6 endpoints met after full data release so shorts double down on trial failure narrative
Investors in CytoDyn Inc. (OTCMKTS: CYDY) are mired in a feverish debate about the recently announced top line clinical trial results known as CD-12. Despite the company pointing to some very positive results in the data, many seem to think the company failed its clinical trials. Unfortunately for these investors they have been duped by the “Short Mafia.” Even many long term investors who understand the science threw in the towel thinking the stock is dead money while they hope and wait for the clinical trials to be completed.
There was a very well coordinated short attack by the short mafia kicked off by Adam Feuerstein’s Tweet on March 5th, 2021 that CytoDyn failed their primary endpoint. Feuerstein’s newly recruited lieutenant, Paulo Santos and the rest of the crew like Culper Research and Utopian joined in the foray. They use the same formula over and over but what is amazing is investors keep falling for their same tricks over and over. The short attacks are most effective on top-line data announcements and the CD12 trial was the perfect mark for the shorts, and they executed flawlessly scaring investors out of their positions claiming the data was worthless.
Feuerstein’s Newest Lieutenant
Just a month ago shorts were getting crushed by the market and the “Reddit Rebellion” which led to mass defection to the long side and left Feuerstein without any help. Paulo Santos appears to be Feuerstein’s latest recruit. He is a Seeking Alpha (SA) author that has written 1,721 articles and amassed over 21,700 followers over the past 10 years. A key metric to gauge the value of an author on the Seeking Alpha platform is by the average number of followers per article written. The average SA author gets 8 followers per article and Santos is 12.6 which is pretty much average. Contrast that to a specialist like Biologics who averages 21.9 per article or to one of the most technically proficient biotech analysts Vision and Value who averages 62 followers per article. Santos wrote on 567 companies over the past decade and only 15 or 2.5% were biotech. Investors have to be really careful to trust the analysis of an average analyst who has very little experience in biotech.
His numerous tweets on CYDY serve to demonstrate his level of incompetence. He started tweeting about CYDY on February 22 and was basically giving digital High Fives to Feuersteins for his negative commentary. Since February 22, 2021 Santos has tweeted 77 times in total, and 67 times or 87% were on the topic of how bad CYDY’s clinical trial data set was. One of the shorts’ favorite accusations is “data mining” and both Feuerstein and Santos and all the other shorts were unanimous that CytoDyn mined the data. This data mining is sometimes referred to as “post hoc analysis” and is accomplished after the final top line data report is completed. No post hoc analysis appears to have been done, but what is comical is how Santos spins or mines the data that he claims shouldn’t be mined. Perhaps this makes him a hypocrite, but ultimately readers will decide that. The executive summary report seems to conform to the Statistical Analysis Plan (SAP).
The problem with the shorts argument is that they don’t know what was or was not included in the Statistical Analysis Plan (SAP) filed with the FDA. This SAP delineates before the trial starts what endpoints the trial is going to cover and what biomarkers the trial plans on measuring. The Short Mafia absolutely couldn’t know for certain what was or was not post hoc unless the company gave the plan to them. It was clear after the public release of the executive summary that the report resembled the typical format of an FDA’s SAP. The shorts desperately wanted investors to believe that leronlimab failed to meet the primary and secondary endpoints shown on clinicaltrials.gov. Their claim was that CytoDyn failed to report any data on these secondary endpoints which meant they must have failed them. It’s very easy to see the list of endpoints on clinicaltrials.gov and the executive summary doesn’t totally match to begin with so this “missing data” claim is unfounded because the shorts are simply guessing at what they think the data points are.
The shorts like Adam Feuerstein led investors to believe these endpoints completely failed. He tweeted “Zero of the five leronlimab efficacy endpoints were achieved in the severe Covid19 clinical trial.” The reality is that the endpoints he was referring to HAD BEEN CHANGED, which meant he basically made up endpoints the trial wasn’t even measuring. The only endpoint that the Short Mafia was correct about was the primary endpoint which was 28-day all cause mortality and one of the secondary endpoints.
