Neurocrine Biosciences (NBIX) shares tumbled 19% on Wednesday, despite the company announcing that day that its schizophrenia candidate NBI-1117568 (‘568) met its primary endpoint in a Phase II trial, as the company’s results failed to surpass those of two bigger-name biopharmas that are also developing drugs for the mental disorder.
According to results trumpeted by Neurocine from the Phase II NBI-1117568-SCZ2028 trial (NCT05545111), a once daily, 20 mg dose of ‘568 showed a statistically significant 7.5-point improvement in Positive and Negative Syndrome Scale (PANSS) total score compared to placebo six weeks after dosing, with PANSS total score improving 18.2 points from baseline.
‘568 also met several secondary endpoints, including statistically significant improvement in clinical global impression of severity scale and Marder Factor scores for positive symptom change (3.0 points) and negative symptom change (1.9 points).
Yet those results didn’t appear to impress investors, which sold off enough shares to send Neurocine stock retreating from Tuesday’s close of $152.55 to $123.76.
The reason, as William Blair analysts Myles R. Minter, PhD, and Sarah Schram, PhD, explained in a research note, is because the 7.5-point improvement vs. placebo was in line with the extent of effect shown by a schizophrenia candidate now under FDA review, KarXT (xanomeline-trospium). The FDA has set a September 26 target action date for KarXT, a first in class dual M1/M4 muscarinic acetylcholine receptor agonist that Bristol Myers Squibb (BMY) inherited when it acquired KarXT’s original developer Karuna Therapeutics for $14 billion.
However, the analysts noted that KarXT showed even higher improvement differences of 11.6 points each in two Phase III trials, EMERGENT-1 (NCT03697252) and EMERGENT-2 (NCT04659161).
According to Neurocrine, ‘568 is the first investigational, oral, muscarinic M4 selective agonist in development as a treatment for schizophrenia. ‘568’s improvement also lagged behind the improvements of 11.1 points and 12.7 points demonstrated by another schizophrenia candidate—emraclidine, a positive allosteric modulator (PAM) that selectively targets M4. Emraclidine’s original developer Cerevel Therapeutics was acquired by AbbVie (ABBV) for $8.7 billion in a deal completed August 1.
The favorable comparison didn’t do much for AbbVie shares, which as of 3:12 p.m. ET on Wednesday dipped 0.3% to $195.40. BMS shares, on the other hand, rose 2% to $49.06.
Anticipating weakness
“While we are positive on the effect size demonstrated by NBI-‘568, we anticipate weakness given the placebo-normalized PANSS score improvement of 7.5 is notably below others in the space and below what investors had been anticipating based on these trials (9-plus points) and what management had suggested at prior investor conferences of around 8 points,” Minter and Schram wrote.
The analysts added that placebo patients did “exceptionally well” in Neurocrine’s study, improving by 10.8 points vs. the 18.2-point improvement from ‘568 patients. But that result was unsurprising, they added, “given potential expectation bias around a more well-validated mechanism and is more in line with prior studies of antipsychotics historically.”
In the 210-patient Phase II trial, 40 patients were randomized to the 20 mg dose of ‘568, the lowest of four doses studied. The other three doses showed lower PANSS total score improvement: 30 mg twice daily (15.8 points, 27 patients); 60 mg once-daily (13.7 points, 34 patients); and 40 mg once-daily (12.6 points, 39 patients). The remaining 70 patients were randomized to placebo.
“The [S]treet will have big question marks on the risky nature of the asset – .. does it work, does it differentiate[?]”, @Sports_bios correctly predicted in comments posted on X.
Phase III-bound
In a statement, Neurocrine’s chief medical officer Eiry W. Roberts, MD, said ‘568 was still on track to advance into a late-stage trial in 2025.
“We recognize the significant need for new and innovative medicines to treat schizophrenia and look forward to advancing NBI-‘568, the first M4 selective agonist, into Phase III development early next year,” Roberts stated.
‘568 is the most advanced candidate from a portfolio of clinical and preclinical subtype-selective muscarinic M4, M1 and dual M1/M4 receptor agonists discovered by Nxera (formerly Sosei Heptares) and licensed by the company to Neurocrine through a three-year-old global collaboration. Nxera could generate up to $2.6 billion in development, regulatory and commercial milestones, plus product royalties through the collaboration, announced in November 2021.
