Rapid Countermeasure Against COVID-19: Therapeutics Not Vaccines

FDA has stopped that access. This is a point of moral outrage.

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While vaccines are getting all the attention, viable therapeutics like CytoDyn’s (OTCMKTS: CYDY) leronlimab and Humanigen’s (NASDAQ: HGEN) lenzulimab have been effectively benched by the FDA until they complete their trials.  Leronlimab is the only phase 3 therapeutic candidate in the world expected to have a positive mortality benefit and not some feel good reduction in hospital stay which are the most recent endpoints that have been given Emergency Use Authorization (EUA).  While the positive developments in vaccines offer considerable hope to turn the tide in the pandemic, it is still distant.  Novel therapeutics completing their trials offer a much faster path forward that is measured in weeks to months.  

Sorrento (NASDAQ: SRNE) just received a $34 million federal contract for a COVID-19 treatment on Friday November 27th, 2020 through its wholly-owned subsidiary SmartPharm Therapeutics, Inc.  It is now in an elite groupand is one of two small pharma players to receive government funding for a “rapid countermeasure against COVID-19.”  Novavax Inc. (NASDAQ: NVAX) is the only other small pharma to receive such an award.  Sorrento plans on developing a Gene Monoclonal Antibody (MAb) which is nothing more than fancy words for something called a vaccine.  They hope to join the ranks of Moderna (NASDAQ: MRNA) and Pfizer (NYSE: PFE) who are using similar technology to develop a vaccine.

Within the United States the word vaccine is trying to overcome a negative connotation.  A Gallup poll has actually been tracking Americans willingness to take a vaccine.  The poll reached a low in September which indicated that 50% of Americans would not take a vaccine if it was available.  The government has pushed its chips all in when it comes to developing vaccines and completely ignored therapeutic options, some of which are more viable than a vaccine especially if you look at what you are getting for the money.

Gene-Encoded Neutralizing Antibodies

Sorrento’s new Gene monoclonal antibody is a neutralizing antibody (nAb) called STI-2020 that in lab tests appears to have a high affinity to block SARS-CoV-2.  Monoclonal antibodies are very expensive to make and there just isn’t enough capacity in the world to treat everyone.  So the government’s answer to deal with the lack of capacity was actually pretty creative, why not use humans as bioreactors to make the neutralizing antibodies.  In theory it could work as a treatment, but more importantly the government wants it as a “prophylactic solution.” The idea is to give it to elderly or immunocompromised patients where vaccines are not as efficacious.  Elderly and immunocompromised adults don’t have an immune system in place that can create the efficacious antibodies to quickly defeat a viral infection, and would need help and that’s what the neutralizing antibodies are for.    

Sorrento’s Gene MAb™ by the numbers

1. Antibodies with significant neutralizing efficacy against SARS-CoV-2 are identified in recovered COVID-19 patients. STI-2020 was discovered.
2. The antibody is sequenced and incorporated into a DNA plasmid. DNA plasmids are small circular strands of DNA that can replicate independently from the chromosomes.  
3. Plasmids are combined with a delivery system for a final formulation of the Gene MAb™ drug. 
4. The Gene MAb™ is given to people using a standard hypodermic injection into the muscle.

Vaccination is Not a Cure and Unable to Completely Stop Transmission

Many people think of vaccines as a cure but they are far from it.  COVID-19 won’t magically disappear from the world if everyone got a vaccine.  Vaccines basically prime the body to deal with future infection by training the body to make antibodies and antibody producing memory cells, called B-Cells that are capable of thwarting future infection.  In order for vaccines to be effective they need a population of people that have solid immune systems.  This means that environmental factors like nutrition, living conditions, and initial viral load can have an impact on how effective a vaccine will be.  The effectiveness of vaccines varies greatly from individual to individual.  

Peter Hotez, dean of the National School of Tropical Medicine at Baylor College of Medicine in Houston, said, 

“Ideally, you want an antiviral vaccine to do two things . . . first, reduce the likelihood you will get severely ill and go to the hospital, and two, prevent infection and therefore interrupt disease transmission.”