Trial Results Summary – Statistically Significant
Due to an over-enrollment of patients greater than 65-years-old, a modified intention-to-treat (mITT) analysis was performed to standardize the data. The mITT analysis of CD-12 yielded the following statistically significant results of primary and secondary endpoints:
1. When leronlimab was used in addition to “commonly used COVID-19 treatments” a clear benefit was seen in the primary endpoint of all-cause mortality at day 28 with an absolute risk reduction of death of 6.5% with a relative risk reduction of death of 28.1% (N = 309, p = .0319).
2. When leronlimab was used in combination with dexamethasone, a clear benefit was seen in the primary endpoint of all-cause mortality at day 28 with an absolute risk reduction of death of 5.7% with a relative risk reduction of 26.2% (N=233, p=.055)
3. The mean length in hospital stay was decreased by 5.5 days in the critically ill population (p = .005)
4. Mortality status at day 28 when leronlimab was used in addition to “commonly used COVID-19 treatments” in the critically ill population with an age < 65 showed a clear mortality benefit with an absolute risk reduction of death of 20.9% with a relative risk reduction of death of 73% (N=40, p=.03)
5. Leronlimab, when given to critically ill patients on dexamethasone, showed a clear mortality benefit at day 28 with a 6.5% absolute reduction (corresponding to a 23.5% relative reduction) in death risk (N=35, p=.04)
6. Length of hospital stay in critically ill patients < 65-years-old showed a clear benefit with a reduction of 6.8 days (N=44, p=.006)
In addition, there were no safety signals seen in the leronlimab group versus placebo. Based on this data, the company is continuing its regulatory talks with the FDA, MHRA, Health Canada, the Philippines, and Brazil. The data supports the use of leronlimab worldwide and shows superiority to dexamethasone which is the current Standard of Care (SOC).
Age Adjustment is Standard Protocol
In the attempt to obfuscate the truth, the shorts are calling age adjustment, post hoc analysis and data mining, but it is a standard practice that is part of any top line analysis. It appears from the Santos Seeking Alpha article that the misinformation is coming directly from STAT using Santos as a conduit. Feuerstein is smart to use Santos because most investors refuse to pay to read his armchair analysis. Investors that are not well versed in statistics may find it hard to understand how a primary endpoint can be missed when so many secondary points are hit and how an age adjustment results in a statistically significant primary endpoint. See the chart below.
Before looking at this chart, it’s essential to know what the mortality rate is in the severe to critical population. For this data point the New England Journal of Medicine (NEJM) study of “Dexamethasone in Hospitalized Patients” with Covid-19 also known at the Recovery Trial is a great proxy with over 6400 patients in the clinical trial. It’s also very conservative with respect to age stratification because there is a 10% spread in average age of the worst patients on mechanical ventilation being significantly younger than the hospitalized patients without oxygen.
The study showed a 41.4% mortality rate and 45% of the patients were over 70. In comparison the placebo arm of the CD12 trial had a 21.6% mortality rate but it represented only 29.7% of people over age 65. The placebo mortality rate from the Critical Care Medicine study can be adjusted to the different age distribution of 29.7% using ratios. Based on the adjusted age distribution the expected placebo mortality rate for 29.7% of the patient population over 70 is 27.32%. This isn’t entirely an apples to apples comparison but the 5 year difference in age is likely to offset the much younger age of the critical patient population.
The placebo arm of the CD12 trial reported a mortality rate of 21.6%, which is an absolute change of 5.7% lower than the historical norm of 27.32% adjusted for age distribution from the Recovery Trial. This is 21% lower and really needs to be explained. The company did not present the data for an age adjusted mortality but with a little math the graphic tells the story.
