Star companies have fallen, microbial pharmaceutical in the end has no future?



There's no room for trial and error

If time must go back, the signs of this collapse of star companies in the field of microbial pharmaceuticals began to appear as early as 2019. In 2019, when global capital entered the market, Seres Therapeutics, a star micro-ecological pharmaceutical company, laid off 30% of its employees to refocus on the clinical advancement of its core pipeline. Later, with more and more pipelines entering the middle and late stages of clinical trials, the operating risks of microbial pharmaceutical companies are also greater.

In fact, simply combing the research and development investment and clinical achievements of the troubled microbiological drug companies in the past few years will find that behind the difficult promotion of clinical trials, the reasons are often very sad.

On the one hand, as a start-up company developing innovative biotechnology, microbial pharmaceutical companies lack experience in clinical trial strategies, and need a relatively loose space for trial and error, with failure in exchange for the possibility of success. Evelo Biosciences, which was disbanded in late November, is a case in point. In the interpretation of the outside world, several self-developed core pipeline EDP1867, EDP1815, EDP2393 clinical trials have failed, Evelo can not be sustained, can only be dissolved. But in fact, until the end, EDP1815 has maintained excellent safety and efficacy data for the treatment of psoriasis, and the long-term data of EDP2393 also beat the control group. In a sense, Evelo erred by giving limited mobility to the wrong indication.

On November 20, Evelo's board of directors filed its deregistration plan with the Securities and Exchange Commission, ending nearly 10 years of operations. In 2014, Flagship Pioneering launched Evelo, which focuses on developing oral microbiotics for the treatment of immune diseases, using drug formulations composed of a single microbial strain to up-regulate or down-regulate the function of immune pathways. In 2018, Evelo listed on the Nasdaq market, raising $85 million and reaching a market value of $2 billion at one point. Prior to this, a number of top institutions and enterprises such as Mayo Clinic, GV, Celgene participated in the investment, and Evelo became a very bright microbial pharmaceutical star enterprise.

The first Evelo to give up was EDP1867. In April 2022, a Phase I clinical trial of EDP1867 for the treatment of atopic dermatitis was declared a failure. In 15 patients who received a low dose of the drug EDP1867, there was no clear evidence of benefit after eight weeks and EDP1867 was put on hold.

As Evelo focused its efforts on EDP1815 and EDP2393, the strategy went off course. The most widely recognized view of EDP1815 is that it is less effective than placebo in treating atopic dermatitis. In February, a Phase II clinical trial of EDP1815 in atopic dermatitis failed to meet its primary endpoint. According to the trial results, the EASI-50 (i.e., 50% improvement in atopic dermatitis disease score) in the control group (placebo group) was 56%, while in the EDP1815 group, only 41%, 38% and 32% of patients in cohort 1, 2 and 3, respectively, achieved EASI-50 or above response at week 16, which was less effective than placebo.

The problem with Evelo's judgment at the time was that placebos were too effective. Unfortunately, after re-examination, in the clinical trial data published in April 2023, EDP1815's performance was still inferior to the placebo. In cohort 4, 37.9% of patients in the EDP1815 group achieved EASI-50 or above responses at week 16, compared with 44.7% in the placebo group.

Interestingly, EDP1815 has already performed well in an earlier phase II trial of psoriasis. According to Evelo's plan, they will advance the development of EDP1815 to treat a wide range of psoriasis patients with mild and moderate disease with few options. But for some reason, Evelo didn't focus on a Phase III clinical trial of EDP1815 for psoriasis. In the case of psoriasis, Evelo is actually betting on EDP2393. In March, Evelo received a delisting warning from Nasdaq. At the time, Evelo's CEO, Dr. Simba Gill, said that resources would be focused on EDP2939, the first drug candidate based on its next-generation extracellular vesicles platform.

Unfortunately, the data from the Phase II clinical trial of EDP2939 for psoriasis, released in October, are still not ideal. The primary endpoint of the study, the difference in the proportion of patients with a 50% improvement from baseline in the psoriasis Area and Severity Index (PASI) score (PASI-50 response) between EDP2939 and placebo after 16 weeks of daily treatment, was not realized. However, it is worth noting that this ratio varied from lower than placebo at week 16 (19.6% EDP2939 vs 25% placebo) to better than placebo at week 20 follow-up (33.9% EDP2939 vs 26.9% placebo). In other words, if the protocol had been properly designed, the clinical trial failure of EDP2939 might have been avoided.