If ‘568 advances as planned, it will be the first compound from Nxera’s platform to enter Phase III. While Nxera will not receive a milestone for this event, “we believe it is highly significant that Nexera’s drug discovery platform has demonstrated the ability to generate a late-stage drug candidate,” Miyabi Yamakita, equity analyst with Jefferies, wrote Wednesday in a research note.
Not surprisingly, Nxera offered a similar conclusion.
“These Phase II data reported by our partner Neurocrine represent an important milestone and strong clinical validation of the power of Nxera’s NxWave™ discovery platform,” Matt Barnes, EVP, president of Nxera Pharma UK and Head of R&D, said in a separate company statement.
“Competitive product profile”
“We believe these data show that NBI-1117568 has a competitive product profile and could be an important new therapy option for patients with schizophrenia potentially with a once-daily pill.”
Jefferies had not weighed in on Neurocrine itself at deadline, though last week the firm raised its 12-month price target on the company’s shares 7%, from $177 to $189, and maintained its “Buy” rating on the stock. “Our analysis suggests ‘568 could show Emraclidine-like efficacy (10~12 [placebo-adjusted] PANSS score reduction) w/ a better safety vs KarXT & similar to Emraclidine,” equity analyst Akash Tewari predicted at the time.
Neurocrine’s muscarinic agonist portfolio also includes three oral Phase I candidates all acquired from Nxera along with ‘568, and all being developed for yet-to-be-specified neurological and neuropsychiatric conditions. They include NBI-1117567, an M1 preferring/M4 agonist; NBI-1117569, an M4 preferring agonist; and NBI-1117570, an M1/M4 dual agonist.
Nxera has retained rights to develop M1 agonists covered by the collaboration in Japan in all indications, subject to specified exceptions.
Neurocrine’s pipeline also includes an internally discovered and developed Phase I selective M4 antagonist being developed to treat movement disorders, NBI-1076986. Those disorders, according to Neurocrine, could include dystonia and Parkinson’s disease tremor.
Yamakita noted that all four muscarinic agonists being developed by Neurocrine have the potential to target multiple psychosis indications. In its announcement of Phase II data for ‘568, Neurocrine acknowledged that potential areas for development of the four muscarinic agonists include Alzheimer’s disease, bipolar disorder, Lewy body dementia and Parkinson’s disease, as well as schizophrenia.
“We expect the collaboration with Neurocrine to continue to generate important catalysts for Nxera,” Yamakita added.
Leaders & laggards
- Ensysce Biosciences (ENSC) shares yo-yoed this week, soaring 45% from 44 to 64 cents on Tuesday after the company announced it had received a $14 million multi-year grant from the NIH and its National Institute on Drug Abuse (NIDA) toward the continued development of PF614-MPAR, an abuse-deterrent opioid with overdose protection that received Breakthrough Therapy designation from the FDA in January. The funding will be available over a period of approximately three years, allowing for the completion of the Phase Ib PF614-MPAR-102 trial (NCT06500793), Ensysce said. On Thursday, however, profit-taking investors caused shares to retreat 30% back to 44 cents in early trading as of 10:30 a.m.
- Invivyd (IVVD) shares sank 29% from $1.29 to 92 cents Tuesday, despite the company’s release of positive Phase III CANOPY trial (NCT06039449) results showing its half-life extended monoclonal antibody candidate Pemgarda™ (pemibivart) reduced by 84% the relative risk of trial participants contracting confirmed symptomatic COVID-19 compared to placebo, where the diagnosis was verified by an RT-PCR test and the individual exhibited symptoms of the disease. Participants treated with Pemgarda experienced a 1.9% rate of symptomatic COVID-19 across a 180-day time period, vs. 11.9% for participants in the placebo arm. No hospitalizations or deaths due to COVID-19 were reported. In March, the FDA granted emergency use authorization (EUA) to Pemgarda, which is indicated for pre-exposure prophylaxis (PrEP) of COVID-19.
- Sonoma Pharmaceuticals (SNOA) shares fell 22% from 22 cents to 11 cents Wednesday, after the company announced it would carry out a 1-for-20 reverse split of its outstanding common stock effective Thursday at 5 p.m. ET. Sonoma common stock was to have begun trading on The Nasdaq Capital Market on a 1-for-20 adjusted basis at the market open on Friday. The reverse split took place three weeks after Sonoma reported results for the three months ending June 30 showing a net loss of $1.143 million, compared with a $1.418 million net loss a year earlier, on revenue that dipped 1% year-over-year, to $3.391 million from $3.427 million.