There was a data anomaly whereby a greater number of 65 year olds were enrolled in the leronlimab arm. This was detailed in section 3.3.1 of the Executive summary. What happened was that a much higher percentage (33.2%) of over 65 years were put into the leronlimab arm versus placebo (22.5%). Since the mortality is so much higher in this demographic the effect on mortality is pronounced. According to the Executive Summary 10 more people over age 65 were enrolled in the leronlimab arm of the trial.
If a random mix of 10 of those patients were moved to the placebo arm the net effect is that there would be 4 less deaths in the leronlimab arm and there would be 5 more deaths in the placebo arm. What this adjustment does is even out the age distribution of the trial. In taking this corrective action the overall mortality in the leronlimab arm drops to 18.91% and the placebo arm rises to 25.6%. This also brings the placebo arm back into normal historical ranges of mortality. As stated earlier the typical mortality in a severe critical population adjusted for the age distribution of the CD12 trial is 27.3%. The difference is 1.7% which is within the confidence levels of both studies. This adjusted mortality is almost a dead match for what the placebo group should have been. Until CytoDyn unveils the age adjusted data on the CD12 trial this is the best analysis to handicap the potential discussions with the FDA regarding a potential EUA.
5th Graders Understand – The Drug Works
With the advent of high frequency trading investors have been conditioned to act first and ask questions later. What is so interesting in the case of CytoDyn and the data release is that investors had the whole weekend to digest the data but the shorts were making so much noise it drowned out any positive comments and it appeared very few did their homework. Had this picture been available at the outset perhaps the Short Mafia’s narrative could have never materialized. A picture is a thousand words and if a 5th was asked which drug has a lower death rate they could figure it out in about 10 seconds. See for yourself.
The question is which group has a lower mortality rate blue or red? In every single case included the primary endpoint of overall mortality, the blue or leronlimab arm was better. There are some interesting observations to highlight. The Number Needed to Treat (NNT) to save one life is calculated on the bottom row. Dexamethasone is 1:8 and tocilizumab is 1:25 and both of those drugs are approved. In the severe and critical population which includes the best standard of care of dexamethasone in about 80% of the trial there is a remarkable improvement that saves 1 in 18.
In the critical population on the right side of the chart the life saving effect is more pronounced. The pink commentary addresses the fact that the data was compelling and could have easily turned to statistical significance if there were a few more patients enrolled in the trial. This is where the data from the Open Label Extension (OLE) trial would be helpful for registration of the drug. On a conference call the company indicated there were 5 critical patients and one died. There were 9 deaths in 36 patients treated with leronlimab. Adding the CD12 plus the OLE data results in 10 deaths out of 41 patients which would lower the mortality rate to 24.4% and result in statistical significance in the entire patient population of critical patients. The FDA is supposed to look at the OLE in support of registration. This data is highly supportive.
The most notable drops in mortality are in the younger group (< 65 years old) in both the severe and critical and critical only populations. The younger group is circled in red and it achieved statistical relevance and ended with a NNT of 1:5 which happens to be the best outcome for a therapeutic worldwide. This means that if there are 50,000 people sitting in ICU that 10,000 lives would be saved if they administered this drug to all of them. That is an amazing statistic on its own merit, but it’s actually better than dexamethasone which is the current standard of care.