At this time, Evelo tried to turn the engine around again, ready to abandon the EDP2939 and pick up the EDP1815. Dr. Simba Gill said, "While we are disappointed with the Phase II results of EDP2939, we continue to believe in the value of our Small intestine Axis (SINTAX) platform and our potential product, EDP1815." We previously reported positive efficacy and safety data in a phase 2 study in mild to moderate psoriasis with EDP1815. "Given the findings of this study, we are discontinuing development of EDP2939 and are reviewing potential strategic alternatives, including pursuing partnerships with EDP1815 and the SINTAX platform."

In the heyday of innovative drug financing, as long as the clinical value is supported by sufficient data, the failure of the strategy is not enough to be fatal. Today's clinical trials are a bit of a hail Mary. Previously, Evelo tried to ease the financial pressure by laying off employees. In January 2023, Evelo cut 45% of its workforce, with further layoffs in the second quarter. But for innovative pharmaceutical companies, throttling belongs to the far water can not save the near fire.

External funding drying up

On the other hand, in the clinical trial stage, where capital needs are greatest, the two possible external financing channels are tightened at the same time, allowing microbial pharmaceutical companies to lose the opportunity for trial and error. In terms of equity financing, the total amount of money flowing to biotech has shrunk significantly. BioWorld data shows that since 2020, global investment and financing in the field of innovative drugs has cooled rapidly. From the perspective of total financing, the global innovative drug companies in 2022 absorbed a total of 60.8 billion US dollars in financing, compared with the 2020 high of 134.5 billion US dollars, less than half. Meanwhile, in the first half of 2023, the XBI index in the secondary market bucked the trend and fell during a period when the S&P 500 rose 15.9%. In the process, a large number of biotech startups, including microbial pharmaceutical companies, have received delisting warnings.

In June 2022, another microbial pharmaceutical star, 4D pharma, was delisted from the Nasdaq stock market. From the public information, 4D pharma has not made major mistakes, the clinical trial of the product in development is also progressing smoothly, and it is difficult to find other reasons for the decline in addition to financing difficulties. 4D pharma is a global leader in the development of living biotherapeutic drugs, based on the same principle of oral administration of a single bacterial strain to treat a wide range of diseases.

According to the data, 4D pharma has launched six clinical programs at the same time, They are the Phase I/II study of MRx0518 in combination with Corida ® (Pabolizumab) in the treatment of solid tumors, the Phase II clinical trial of MRx0518 in combination with BAVENCIO® (avelumab) in first-line maintenance therapy for urothelial cancer, the Phase I study of MRx0518 in neoadjuvant therapy for patients with solid tumors, and MRx0518 The Phase I study for the treatment of pancreatic cancer patients and the Phase I/II study of MRx-4DP0004 for asthma can be seen in the cash flow pressure.

Among them, in March 2022, just three months before delisting, the company's microbiome based investigational therapy MRx0518 in combination with anti-PD-1 antibody Keytruda reached the primary efficacy endpoint in a phase 1/2 clinical trial for the treatment of renal cell carcinoma. However, at a time when the decision-making threshold of investors has been raised a lot, such clinical progress seems to be difficult to attract sufficient external funding.

For biotech startups, licensing is undoubtedly an important source of funding. The early rise of microbial pharmaceuticals is also inseparable from the heavy layout of multinational pharmaceutical companies. However, in recent years, the enthusiasm of multinational pharmaceutical companies for microbial pharmaceuticals has declined significantly. According to stifel statistics, in 2023, the global pipeline authorization market maintained an almost consistent M&A rhythm with the previous year, but among the top three indications, skin and gastrointestinal diseases, which are the focus of microbial pharmaceutical companies, are not listed.

In fact, the attitude of multinational pharmaceutical companies on microbial pharmaceuticals is not only no longer radical, but has begun to retreat. In August 2022, after a thorough review of its product strategy, Takeda decided to terminate its partnership with Finch Therapeutics on FIN-524 and FIN-525. Shortly thereafter, Finch also terminated the Phase III clinical trial of its core product, CP101, as going concern risks became apparent.

