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I covered Selecta Biosciences (NASDAQ:SELB) twice in the last couple of years. I would call them a highly appreciative part 1, since when the stock is down 60%, and a somewhat cautious part 2, since when the stock is up 80%. The joke, clearly, is on me.
This is part 3.
In part 2, I said at the end:
This once promising, $1.5bn (2018 figures) company has passed through a lot of doldrums and is today valued at ~$100mn. That figure looks promising, and if the critical DISSOLVE trials see any major success, the stock will surely go over the top. However, it is still a very risky bet, and in this difficult market, only a very astute risk taker will go for it now.
The DISSOLVE I trial was fully enrolled by December 1 last year. The company originally guided for toplining in H2 2022, which is this month. However, latest guidance shows topline data in Q1 2023, which is next month, to March. So there’s been a delay.
DISSOLVE is SELB’s latest stage trial. The asset is SEL-212, which consists of pegadricase, Selecta’s proprietary pegylated uricase, co-administered with ImmTOR, designed to mitigate the formation of anti-drug antibodies (ADAs). The trial is in phase 3. It is a 120-patient randomized, double blinded, placebo-controlled study (DISSOLVE 2 uses saline, and has no extension study) in patients with GOUT refractory to conventional therapies. GOUT is described as follows by the company:
Gout is the most common form of inflammatory arthritis with more than 8.3 million people in the United States having been diagnosed with gout, which is caused by high levels of uric acid in the body that accumulate around the joints and other tissues and can result in flares that cause intense pain. Approximately 160,000 people in the United States suffer from chronic gout refractory to conventional medicines, a painful and debilitating condition in which people with SUA levels below 6 mg/dL and therefore have several flares per year and can develop nodular masses of uric acid crystals known as tophi.1 Elevated SUA levels have been associated with diseases of the heart, vascular system, metabolism, kidney and joints.2
Gout is treated with the following:
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Corticosteroids, nonsteroidal anti-inflammatory drugs (NSAIDs), or low-dose colchicine should be prescribed for patients who have acute gout.
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Long-term urate-lowering therapy should not be initiated in most patients after their first gout attack or in patients who have infrequent gout attacks.
This is the guideline, Management of Acute and Recurrent Gout, developed by the American College of Physicians and endorsed by the American Academy of Family Physicians. However, this is from 2017.
In 2020, the American College of Rheumatology published the following detailed recommendations:
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Treating gout with urate-lowering medications is strongly recommended for patients who have tophi (nodules that form from a mass of uric acid crystals at joints or in soft tissues), radiographic evidence (X-ray or other imaging) of damage due to gout, or two or more gout flares per year.
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Allopurinol is strongly recommended as a first-line urate-lowering medication over all others for all patients.
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Allopurinol or febuxostat is strongly recommended over probenecid as a first-line treatment for patients with moderate-to-severe chronic kidney disease.
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The use of pegloticase is strongly recommended against as a first-line treatment.
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Starting with a low dose of allopurinol and febuxostat is strongly recommended over starting at a higher dose.
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Using anti-inflammatory medication, such as colchicine, nonsteroidal anti-inflammatory drugs (NSAIDs) or prednisone or prednisolone as a preventive measure along with urate-lowering meds is strongly recommended over not using anti-inflammatory meds. Continuing the anti-inflammatory meds for three to six months with regular monitoring and adjustments if gout flares continue is also strongly recommended.
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Using treat-to-target strategy by adjusting urate-lowing meds to reach a target uric acid level of less than 6 mg/dl (milligrams per deciliter) is strongly recommended over using a fixed dose of the medication and no target.
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When using other medications and interventions fails to reach the target urate level and the patient continues to have frequent (two or more a year) gout flares or tophi, it is strongly recommended that they switch to pegloticase instead of continuing the current urate-lowering drug. But switching to pegloticase is strongly recommended against for patients who haven’t reached a target urate level but don’t have frequent flares.
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Using colchicine, NSAIDs or glucocorticoids (corticosteroids) as a first-line treatment for the management of flares is strongly recommended over interleukin-1 inhibitors (biologic medications) or hormone treatments (ACTH). Low-dose colchicine is strongly recommended over high-dose. For those who can’t take oral medications, glucocorticoid shots are strongly recommended.
Despite all that, there appears to be no recently approved new therapy for gout. KRYSTEXXA, comparing against which SEL-212 ran a phase 2 trial a few years ago (COMPARE trial), was approved in 2010. About this, I noted:
For these patients, Krystexxa, currently owned by Horizon Therapeutics (HZNP), was approved in 2010 as a third line option for chronic, treatment refractory gout. The drug targets the 3% of all gout patients who do not respond to standard treatment for various reasons, and last year, it had annual sales of $342.4mn. The drug works by blocking a pathway downstream of xanthine, and while its efficacy is well-known, it has severe safety issues caused by an immune response that produces, in 92% of patients, voluminous anti-Pegloticase antibodies, severely limits its efficacy while aggravating its adverse reactions.
SELB ran a phase 1 trial and then a phase 2 trial of SEL-212 in gout, so they have done their homework thoroughly. The primary endpoint of the DISSOLVE studies is “serum uric acid (SUA) control during month six, a well-validated measure of disease severity in chronic refractory gout.” This was similar to a secondary endpoint in the phase 2 study. There were, however, major differences so one study does not precisely inform the other.
In my previous articles, I discussed the problems with the COMPARE trial. I noted that if we take a per-protocol analysis instead of an ITT, then the trial meets the primary endpoint. The logic for PP over ITT is that during the pandemic, a lot of patients deviated from the protocol for reasons that were unrelated to therapy. However, while all this is logical, DISSOLVE becomes critical because it will be required to prove, rather than confirm, SEL-212’s efficacy over KRYSTEXXA. A problem with DISSOLVE is that it does not use KRYSTEXXA in the comparator arm, but instead uses placebo. This is a critical problem.
Note that SELB sold SEL-212 rights to Sobi for $730mn, with $100mn of this amount upfront. However, KRYSTEXXA, as I noted earlier, made nearly $350mn in 2019, the year I used my data from. Thus, SEL-212 did not fetch too high a price. It will anyway work as a proof-of-concept trial for SELB’s ImmTOR platform. The pipeline consists of a number of early stage assets, with the latest stage being phase 1 for SEL-302 targeting Methylmalonic acidemia (MMA).
In my May article, I discussed a few issues with SEL-302 and tried to assess why the stock was down 80% from my December 2020 article. I concluded that despite a clinical hold, decoupling of the AskBio partnership, and a persistent manufacturing issue (?), the real reason seems to have been the FDA’s ongoing concern with using AAV vectors for delivery. The stock, thus, reached its lows in June, but then spiked up in August, and is trading much higher than where it was in May-June. The reason for the August spike seems to be twofold, both related to money – one, they successfully raised ~$40mn in that quarter, and two, completion of enrolment in DISSOLVE 2 triggered a $10mn milestone payment from Sobi. Thus, the spike wasn’t data related, of which there wasn’t any at that time.
Financials
SELB has a market cap of $203mn and a cash balance of $148mn. Collaboration and license revenue for the third quarter of 2022 was $20.7 million. Research and development expenses for the third quarter of 2022 were $16.5 million, while general and administrative expenses were $5.8 million. At that rate, they are covered for 6-7 quarters, or, like they claim, till 2024.
Bottom line
SELB’s spike potential can be seen from the August price movement over a successful secondary. They do not have a clear record, as I discussed, however, DISSOLVE could well be a success – of sorts. The stock is up a lot from their lows, and topline is just a quarter away. A small pilot would be a risky but interesting gamble.
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