Biotech

Handicapping CytoDyn’s (OTCMKTS: CYDY) Interim Readout

Powerful recommendation from DSMB Imminent on Leronlimab

Numbers are not part of any Interim report unless a statistical penalty is taken 

A Fox interview with CytoDyn’s (OTCMKTS: CYDY) CEO indicated interim results were to be “hopefully” announced by the end of the week, Friday October 16th.  An announcement of this order of magnitude would likely be via an investor conference call.  Based on their recent pattern of announcements, they should come out with a press release on Friday,  that schedules a call for Tuesday October 20th.  The language in the press release would then be interpreted by the markets for further insight into what would be discussed on the investor call.  Key words in their press release like FDA, positive results, likelihood of meeting the endpoint, or peer reviewed journal article would be digested by the market.  It’s very important to point out that over the past couple of months there have been significant press releases right before most conference calls.  CEO Nader Pourhassen, has mentioned numerous times that investors need to look at CytoDyn on a fundamental basis or if they “blink” they might miss it.  A very bullish announcement is expected in the coming days and the market has not even remotely priced in a possible drug approval.  

Interim Results  (No Data Just a Recommendation)

When investors think about results, they think of data like SAEs, mortality rate, clinical symptom score, viral load, or number of intubations.  In general, this type of data is mentioned by drug companies in their top line reports.  Interim results are a whole different animal, and the purpose of this article is to educate investors on what to expect.  Based on previous public information, the company is probably meeting or has met with the Drug Safety Monitoring Board (DSMB) to discuss how to proceed after looking at the interim results.  In a recent presentation by Principal Investigator Dr. Harish Seethamraju; 

“The FDA and the DSMB are reviewing the interim data the unblinded data to the FDA as we speak”   

This DSMB is independent from the company and the FDA.  The DSMB charter is the protection of the patients with respect to safety and efficacy, and TO make determinations with respect to interventions, or make amendments to the protocol, or even change the study.  This charter is basically a checklist of what they are looking for with respect to safety and efficacy.  Their job is to provide recommendations to the FDA.  Before the clinical trial starts they have statistical monitoring guidelines in place that would guide their recommendations to terminate or continue the trial. This is called a statistical analysis plan (SAP) and it lets them objectively decipher the data when presented.  Since the company has not elected to take a statistical penalty, only the biostatistician at this time has a look at the unblinded data.  This biostatistician cannot reveal anything to the company or the FDA.  The biostatistician will provide a report directly to the DSMB and is part of it.  Based on this report they will make recommendations to CytoDyn which would then likely pass them on to the FDA, requesting a meeting or informing them of changes being made to the protocol.    

The DSMB consists of at least 3 people and must contain a biostatistician, ethicist, and a medical person specialized in the disease.  None of them can have any financial links to the company.  This board follows their monitoring plan and will review if the drug is significantly safe or more effective than another relative to the placebo arm.  It also ensures the integrity of the data in terms of collection and analysis. It also has the authority to stop the trial based on different criteria.  When the DSMB meets to review the interim analysis, as it is doing now, it will make a recommendation to the Company about the trial.  Often the recommendation is to continue the trial because there is little risk of safety and there is no evidence that the product has such a great and obvious benefit that it would be unethical to not offer it to the people receiving placebo.  A recommendation to continue is very powerful because it also means the trial should reach its primary endpoint and will not require additional enrollment or extention..  

The dark side of the DSMB is that it can also terminate a trial for safety concerns.  Going over all the ways a trial can be stopped isn’t that helpful to investors looking at CytoDyn as an investment. It is however critical to highlight Dr Seethamraju’s comment on October 7th, because if the DSMB and the FDA are indeed talking it means there is likely a serious recommendation on the table given the length of time that has transpired.  The old saying is that “bad news travels fast” – if it was bad news (think safety issues), it would have been out by now, and with such a stellar safety profile bad news was not likely.  

Common DSMB Recommendations

  • Harm: this means that if the drug is hurting the participants and creating more SAE’s than in the control arm they can stop the study.  The trials that do fail get taken out in this manner.  
  • Futility: another finding of the DSMB is futility which means that the data is unlikely to hit its endpoints.  This decision also factors in the pace of enrollment and usually recommends closure.  
  • Overwhelming positive effect:  if the interim data suggests that a clinical trial offers a statistically significant benefit, which means it’s working well so that everyone should be offered the drug, they can recommend an end to randomization and the drug should be given to placebo patients.  This happened with remdesivir  when Fauci decreed it was the new standard of care.  Events like this normally are followed by the drug company asking for early approval if there is a solid analysis of the long term safety data.

In the case of CytoDyn a standard DSMB recommendation to continue the trial carries enormous weight.  Gilead Science’s (NASDAQ: GILD) drug remdesivir and CytoDyn’s drug leronlimab are the only phase 3 randomized clinical trials with an endpoint of 28 all cause mortality.  Remdesivir was approved even though they didn’t reach statistical significance on a mortality benefit.  They had 8% vs 11.4% in the placebo arm.  Since the world is in a pandemic state, it’s reasonable that the DSMB will recommend a stoppage of the trial if the company is on track to reach its primary endpoint.  If the Company needs more people, depending on the number, this could be a positive outcome as well because it means they are tracking for an approvable drug for COVID-19.  