Vaccines cannot completely stop transmission of the disease either.  The ability of a vaccine to prevent a virus from causing an infection is called sterilizing immunity.  A vaccinated person can still carry the disease and infect others.  Experts still do not have enough information to say conclusively that the COVID-19 vaccines stop transmission.  Vaccines are variable  with respect to efficacy within a population, because they are based on a person’s unique immune response.  Vaccines prep a person’s body to fight the disease so if someone is exposed their body can mount a swift immune response, but during this process the virus can still shed and expose others who have been vaccinated as well.  In essence vaccines are designed to make people asymptomatic carriers of the disease.  

According to the World Health Organization (WHO), the serial interval (the time between successive cases) for influenza is 3 days while COVID-19 is estimated at 5-6 days.  Influenza can spread much faster but the case mortality rate is not nearly as high as COVID-19.  The case fatality rate is about .1% for influenza and estimated at 2.0% for COVID-19.

Early in the pandemic Fauci said 40 – 45% of the people spreading the disease were asymptomatic and a new JAMA report indicates 29.6% are asymptomatic.  What is certain is that vaccines can slow the spread of the disease which makes it more manageable and results in less people going to the hospital. Masks and social distancing are also viable options that can be used in tandem with a vaccine to slow the spread of the disease.  Science is very clear that masks do save lives, the only question for debate is how many lives they save.   

What Pfizer’s 95% Effective Means

Pfizer has pronounced that the vaccine is 95% effective but upon closer inspection what does that really mean.  The Bmj did an analysis of the top 7 vaccine candidates; the only endpoint was the prevention of symptomatic disease in a vaccine patient.  This means the vaccine is considered effective if it stops a person from getting a mild case of the disease.  In the Moderna and Pfizer studies this was classified as a cough and a positive lab result.  Everyone would love to think there is benefit from that, but as indicated earlier in the article asymptomatic people can still spread the disease.  Experts like Dr. Kathleen Neuzil, director of the Center for Vaccine Development at the University of Maryland said,

“We should anticipate the SARS-CoV-2 vaccine to be similar to the influenza vaccine.  That vaccine may or may not keep people from being infected with the virus, but it does keep people out of the hospital and the ICU.”  

The endpoints people really care about is the reduction in severe COVID-19 incidences and the interruption of transmission which is referred to as person to person spread.  In a rush to deliver a vaccine, the FDA allowed these endpoints to be completely excluded from the study and not even considered as secondary endpoints. Despite FDA guidance, Moderna’s key secondary endpoint is the prevention of severe COVID-19 defined by hospitalizations. Unless vaccines can prove that they take dying off the table, it’s very hard to see them in a positive light.  

Therapeutics – More Bang for the Buck

The top therapeutics are neutralizing antibodies made by Eli Lilly (NYSE: LLY) and Regeneron (NASDAQ: REGN). They both have Emergency Use Authorization (EUA) for the treatment of mild to moderate patients who are at high risk of progressing to severe COVID-19.  The issue with these therapeutics isn’t the side effects, it’s to whom the drug should be administered to since the availability of drugs is quite constrained.  LLY has only agreed to supply 300,000vials of bamlanivimab over the next two months. REGN has also agreed to supply 300,000 doses of its neutralizing antibody cocktail of casirivimab and imdevimab.  These drugs need to be administered early in the disease progression to be effective and have proven to be ineffective in the hyperinflammatory stage of the disease where the viral load is not a factor.  

FDA Values Endpoints More Over Real Results

LLY with their drug bamlanivimab is expected to cost $375 million for 300,000 vials.  In their clinical trial 465 mild to moderate COVID-19 patients were enrolled. The clinical results showed that 3% of bamlanivimab patients versus 10%of placebo patients were at risk of disease progression as measured by hospitalization and emergency room visits. This effect was similar regardless of the dosage of bamlanivimab. LLY was also able to get its arthritis drug baricitinib EUA approval in combination with Gilead Sciences (NASDAQ: GILD) remdesivir.  The primary endpoint was a reduction in the time to recovery.  There was a one-day reduction in median recovery time from 8 days to 7 days in combination with remdesivir versus remdesivir alone.  It’s very hard to calculate how a one day improvement in hospital stay does anything at all to flatten the curve.  Although the drug received EUA approval there is very little to be excited about.  The serious adverse events (SAEs) continue to be an issue with remdesivir.  SAEs were 15% for the combination therapy vs 20% for patients treated with remdesivir alone.           

