Soligenix, Inc. investors may have an opportunity to capitalize on what appears to be a significant disconnect between current share prices and near-term catalyst opportunities. Currently, shares of Soligenix (NasdaqCM: SNGX) continue to consolidate around the $0.95 level after trading lower on extremely positive news related to its ongoing SGX942 trial to treat oral mucositis in patients with head and neck cancer, an unmet medical need. From a trial perspective, the news offered insight into the late-stage analysis of the trial, and recent communication from the Data Monitoring Committee (DMC) suggests that the company’s late-stage Phase 3 trial, DOM-INNATE, is meeting its 90% statistical powering measure to effectively treat oral mucositis in H&N cancer patients.
More specifically, on August 28th, Soligenix announced in a news release that the DMC issued a positive recommendation to continue enrollment in the company’s ongoing Phase 3 trial targeting the treatment of oral mucositis in patients with head and neck cancer. The DMC did request that SNGX increase the enrollment size of the trial by 70 patients in a move to maintain a 90% statistical significance measurement. And, many are looking at that request as a clue that the DMC likes what they see thus far. After all, they could have stopped the trial for futility if they believe that the 90% threshold was not an attainable endpoint.
Furthermore, although the news appears to be all good, investors may have misunderstood the causes of the trial size increase. Specifically, unlike many notes from the FDA and DMC related to trial design and process, this addition to the enrollment size to 260 patients from the initial 190 patient design is not going to cause a reporting delay. Notably, to that point, Soligenix has already commented in an interim analysis update that they are expecting to release topline data during the first half of next year. And, that timeline is consistent with original data release expectations.
Video Link: http://www.youtube.com/embed/_AjbBBVlfr4
Reading Between The Lines Of The DMC Recommendation
For investors, a value opportunity may be growing, and with it a chance to take advantage of what is likely a temporary slide in share price ahead of the approaching SGX942 data release.
To support that thesis, both the company and its investor base pointed out that the recommendation to increase the sample size may be an indication of a promising signal that the company is on track to achieve its primary endpoint. Additionally, rather than seeing the DMC action as a negative, Soligenix’s Chief Medical Officer recently commented in a Zack’s Small Cap Research interview that the DMC’s request to increase the sample size was likely required to account for any potential variability observed in the Phase 3 trial that differs from the trial’s original design assumptions. Thus, some are concluding that the trial data may already be close or even ahead of its 90% statistical power; otherwise, the DMC would have likely ended the trial for futility. Moreover, it’s also important to note that there have been no safety concerns cited by the DMC based on the interim analysis.
In addition to the positive assumptions, during the Zack’s interview, Dr. Richard Straube, Soligenix’s Chief Medical Officer, offered his expertise into the trial design, the DMC request, and the meaning of the trial designs statistical power measurements.
Soligenix CMO Makes Notable Observations From DMC Request
During an August 2019 interview with Zack’s Small Cap Research, Dr. Straube made some poignant observations about the DMC’s request to increase the enrollment numbers. He provided a rational explanation to several initial concerns. His first observation related to the study design and the DMC request to increase enrollment. Responding to whether or not he was surprised by the required increase of 70 patients to the study, he said,
“Nothing is wrong with the study. Given the uncertainties involved with predicting outcomes for any clinical trial, the recommended increase in sample size is not dramatic. Reviewing the medical histories of the patients currently enrolled in the trial, there is nothing to lead us to believe that there is anything other than increased inter-patient variability that always changes between clinical trials. This could easily arise with expansion of the trial to a larger number of clinical sites and expansion into Europe that was required to complete the larger trial in a reasonable timeframe, and to support use of the study for a marketing authorization application with the European Health Authorities.”
Additionally, he explained that an increase in a study’s sample size is not uncommon, especially when it’s related to maintaining statistical significance. To that end, he gave a layman’s explanation of how the process works by saying,
“I will try to explain without being too technical. Please bear with me. The initial sample size of 190 was a “best estimation” based on both statistical requirements and expected relative outcomes in the treated and control arms of the Phase 2 clinical trial. Statistically, you must decide the degree of risk that you will accept that the trial will be “negative” despite the drug actually working (false negative result) referred to as the power of the trial (statistical jargon “1-β”; in our case set to 90%) and the risk that the trial is “positive” despite the drug actually working (false positive result), referred to as the statistical threshold. But again, differences between the Phase 2 and Phase 3 study are anticipated given the broader number of clinical centers in more countries included in the Phase 3 study, which was critical to ultimately allow us to pursue marketing approval in Europe and the US, and other jurisdictions, as well as enabling us to complete the trial in a reasonable timeframe.”
