to likely 2Q2025. With this delay, the company, once again, finds itself in a financial pinch and will need to raise additional capital to bridge itself through to its NDA submission.
This is the second time that Cellectar has delayed the timing of its NDA submission, resulting in an urgent need for capital. Recall that in January, when they announced their top-line Waldenstrom’s macroglobulinemia (WM) data, they also pushed their NDA submission timing from 2Q2024 to 2H2024. This delay stretched their balance sheet, eventually requiring them to renegotiate the price of the final tranche of warrants from their September 2023 financing. That warrant renegotiation brought $19.4mm into their treasury while adding three additional warrants, with the first tranche ($2.52 strike) triggered upon FDA accepting their NDA submission and assigning them a PDUFA date. With its cash runway and NDA submission timelines now guided for 2Q2025, Cellectar cannot rely on the first tranche of warrants coming in (or even being in the money) and, therefore, needs to raise additional capital in the coming months.
Acceleration Causing The Delay?
When Cellectar finally does submit its NDA for CLR 131 in WM, it will seek accelerated approval from FDA. Cellectar will be required to run a confirmatory study for full approval as part of the accelerated approval process. According to Cellectar’s management, the confirmatory study is the cause of the NDA submission delay. During the Q3 call, management stated that the company needs to reach an agreement with FDA on the confirmatory study design before the agency reviews their NDA submission. The company’s COO stated, “We have a dedicated team working closely with the FDA and EMA to expedite the process and believe we will rapidly come to a resolution on a confirmatory study design with the FDA.” Assuming the company meets its new NDA submission timelines and FDA accepts the CLR 131 NDA for review, Cellectar should have a late-2025 PDUFA. Despite our misgivings over the company’s poor management of timelines and expectations, Cellectar, with a 2025 PDUFA, could still be a name of interest for us next year. But first, the company needs to address its balance sheet (again), and until that happens, in our opinion, the stock cannot work.
Speaking of Raising Money
Back in May, we briefly touched on Eupraxia Pharmaceuticals (Nasdaq: EPRX) as an emerging player in the “newish” indication of eosinophilic esophagitis (EoE). Eupraxia has ambitious clinical plans for EP-104GI, injectable fluticasone in a polymer delivery technology, and recently raised C$44.5mm to support the expansion of their ongoing Phase 2a EoE study. The company is currently running a single-arm dose-escalation study with EP-104GI in EoE patients but plans to increase the sample size and include a placebo arm (making it more like a Phase 2b study) for later cohorts, likely starting in mid-2025. With this new capital, Eupraxia is fully funded to complete its expanded Phase 2 study, a study it believes will then support a single Phase 3 registration path for FDA approval.
The Trend is Your Friend
As mentioned above, EoE is a “newish” indication, first described in the 1990s. There are only two drugs approved for the management of EoE, Sanofi (NYSE: SNY) / Regeneron’s (Nasdaq: REGN) Dupixent was approved in 2022, and early this year, FDA-approved Takeda Pharmaceutical’s (NYSE: TAK) Eohelia. The pivotal studies for both drugs had co-primary endpoints of histological response (measured by eosinophil count) and symptom response (patient-reported dysphagia, difficulty swallowing, scores).
Earlier this month, Eupraxia announced data from the fifth cohort of their dose-escalating Phase 2 study, where EoE patients treated with EP-104GI (48mg fluticasone) had impressive histological and symptom results, with an 83% mean reduction in peak eosinophil count (PEC) and a 41% improvement in patient-reported dysphagia scores at week 12. These data came from a small sample size, and cross-study comparisons can be problematic, but even with these caveats in mind, EP-104GI’s efficacy already appears to be at or above the range for Dupixent and Eohelia. We say already because Eupraxia believes with 48mg of fluticasone, they are still at a suboptimal dose and suboptimal coverage of the esophagus. With a favorable safety profile thus far, Eupraxia intends to continue dose-escalating EP-104GI into additional cohorts, with data from the sixth cohort expected in 1Q2025.
Once the company has reached a dose (or doses) expected to advance into its pivotal program, the study will flip into a placebo-controlled protocol with 20 patients per arm, likely sometime in mid-2025. In the meantime, the company will continue to report data from additional dose-escalation cohorts. The evidence from the earlier cohorts indicates a clear dose-response for EP-104GI, suggesting that, assuming tolerability remains good, histological and dysphagia results should continue to improve as the dose is pushed higher.