The endpoints of REGN’s antibody cocktail showed a reduction in viral load as the primary endpoint and significantly reduced the number of follow up hospital visits.  While a 57% reduction in related medical visits may appear to be a lot, the actual difference tells a completely different tale. There were 3 arms, a low dose, a high dose and placebo.  In the active arm 2.8% of the population of 542 needed follow up hospital visits which represents 15 patients. In the placebo arm 6.5% of the population of 257 needed follow up medical visits which represents 17 patients.  While this result was statistically relevant with a p value = .024 its only making a tiny dent of 37 additional medical visits per thousand.  This endpoint has nothing to do with hospitalizations.  The number of hospitalizations in the study of 799 only totaled 12.  The question is how meaningful is this secondary endpoint of reduced medical follow up in light of the fact that the study failed the secondary clinical endpoints of number of patients admitted to the hospital, number of patients admitted to ICU, number of patients needing mechanical ventilation, number of days of hospitalization, and all cause mortality. 

Putting things into perspective over $450 million was awarded to REGN to develop this therapeutics and the American healthcare system is expected to reap 11,100 less follow up visits than the current standard of care.  Only in America is a COVID-19 follow up visit worth $40,540.  On a daily basis over the next 60 days with 6,146 hospitals and 9,000urgent care facilities in the United States we couldn’t add an extra 185 follow up visits a day.   

The FDA has consistently asked for clinical outcomes but in the case of REGN there is scant evidence.  The primary driver for approval was a reduction in viral load which is really just a biomarker.  It seems like we are going back in time to the days when the FDA considered a reduction in tumor size was more important than clinical benefit.   

Front Runners for Therapeutics

Regardless of the therapeutic choice they are much better options than the vaccine.  For the 72 million millennials out there consider the choice of just getting a little sick or a vaccine with some side effects and then having to come back a second time for more.  Millennials might figure out it makes more sense to juice up their immune system and just get exposed and presto they are vaccinated. This is not a good idea for the portion of the millennial population that has underlying medical conditions, but the point is the vaccine just isn’t very appealing to this group when therapeutics are just about to be released. Remember the point made earlier that almost 30% of infections are asymptomatic which represents a sizable portion of this population.  Fauci’s pick of therapeutic as the standard of care, specifically Gilead Sciences (NASDAQ: GILD) remdesivir, was just a very poor choice that has managed to haunt the entire field of therapeutics. Other failures with blood plasma and hydroxychloroquine have kept regulators very cautious about approving additional therapeutics.  

CytoDyn – Leronlimab

The top therapeutic is a repurposed HIV and cancer drug called leronlimab.  It has an impeccable safety profile in HIV with some patients on it as long as 6 years with not a single instance of a SAE.  The drug has a complete BLA on file with the United States FDA and is planning on filing BLA’s in the United Kingdom and Canada for HIV.  Since the drug is at such an advanced stage of development demonstrating efficacy is really the last hurdle.  In a phase 2 study of mild to moderate patients they showed a clinically significant improvement in clinical symptom score and a statistically significant improvement in the NEWS2 score.  The company recently announced that they are at 75% enrollment in their pivotal phase 3 trial for severe to critical COVID-19 patients and at another interim data point.  The FDA or DSMB could look at the data at any time and decide this drug is worth trying to lower the death rate in the United States.  The drug is a CCR5 inhibitor and it stops the trafficking of macrophages to the site of infection and ultimately quiets the cytokine storm and restores immune homeostasis as evidenced by normal CD4/CD8 ratios.  

Humanigen – Lenzilimab

While not as advanced as CytoDyn in the drug development process, the efficacy is noteworthy. The safety profile in this eIND study of 12 patients showed no treatment-emergent adverse events attributable to the drug. The company is repurposing their Graft vs Host Disease (GvHD) drug used in immunotherapy to quiet the cytokine storm in COVID-19 ARDS patients.  The target of Lenzilumab is granulocyte macrophage-colony stimulating factor (GM-CSF).  This cytokine is upregulated in COVID-19 and is correlated to disease severity.  In their eINDs of critical COVID-19 patients 11 out of 12 had a median time to discharge of 5 days.  There was a significant increase in oxygenation as measured by SpO2.FiO2 over baseline.  Two-thirds (67%) of the patients were under 315 SO2/FiO2 verus 8% at the end of the observation which means that 7 out of 12 improved their lung function.  The patient’s cytokine panel was also observed with particular attention to C Reactive Protein (CRP) and IL-6. Both of these inflammatory markers showed a reduction in myeloid cells 2 days after lenzilumab treatment.  There was no mortality in this cohort of patients. Building on this data were interim results from a phase 3 randomized controlled trial that measured the number of recoveries. The company is still blinded but at its interim point learned from the DSMB that lenzilumab had 37% more recoveries over placebo.  According to the adaptive design, more patients can be added in the promising zone which was characterized as improvement greater than 29%.  The company increased the target number of recoveries from 257 to 402. Patient recruitment continues but it’s not unreasonable to expect that they file for a potential EUA.       

