CytoDyn FDA Letter is Old News - International Still Progressing

CytoDyn Inc (OTCMKTS: CYDY) shareholders got a real gut check yesterday as the STAT writer Adam Feuerstein sent out a tweet at 3:15PM citing an FDA statement that leronlimab failed 2 clinical trials. At 3:00PM the stock was trading around $2.75 and started its collapse to $2.40 by the time of the tweet. Investors need to keep in mind that this “statement” was out hours earlier and posted on InvestorsHub at 1:25PM and 1:47PM on Investors Hangout without any discussion or panic because it’s common knowledge that CytoDyn has 2 more trials in the pipeline because they failed to meet endpoints in the last 2 through no fault of their own. For the most part the FDA statement was factual, but there were also gross misrepresentations in the letter as well that played into the hands of the shorts. Investors should not be fooled by these shenanigans because the international pipeline is very strong. The standard 15 minute front running period before the Feuerstein tweet started at 3:02PM with massive block selling followed by investor panic as more disinformation surfaced from the message boards. The price ultimately settled around the $2.00 mark by the close. This was another successful bear raid that happened to coincide with the last day that class action shareholders could join the litigation of manufactured claims by a Seek Alpha author. Investors that keep tabs on the Yahoo Message boards probably realized that there were hundreds of reminders of the class action for the past month and that another short attack was imminent. It became clear after the bell that STAT reporter Feuerstein was the mastermind behind this attack as he followed up with a STAT article of his own and pushed his friend at FierceBiotech to publish one as well. Look at the similarity in language and tone!

FDA Statement Rehashes Clinical Trial Results and a New Narrative

This FDA statement was like no other in recent memory and started with its rationale for composing it. The company still doesn't have a purchase order yet the FDA was compelled to comment. It said the “FDA recognized the substantial public interest in medicines” to treat COVID-19. Over the past 2 months there has been a groundswell movement by doctors and opinion leaders to make exceptions to approve Emergency Use of leronlimab. One of the more vocal has been Dr. John Bream a strong advocate calling for the FDA to issue an EUA. He’s not alone. Dr. Been and Dr. Randy Nicolas have also made overtures that leronlimab is worthy of an EUA. The letter and outpouring of support for the drug many have tipped the scales and forced the FDA into a defensive posture. After the bell CytoDyn announced they would be holding a conference call today at 4PM EST. At the end of the release they mentioned

“As we continue to work with the FDA and other regulatory agencies, we ask investors to limit their outreach and respect the regulatory approval processes.”

The tone of the FDA statement was factual, but a little combative as well with respect to the announced results of the trials. This appears to be the FDA’s new narrative. The letter was negative in the sense that it pointed out that “there was no observed effect of the drug on the study’s primary endpoint or on any of the secondary endpoints.” It went on to say that the data doesn’t support approval, but it punted on the issue of an EUA. Luckily foreign countries are no longer relying on the US FDA to help them, but the FDA statement is unsettling. As outsiders looking in it makes no sense to recruit patients if the data doesn't support approval. So it's a little unclear what their motive is. It looks like a low level executive was instructed to put something out to quell the email traffic, but this letter is more likely to incite a greater response. There were however, gross factual inaccuracies contained in the statement. It said they failed their secondary endpoints but that simply isn’t true. In the CD-10 mild to moderate study it nailed the NEWS2 endpoint and was statistically significant.

"In all treated patients, at the End of Treatment (or Day 14), patients in the leronlimab group were more than twice as likely to experience a beneficial improvement in NEWS2 scores compared to patients in placebo group (50% vs 20% p = 0.0223)."

They also dismissed the subgroups as part of a post-hoc subpopulation, but they were part of the Statistical Analysis Plan. CD12 was a multi-arm study with a severe and critical patient population. Since the critical patients were an arm of the study and not a subpopulation it's disingenuous to say they were a subgroup. One of the pre-established secondary endpoints of the CD12 study was 14 day mortality. Therefore they are completely within their bounds to declare a mortality benefit with a p-value of .023.The FDA statement closes with tidbits that things are still okay and moving forward. The statement said “such analyses may inform the design of future clinical trials investigating leronlimab for the treatment of COVID-19.” Clearly this is an olive branch that they are still working with CytoDyn to develop a protocol. The FDA said it will continue to provide advice to the company on their developmental program. The shorts would have you believe the drug is dead and not moving forward yet the letter ends with “We are committed to working with sponsors of novel therapies to facilitate development and approval of new treatments.” The facts are that there is no warning letter, the drug is not on clinical hold, the trials are proceeding, the Open Label Extension Arm is continuing, and the FDA is providing guidance on the clinical trials. The letter was really more of a history lesson than an indictment that the drug doesn’t work. Lets call a spade a spade the FDA made the call on only allowing 2 shots of leronlimab and powering the trial with 400 people while mixing severe and critical together. While the FDA did not want to consider NEWS2 as an endpoint for approval it was part of the protocol. By the tone of their letter they clearly haven't had a good look at the study beyond the top line because they have ignored the significance of leronlimab on the secondary endpoints. Investors should not forget the DSMC also failed to make a successful recommendation to meet its endpoints. If the play field doesn’t seem level because it probably isn’t. The FDA appears to be in CYA mode because India or Philippines could approve it and its success would give them a major black eye.