Positive Readout Likely

Investors need to realize that when the Company announces interim data they will be telling investors if they won or lost the game.  There will be no score because the data is blinded. Investors expecting a mortality number versus placebo might need to rethink their investment thesis. It really boils down to whether or not the investor believes Dr. Pattersons statement; 

Napkin Math Analysis

The UCLA study from Dr Otto Yang had 30 emergency IND (eIND) patients, and leronlimab saved 23 out of 30 patients with an average time to discharge of 5 days.  This represents a 23% mortality rate.  These are practically compassionate use patients with a high likelihood of death without some sort of intervention. Assuming the usual rate of death is 75%, then only 7 patients should have lived versus the 23 that actually recovered.  These eIND’s let CytoDyn know that their drug had a high level of efficacy.  This UCLA study represents a cohort of patients that is considerably worse off than the patients currently enrolled in the CD 12, severe to critical COVID-19 trial.  

The Company recently announced that 45 patients in total had died in the clinical trial.  On the surface that represents an unusually low mortality rate of 23% and is coincidentally the same as the UCLA study.  There are no details with respect to which arm the deaths were in and it’s possible that it could be in either the control or the leronlimab arm.The trial consisted of 195 patients at the interim point.  They were randomized 2:1 which means 130 were in the active arm and 65 in the placebo group.  Assuming a 20% mortality rate slightly adjusting for the severity of the patient population 26 patients would have died in the leronlimab arm.  This would leave 19 deaths out of 65 in the placebo arm would equate to 29%.  This represents a 31% improvement in leronlimab patients over the placebo.  

As an FDA rule if an endpoint demonstrates a greater than 30% improvement in efficacy over an existing therapy is likely approvable.  When there are no approved therapies as in the case of COVID-19 the bar is 20%. Based on the number of deaths and using worst case analysis there is clearly a mortality benefit.

This is actually a very conservative estimate because the best published mortality in the severe to critical population was tracked at 30.9% in an Emory University report.  It’s important that investors know what is at stake in regards to human life. If these conservative estimates are close then a 9% reduction in mortality needs to be applied to the number of hospitalized patients.  Looking at this on a national scale the 90 day weekly hospitalization rate is 1.44%. The current number of new cases is averaging 60,000 people daily for a weekly total of 25.2 million people over just the next 2 months.  This would result in 362,880 hospitalizations.  Although CytoDyn is not part of Operation Warp Speed (OWS) they have managed to have stockpiled over 300,000 treatments to meet any potential demand.  If leronlimab is not approved and the FDA requires the trial to be completed it would cost the United States 32,659 lives.  Statisticians with the DSMB will be looking at this to see if the safety concerns outweigh the improvement in mortality.  The daily number of world cases is 336,000 and if the same assumptions are applied, leronlimab could save 290,304 lives worldwide over the next 2 months.             

Investment Summary

An approval is clearly not factored into the stock price.  CytoDyn has been under enormous pressure from the shorts pointing to all sorts of ancillary issues unrelated to the bottom line of whether or not the drug works.  The proof lies in HIV, cancer, COVID-19, GvHD, and NASH trial results.  All clinical and preclinical trials demonstrate the drug works.  In general, if a drug works it’s likely to be approved.  The investor drama surrounding the Mild to Moderate study was ridiculous as investors accused the CEO of lying.  Asymptomatic people get better on their own and leronlimab only works when there is an imbalance in the immune system. So the results were in line with the mechanism of action (MOA).  

It’s completely understandable why the FDA was reluctant to give Emergency Use Approval (EUA) before the severe patient trial had at least its interim results from the DSMB.  CytoDyn scientists believe it is possible that leronlimab could be used with newly diagnosed patients to prevent the serious complications, but they also believe it can help severe to critical patients quiet the cytokine storm and increase their chance of survival.  Based on the limited supply of the drug by OWS failure to engage CytoDyn, there is only so much product available and it’s critical to understand leronlimabs full capability to minimize the loss of life.  The interim results should provide the company and regulators the clarity they need to move forward with the approval process.  

Since leronlimab is given as an injection it can be given by any doctor or emergency room before hospitalization is needed giving it broad appeal thereby creating a shortage for the critically ill which could result in a loss of life.  The DSMB should factor all these items into their analysis INCLUDING the mild to moderate trial and make a recommendation to CytoDyn.  Based on the anecdotal eIND’s, the mild to moderate trial, the safety profile from HIV and cancer, it’s really hard to believe that a professional and ethical board like the DSMB would do anything, but the right thing.  

The CEO characterized this situation the best.  Investors should bet on the fundamentals of the company and that this drug will be approved in due course. Since a continuation of the trial is already factored in the price of the stock  it should not react negatively to news of finishing the trial.   In this scenario the focus will shift toward an approval in the United Kingdom, the European Union, or the Philippines and then on the HIV BLA for the United Kingdom.  The only negative scenario is if they need to add patients because that would increase the cost and the development time. The best and most likely scenario is if approval language is used, then a $10 billion + valuation could be realized in a very short time span. 

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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. The author may hold either long or short positions in the securities discussed.

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Handicapping CytoDyn’s (OTCMKTS: CYDY) Interim Readout
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