Status of the EUA
The Data Safety Monitoring Committee (DSMC) was a complete failure with respect to the CD12 trial and did not recommend any changes in the primary endpoint. Had they changed the endpoint to a reduction in hospitalization CYDY would have met its primary endpoint and been a no brainer for an EUA. The DSMC clearly made a mistake or this age stratification anomaly happened after their review. The failure of the DSMC in this trial is so gargantuan that the FDA is going to need to do a full review of what went wrong. Apart from the DSMC issue, the FDA has a difficult decision to make which is to stick to their regulatory requirements of p-value or face the consequence of inaction which will result in tens of thousands of American’s dying. From a clinician’s perspective the drug works, they understand how good an NTT of 1:5 is for this disease and they want it. They aren’t concerned about p-value and also know that reducing the hospital stay by 6 days is an incredible advancement in the treatment of the disease. The head of the FDA is Dr. Janet Woodcock and fortunately for Americans she is a strong advocate of clinical outcomes and not p-value. In an interview with biopharmadive she said:
“People say they want placebo-controlled trials, but I always ask them would you be willing to die to give a p-value?” – Janet Woodcock
It’s pretty clear she is a strong advocate of clinical outcomes and that is what is happening with leronlimab. The company is clearly putting an EUA package together to present to the FDA Chief, the only issue is the timing of her decision. Many doctors have been writing letters to her and there is a rumor that an advocacy group is forming and meeting early next week. This may force her hand to make a decision sooner because an NTT of 5 on a perfectly safe drug has no defense for her inaction. She may also want to keep the integrity of the DSMC intact and the only way to diffuse that ticking time bomb is with a quick EUA which would take the spotlight off of the first major DSMC failure. CytoDyn has also been talking to a number of other regulatory agencies and if the US passes on issuing the EUA when the drug is ultimately approved there will be no supply left to save American lives. There are 3 public relation nightmares ready to hit Woodcock’s office and an EUA that would ultimately save tens of thousands of American lives and catapult Woodcock to a heroic status is just a signature away. The shorts must believe that Woodcock is a hypocrite and that people should die for a p-value.
Number Needed to Treat
Mortality benefit is the gold standard in clinical trials. Trial after trial failed to show any mortality benefit in COVID-19 including remdesivir, which was the first drug approved. In the RESOLVE trial, clinicians throughout the world were ecstatic when they learned of a mortality benefit for the first time in the critical patient population. Dexamethasone stood as the undisputed therapeutic leader until now. Not only does leronlimab have an NNT of 5 but it also showed superiority to dexamethasone alone. Clinicians understand what an NTT means for their patients and will push to get it.
CD16 Trial – Pivotal Phase 3 Trial
There is not much known about the CD16 trial except that the FDA asked for the entire protocol not a summary. It’s not on clinicaltrials.gov but CytoDyn indicated it will enroll 140 critically illy COVID-19 patients in a double blind placebo controlled trial that is randomized 1:1. These patients will have an Ordinal Scale of 2 at baseline, which means they will be on mechanical ventilation. The trial’s primary endpoint is the reduction in hospital stay over the control. It’s unclear if they are going to enroll people with or without dexamethasone. In their CD12 trial they were able to reduce the average hospital stay from 39 days down to 33 days. This endpoint was statistically relevant with a p=.005 and adjusted for stratification and age. The data also revealed some very short hospital stays in the younger <65 group which had a median stay of 30 days versus 42 in placebo. This too was statistically significant with a p=.006 and would save billions of dollars for the insurance industry if this drug is approved because reducing the hospital stay by 12 days in the largest subgroup could really open up a lot of ICU beds if the pandemic continues to rage on.
Swift Recruitment Prospects in CD16
- Currently enrolling in 18 trial locations
- Same procedures & similar patient population – seamless transition.
- Clinical trial priority – 1st on list due to exceptional clinical outcomes.
- Big pharma Cherry Picked patients – CytoDyn’s Turn now.
- Trials could go international in Canada and the Philippines – Funneling into CD16
- Vaccines aren’t as effective against new variants – cases may rise
The drug is worthless because it has been in development for 20 years and hasn’t seen one approval and has failed every single trial. This statement is patently false, but it’s needed to establish the shorts point of view. The shorts claim that since the company has to do a new trial, it will take time and money, which will lead to future dilution. This is the shorts thesis, which means the only catalyst left for the shorts at this juncture is a costly trial and a dilutive financing. Notice what is missing from their armamentarium, their most powerful weapon, failure of the primary endpoint, therefore their drug cannot be approved.