DMC Provides Clue To Meeting 90% Statistical Significance
After determining that the news from the DMC is more likely a positive event than a negative, investors may be looking at an opportunity to take advantage of what may be considered a mispricing of assets ahead of key trial data. After all, with the study being 100% blinded to the Soligenix management team, it may be more important at this juncture to read between the lines of what the DMC may have intimated. Moreover, investors that follow biotech companies and their trials are more apt to recognize that a contributing factor of the resizing recommendation may be more likely related to the placebo population, which may be responding in a slightly different way than they did during the Phase 2 study, an event that is not to be unexpected. In fact, Soligenix has pointed out that in almost every clinical study done in recent years to treat oral mucositis, the placebo populations have varied in their response from trial to trial.
Dr. Straube made additional comments about the trial design. When asked about the company’s high threshold for 90% statistical significance, he explained,
“I know for those not living clinical development, this concept of power can be difficult to understand. Power basically measures the risk that an efficacious drug does NOT achieve statistical significance. A power of 80% vs. 90% doubles the risk that the drug works but does not achieve statistical significance. We believe SGX942 has the potential to dramatically affect these critically ill patients. This belief is anchored in the very consistent results ranging from preclinical to clinical studies. Therefore, we have determined that the additional sample size to give SGX942 the best opportunity for success is well worthwhile. Since Soligenix remains completely blinded, it is impossible for us to estimate what the sample sizes would be at other powers, but it’s safe to say it would be less.”
Moreover, he offered insight into the difference between a 190 and 260 enrollment size, saying,
“We have no idea what the power of the trial would be if the same rates of success in the two treatment groups continued through the remainder of enrollment to 190 patients, other than it is less than 90%. In fact, we may still have achieved statistical significance at 190 patients; however, you must keep in mind that for the efficacy analysis, the DMC was tasked with providing guidance so that our high power calculation of 90% was maintained, assuming there was a promising and meaningful signal in the primary endpoint, which there obviously appears to have been.”
But, at the end of the day, it’s the results of the trial that matter most.
Closing In On SGX942 Top-Line Results
What is a known variable at this point is that at the end of the day, both investors and the Soligenix team want positive results. And, as it stands, the chance for a positive trial enrolling 260 evaluable patients stands at 90%. Also, analysis of the current data further suggests that the failure risk is reduced with an increased patient population because the trial is based on actual enrollment size measured across sites the US and Europe. In addition to lowering the chances of an endpoint miss, the increased patient data also increases the chances that many of the trial’s secondary endpoints targeting infection rate and tumor resolution may also demonstrate statistical benefit. That could also position SGX942 with important distinguishing factors as it heads toward commercialization.
From a funding perspective, Soligenix has stated on multiple occasions that they have the cash resources to complete the trial without the need to raise additional capital. The company also does not expect any problems related to enrolling the additional patients and views the feedback from the DMC as an event that strongly suggests that SGX942 is demonstrating benefits.
Finally, it may be prudent to view the recommendation by the DMC to continue enrolling patients as a positive event. Clearly, it’s not a stretch to conclude that the DMC would not subject additional patients to a treatment that was showing little benefit in treating oral mucositis.
Perhaps most importantly, Soligenix does not expect any delay in the release of topline data, which is still expected in the first half of 2020. And, with interim data already suggesting that the primary endpoints can likely be met, revenue models by Zack’s indicate that the commercialization and potential revenues from SGX942 could translate into a more appropriate valuation of $8.00 per share for the stock. Compared against recent share price levels, that increase could deliver a more than 750% return.
And, if investors continue to trade on what is known, rather than speculate to the contrary, SGX942 appears to be on track to help drive shareholder value substantially higher.