Ampio Pharmaceuticals – Ampion

What is so interesting about Ampio Pharmaceuticals is that their drug was initially developed for pulmonary fibrosis and then repurposed for Osteoarthritis of the Knee (OAK) and here it is again being repurposed for COVID-19.  The safety profile of ampion is phenomenal because it has not had any SAE’s related to the disease.  The drug is made by filtering the fractionate out of Human Serum Albumin (HSA) and this fractionate contains many anti-inflammatory properties. In a recent update they mentioned that the Special Protocol Assessment (SPA) clinical trial for OAK might be acceptable and that a formal response was coming by the end of the year. Although they are in their phase 1 there are clear signs of efficacy.  There were 10 patients in the clinical trial and the drug met its safety endpoint for intravenous use.  All severe to critical COVID-19 patients treated were discharged within 5 days.  In the placebo group 1 of the 5 died which could demonstrate a mortality benefit.  The company is now testing in clinical trials an inhaled form of Ampion.  They finished their first two cohorts of patients and have quickly progressed to their final cohort of 34 patients.  This study will give them an excellent foundation to design a pivotal phase 3 for approval within the coming months.  

Relief Therapeutics – Aviptadil

The early clinical trial results of Aviptadil in COVID-19 patients with respiratory failure was impressive.  Relief Therapeutics (OTCMKTS: RLFTF) treated 21 patients with intravenous Aviptadil and followed them for 60 days.  Their 28 day survival rate was 90% versus 17% (p<.001).  In addition there was a 6.1 differential on the 10 point WHO Ordinal Scale.  There was a 2.6 point improvement in symptoms with Aviptadil versus a 3.5 point worsening in the control group which accounts for the 6.1 point differential between the cohorts of patients.  Aviptadil is a formulation of Vasoactive Intestinal Polypeptide (VIP).VIP is known to be highly concentrated in the lungs (70% bound to alveolar type 2 cell(ACE2)), where it inhibits SARS-COV2 replication, blocks the formation of inflammatory cytokines, prevents cell death, and upregulates the production of surfactant. Surfactant that coats the lung and is essential for oxygen exchange. This is why preventing damage to these type 2 cells by SARS-COV2 is crucial. 

They are currently recruiting up to 165 patients in a phase 2b/3 clinical trial and have recently announced they have enrolled 150 and are very close to completing their enrollment.  The safety profile of this drug is good with no SAE’s reported. The drug has been used under an Expanded Access Protocol in more than 175 patients which is more than any other COVID-19 drug that is not approved under an EUA.  Using an ad hoc comparison 72% of Aviptadil patients that have comorbidities survived 28 days versus 27% of control patients taken in a comparable setting at Houston Methodist Hospital.  Anecdotally this data suggests a mortality benefit.

Investment Summary

Vaccines are not the panacea that will take dying off the table.  The only drug that has a shot at reducing mortality is leronlimab, because it is the last drug standing in a phase 3 with a mortality benefit.  Although the data is still unblinded the drug has been through two Drug Safety Monitoring Committee (DSMC) meetings that indicate the drug is meeting its endpoint and thereby likely to be approved.  In the interim, no patients can get the drug via emergency IND because the FDA has stopped that access.  This is a point of moral outrage.  By not looking at the interim data for leronlimab in an urgent fashion the FDA is condemning thousands of people to death daily.  Although many drugs have gotten EUA’s only remdesivir has gotten FDA approval. Leronlimab is superior to remdesivir in safety and efficacy in moderate to critical patients and could be the next drug approved. The only question is when. If your investment thesis is to follow the flow of government money then SRNE and NVAX are buys at this point, however if you believe that the will of the American people will be heard in the next 6-8 weeks with an approval of leronlimab then CYDY is clearly the better investment vehicle with only a $1.5 billion market cap.  The first drug that takes dying from COVID-19 off the table should be worth north of $10 billion ($17.00/share). 

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