Horrible Risk to Reward Profile for Shorts
The two biggest risks for the shorts are a non-dilutive deal or a quick clinical trial. If Pourhassan is able to get any revenue in the door it eliminates the shorts catalyst of impending dilution. It would also be a gamechanger for the company and boost his stature with the investment community. The CEO has multiple regulatory irons in the fire outside the United States which includes the Philippines, Canada, Brazil, and the United Kingdom. He has essentially created a regulatory bidding war, and the prize is the first shipment of the drug. This translates into revenue for the company that eliminates the risk of dilution, and also gets them a NASDAQ uplisting as a sweetener. Any announcement of the start of the new CD16 critical COVID-19 trial, or fast enrollment numbers, exponentially increase the risks to the shorts. They are counting on slow enrollment and a declining hospitalization rate making it harder to recruit patients.
Unlike many investors who panic sold after the clinical trial results the shorts understand statistics. They understand that should the company complete enrollment in the CD16 trial that there is virtually no chance of a failure when the p-value is 0.005. There is NO CLINICAL TRIAL risk at this point which means the ONLY RISK is the rate of patient enrollment. It is clear to those that understand statistics, that a larger clinical trial that goes from 34 patients to 70 patients will result in higher statistical significance (lower p-value) in the time to recovery endpoint, which was a basis for approval in remdesivir and tocilizumab. And the fact that leronlimab already handily beat the standard of care with dexamethasone, outlined in the Executive Summary in Table 4-15 through Table 4-17, leaves no doubt of a positive outcome if they complete the trial.
To make matters worse for the shorts, they also have a wild card to contend with. The wild card is that any sort of approval that lends credence to regulators getting serious about the drug could lead to a panic buy. Any EUA from any country or even a regulatory action from Health Canada to approve the sales of the drug could lead to a stampede to cover the short positions. This regulatory credibility also includes the United States and the World Health Organization (WHO), because it is very reasonable to suspect that the NIH or the WHO will want to include leronlimab in their ongoing clinical trials as it handily beat their golden child dexamethasone.
For the second time in the span of a year the Short Mafia was able to pull off one of the biggest cons in biotech duping investors into thinking that leronlimab has no chance of approval when in reality it is at worst case 3 months away from approval. An approval in COVID-19 could propel the stock to $25+ which represents a reasonable $15 billion market capitalization. The recent short attack has created one of most de risked biotechs in the sector. This is a 10X return for investors from the current level who understand statistics, and believe that CytoDyn will be able to recruit 140 critically ill patients who have no realistic treatment options, in 18 centers, over the coming weeks. It works out to 8 per trial site, so 2 critical patients per week gets the job done in a month.
The company met more statically significant endpoints (see summary above) than any other COVID-19 drug therapeutic up until this point. During a pandemic it’s unclear why the FDA is so set on a larger clinical trial to test the same exact endpoint that was already proven in a large randomized controlled trial. Instead of 34 patients they want 70, while that might not seem like a good reason to let thousands of critical patients die of COVID-19 while the trial is underway, they alone have to face the congressional inquiries and be responsible for their actions. To the millions of compassionate people out there, it makes no sense as to why an EUA hasn’t been issued by the FDA contingent on future trial results for a drug that has been proven safe and will do no harm. Long term investors who don’t understand statistics, are trying to rationalize this behavior into a lower likelihood of approval. They need to wake up and realize it’s only been a week, and that the FDA is a bureaucracy that doesn’t turn on a dime. The new FDA commissioner, Dr Janet Woodcock, might decide over the weekend that a congressional investigation might be a bad career move for her, and be working on an EUA as we speak. There are so many unknowns, but what is resolute after the release of the Executive Summary of the CD12 data is that leronlimab works in COVID-19. It is superior to dexamethasone and really helps critical patients under 65. It’s a lock for approval if CytoDyn can finish their clinical trial, and is an excellent investment with one of the best risk reward ratios in biotech.
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Disclosure: Insider Financial and its owners do not have a position in the stocks posted and have posted this article for free without editorial input. This article was written by a guest contributor and solely reflects his opinions.