Polyphor — Phase III ORR data on track for Q221

Polyphor has completed enrolment of its pivotal FORTRESS study, which is a randomised global controlled trial studying balixafortide with eribulin versus eribulin alone, in 432 previously treated HER2-negative advanced breast cancer patients. Additionally, three pre-specified interim analyses conducted by the data safety monitoring board have now been completed (after 193, 284 and 401 patients had been randomised) with no modifications recommended. The primary endpoint of the trial is PFS 12 months after the last patient is randomised. Those data are expected for Q421 and, if positive, would enable a standard NDA filing with the FDA and a filing with the EMA (although the EMA may also require some interim overall survival (OS) data for approval).

However, depending on the data, Polyphor may be able to file for accelerated approval with the FDA (but not the EMA) on ORR data assessed in patients with measurable disease who are third line or later (estimated by the company to be 66–75% of the study population) based on discussions with the agency. These ORR results should be available in Q221, six months after the last patient is randomised. Additionally, if the p value of the balixafortide + eribulin arm versus eribulin is p≤0.001, Polyphor plans to first apply for breakthrough therapy designation (BTD) with the FDA (the agency typically responds within just 60 days) before filing for accelerated approval. A BTD allows for more intense FDA involvement in the drug development process, an organisational commitment of senior managers and eligibility for both rolling and priority review.

As a reminder, data for balixafortide have so far have been positive, although early, and come from a Phase I dose-escalation study in combination with eribulin in 56 HER2-negative metastatic breast cancer patients (23% of which were triple negative). These patients were heavily pre-treated with 78% having three or more prior chemotherapy regimens.1 In this trial there was a clear dose response with the high dose (the dose chosen in the Phase III FORTRESS study) achieving ORR, median PFS and median OS greater than was previously seen with eribulin alone. It is always tough to compare across trials, especially small Phase I trials versus Phase III results, but eribulin has not typically seen 38% response rates as a monotherapy (ORR has typically been around 13% as seen in its Phase III trial, see Exhibit 1) so this is likely indicative of an effect of balixafortide therapy.

Additionally, four of the nine patients who responded in the Phase I had a ‘late onset response’, which is something not typically seen with eribulin but would be more likely with a compound like balixafortide (see Exhibit 2) that is not directly cytotoxic but has an effect on tumour migration,2 growth and angiogenesis.3

Beyond Phase III, Polyphor plans to expand into other segments of oncology. A Phase I/IIa trial of balixafortide with nab-paclitaxel in first line metastatic breast cancer patients is expected to begin in Q321. In mouse models of breast cancer, the combination of balixafortide and paclitaxel led to 87% tumour volume inhibition versus control, compared to 58% tumour volume inhibition with paclitaxel alone.

Additionally, Polyphor has identified a novel CXCR4 inhibitor and plans to initiate pre-clinical development in hematological cancers this year. In vitro data indicated dose-dependent synergistic effects with two different standards of care against both sensitive and resistant hematologic cancer cell lines. Experiments in a number of hematologic cancers are ongoing. A patent application filing is expected in Q221 with the disclosure of the compound to be made afterwards. Human clinical trials may begin as early as H222.

The company has conducted research in collaboration with the University of Basel on balixafortide’s antiviral effects on COVID-19. These ex vivo experiments showed a clear and consistent effect. Beyond the antiviral effect, the anti-inflammatory effect of CXCR4 inhibition may be beneficial in COVID-19 patients as overexpression of CXCR4 has been seen in the lungs of severe COVID-19 patients.4 The precise mechanism of action is under investigation and additional pre-clinical studies have been commissioned. The feasibility of a human clinical trial programme is being assessed.

In December, Polyphor was granted a CTA by the UK Medicines Healthcare Products Regulatory Agency for inhaled murepavadin for the treatment of P. aeruginosa infection in CF patients. Patient enrolment in the Phase I trial is expected to begin in Q3, later than the company initially expected due to some primary packaging changes to improve product stability. The trial will include single and multiple dosing in healthy volunteers for up to seven days. A Phase Ib/IIa study is also being planned and will be partially funded by a grant of up to US$3.3m from the Cystic Fibrosis Foundation.

Polyphor also has a preclinical antibiotics programme that consists of outer membrane protein targeting antibiotic (OMPTA) BamA and Thanatin. OMPTA BamA targets gram-negative bacteria such as Enterobacteriaceae, P. aeruginosa and A. baumannii and so far has shown a very low propensity for resistance in in-vitro experiments, according to the company. Polyphor is working on the formulation and peptide design. The Thanatin programme is a narrow spectrum gram-negative antibiotic focusing on carbapenem-resistant Enterobacteriaceae as commonly used antibiotics are generally inactive against this infection.5 Both programmes are receiving funding from the Combating Antibiotic-Resistant Bacteria Biopharmaceutical Accelerator (CARB-X), a global partnership led by Boston University. For OMPTA BamA, in December CARB-X has committed to additional funding of up to $2.3m (bringing the total for this stage to $US5.1m) and Polyphor may receive up to US$13m in future option stages if project milestones are met. CARB-X is also funding the Thanatin programme with US$2.6m initially and up to an additional $15.8m if certain milestones are met.

We have increased our valuation of Polyphor to CHF474m or CHF42 per basic share, from CHF413m or CHF37 per basic share, mainly due to rolling forward our NPV model. This was offset in part by lower net cash. Note that we only attribute value to balixafortide’s programme in previously treated advanced breast cancer patients, as it is the only programme in human clinical trials. Once additional trials are initiated. we will include those programmes in our valuation. Additionally, the upcoming data from the FORTRESS study may have a significant impact on our probability of success for that programme.

The company recently reported 2020 results. The net loss was CHF44.9m, down 30% from CHF64.7m in 2019. The majority of this difference was due to a US$15m upfront payment from Fosun Pharma for the Chinese rights to balixafortide. Additionally, R&D expenses fell 14% to CHF52.3m from CHF60.7m. The company had CHF30.7m in net cash (CHF34.3m gross cash and CHF3.6m in gross debt) at 31 December 2020 and has guided for CHF41m to CHF45m in operating expenses for 2021. Based on this guidance we have lowered our 2021 R&D estimate from CHF42.3m to CHF39.3m. Our normalised 2021 operating loss estimate is now CHF44.8m compared to CHF48.6m previously. We have also introduced our 2022 estimates, which feature R&D expenses of CHF35.3m and a normalised operating loss of CHF41.1m. We expect R&D to decline in 2022 as FORTRESS study expenses should be winding down by then.

To potentially assist with near-term funding, in July 2020 the company announced an equity-linked financing arrangement with IRIS, a French financial firm, to raise up to CHF19.3m over the next two years. Under the terms of the agreement, IRIS may buy 24 tranches of CHF800,000 worth of zero-coupon mandatory convertible bonds on a monthly basis. These bonds would then convert into shares at a discount to the volume weighted average price every month. CHF2.4m of this facility had been used by the end of 2020.

If Polyphor partners balixafortide, it should greatly alleviate a significant portion of any future financing needs as commercialisation and any additional R&D would likely be the responsibility of the partner. However, if it does not partner the product in the US and EU, we estimate it would need to raise CHF205m (previously CHF220m) through 2024, which we record as illustrative debt per Edison policy. We continue to model that the company will raise CHF40m in 2021, modelled as illustrative debt.