International Business Development

Countries are motivated to look at subgroups but the FDA says clearly no subgroup analysis will be accepted. This is where the clinical trial data from the CD10 and CD12 trials will really make a difference in the international arena. The company can also deliver the Open Label Extension (OLE) data which was characterized as excellent. Then there are all these anecdotal studies which show very critically ill patients getting better and off the ventilator.PhilippinesLeading the charge is Chiral Pharma, who has a commitment of 200,000 vials from CytoDyn to sell via CSP to critically ill patients. Over 100 CSP’s have been given and the company gave guidance that the first 28 patients were tracking better than the critical patients in their CD12 trial. The company was expecting revenue in the form of a purchase order which would legitimize the technology for investors and other regulatory agencies. IndiaThe conditions in India are dire which is why a large blue chip distributor like Macleods reached out to CytoDyn to establish distribution in the country that is being ripped apart by the virus. In the Proactive Investors video the CEO was pretty confident that approval was possible with a large clinical trial and that recruiting patients wasn’t going to be a big issue. The beauty of this deal is that if they push it over the finish line then there is possible expansion to other countries in need. They don't think twice about approving a drug that is dramatically altering the landscape of treatments for COVID-19. Another factor to consider are the horrific conditions in India where they can't even provide oxygen to people. Hospitals are getting overrun and bodies are laying in the streets. They need to try something and the safety profile is excellent. This improves the odds of getting their version of the EUA filed and then do a large confirmatory phase 4 study in conjunction with the compassionate use. The timeline with Macleods is accelerating nicely. Last night investors learned through an 8-K that 200,000 vials were exclusively granted to Macleods for resale via a CSP or EUA from the India Central Drugs Standard Control Organization (CDSCO).Following the Tociluzimab drug development template, leronlimab could fit into that model quite well. Tociluzimab was awarded an EUA after they completed a small 50 patient trial and then when they failed their 800 patient trial that was the end of the drug development but would arguably be a very bright future for CytoDyn because we know the drug works. Part of the desperation in India is because they don't have any approved drugs for critically ill patients. BrazilThe clinical trial protocol is being finalized and all the clinical trial sites are getting ready to recruit patients. The company anticipates 45 sites which means the trial could go very fast. Another element that may have been overlooked by investors is that the clinical trial protocol is against the standard of care and right now that is pretty low. There is likely going to be a night and day difference. Brazil is slated to inject people in the CD16 and CD17 trial starting in June. They have 1050 people in CD17 and 450 patients in the critical care trial CD16. Interim data could come as soon as August and mean an approval in September. Brazil is also going to have 4 shots vs 2 shots which is a major benefit stacked up against a very low standard of care. There is a high likelihood that enrollment in the trial could go much quicker than expected. CanadaThe situation in Canada isn't that great either. Canada has given the company a rolling BLA review process. The company has given guidance that they could be ready to file their final part of the BLA in June.

Latest Topline Data

The company just released topline mortality data that shows an 78% mortality benefit at 7 days an 82% mortality benefit at 14 days. The issue is that only 2 doses were given in the clinical trial so mortality benefit decreased to 50% in 21 days and 31% in 28 days. The FDA was primarily responsible for these poorly designed clinical trials that measured mortality when no active drug was being given between day 14 to day 28. The FDA is now on board with 4 doses but the damage has been done. Dr. Lalezari was an early critic of the 2 dose regimen. Here is a snippet from the October 20, 2020 conference call.

"As Nader said, there was the DSMC meeting last Thursday and during the intro to the meeting, I had asked the members of the committee to look at the clinical signals, mortality signals and to specifically address whether we needed to adjust the dosing. When we had submitted CD10 & CD12, we had proposed 2 doses for the mild to moderate patients, 4 doses for the severe & critical & the FDA pushed back having to give 2 doses for both study populations. I've never actually been comfortable with that, and so the question I asked the committee was, was there a signal that might require Cytodyn to adjust the CD12 dosage. Are there patients who, particularly critical patients, who might need a 3rd or 4th dose of Leronlimab?"

The significance of this data is that it shows potential international partners that this is another smoking gun as to why the clinical trial results did not reach clinical significance in the CD12 trial. It gives them more ammunition to push their medical community to move forward with the approval process.

Investment Summary

It's clear now that CytoDyn’s strategy of international approvals is an excellent plan. In no way can this backward looking FDA statement derail the progress in these international countries. Did they get a raw deal from the FDA? Of course they did, but until the laws change to put lives ahead of p value this is the world we live in and investors just need to cope. Last August when the company didn’t get an EUA in its mild to moderate trial the FDA was starting to show its colors that data was more important than saving lives as they were fully committed to a vaccination strategy that had little bandwidth for therapeutics. The list of approved therapeutics is paltry given all the effort that has gone into clinical trials. It was all about the vaccine and still is.The FDA statement didn’t reveal any new information. At issue is investor fatigue which is at its highest level because investors know the drug works and dont need more clinical trials to prove it to themselves. They understand that “anecdotes don’t come off life support.” It's hard for investors to fathom how slow the approval process has gone and how many data roadblocks keep cropping up during the pandemic, but that's simply drug development. Many webcasts have been sell on the news type events, but this one may finally be different. This bear raid might be the last opportunity to panic investors because revenue changes everything and that is imminent. The heat has also been turned up in India to get an approval and they have a blue chip client pushing their agenda. The Brazil clinical trial is about a sure thing to an approval as investors are going to get and that is expected to start in June and should have a readout by September. If any one of these events hits the stock will be in double digits. This panic selling should be purchased by investors.As always, good luck to all (except Fraudstein and the shorts)!

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