In August 2022, three months after starting to lay off employees, Kaleido stopped all research and development after failing to find a suitable deal, and the Flagship microbial pharmaceutical company entered bankruptcy. However, more than half a year ago, Kaleido CEO Daniel Menichella also revealed to the media that it is expected to start a phase II study in ulcerative colitis in the first half of 2022.

Kaleido was founded in 2017 with $65 million in funding from Flagship and went public in 2019. The company has signed partnerships with J&J's Janssen and MD Anderson Cancer Center. In January 2022, Kaleido was revealed to have laid off employees and subsequently suspended the Phase II clinical trial of KB109. But this news comes just weeks after Janssen Biotech, a unit of Johnson & Johnson, expanded its research collaboration with Kaleido to pursue treatments for atopic, immune and metabolic diseases.

Without the loose external funding environment, the difficulty of commercializing a new drug is undoubtedly much greater.

New microbial drugs have completed the closed loop of commercialization

Of course, regardless of the dilemma of clinical development, the market demand for microbiological drugs is clear.

In April 2023, Seres Therapeutics' SER-109 was approved for marketing under the trade name VOWST for the treatment of recurrent Clostridium difficile infections. The commercialisation of VOWST, the world's first oral microbiome containing a beneficial gut bacterium known as Firmicutes, will be jointly carried out by Seres and Nestle, who will split the sales revenue equally.

As a new clinical drug, VOWST has achieved remarkable market feedback since its launch. According to the latest financial report released by Seres, after the approval of VOWST, it began to be marketed in the United States in June 2023, and by the end of September, 610 completed prescription registration forms had been received. Of these, 282 patients have started treatment with VOWST. In addition, VOWST is not currently covered by commercial insurance, and these prescription registration forms are submitted by more than 480 different health care providers, 78 of whom have prescribed VOWST to more than one patient.

It is worth noting that VOWST is not priced low, and there are other options besides VOWST for clinical use in the treatment of C. difficile. Clostridium difficile is a bacterium commonly found in a healthy gut microbiome. When someone takes antibiotics, it can change the balance of gut microbes and lead to a life-threatening Clostridium difficile infection (CDI). Even if they are cleared, the infection may recurs several times due to an imbalance in the gut flora.

At present, the most common clinical treatment option for C. difficile infection is fecal transplantation, but this treatment has been very poor experience, and people have been trying to develop new treatment options. In addition to VOWST, biologic agent Betuximab and enema REBYOTA are all new therapies that have appeared in recent years. Among them, REBYOTA will be launched in 2022, is the world's second approved microbial drug, it also needs to collect intestinal microbial samples from healthy donors, and traditional fecal microbial transplantation is different in the preparation of REBYOTA involves a strict charge process to ensure the stability of microbial treatment.

At this stage, there is no research data that directly compares VOWST to the above alternatives due to the short time on the market. However, from the cross-comparison of data, the effectiveness of VOWST is higher than that of REBYOTA and betuximab, and under fecal bacteria transplantation, the treatment cost is the highest among the four types of programs, but the drug route is the most friendly. The relatively good curative effect and convenient oral dosage form may be the reason for the popularity of VOWST.

In the earnings report, Seres also acknowledged that VOWST is a great product, but the commercialization prospects are uncertain due to the very high price. From a cost-control perspective, commercial insurance plans may only use VOWST as a second-line option, that is, after a cheaper alternative fails. Regardless of price, VOWST is easily the first line option for doctors and patients to prevent recurrent Clostridium difficile infections. Of course, Seres is also trying to reduce the cost of commercial use of VOWST. In August 2023, Seres closed one of its three donor collection centers and set up a donor screening lab to reduce costs.

In a sense, over the past 10 years, hundreds of clinical trials have rapidly verified the clinical value of microbial pharmaceuticals. For now, microbiotics are stuck on commercial value. When nearly half of the overseas microbial pharmaceutical star companies have collapsed, people can not help but pinch sweat for this industry. But the more granular observation is that the industry still has the opportunity to squat and jump. We still hope to see more new microbial drugs to address complex clinical challenges when the trial-and-error space and funding environment become appropriately loose.