Applied Therapeutics (APLT) and its investors received a welcome surprise Wednesday when the FDA scrapped plans to hold an Oct. 9 advisory committee meeting to review its lead pipeline candidate, the classic galactosemia treatment govorestat, ahead of a planned November decision on approval.
By canceling its planned meeting, the Genetic Metabolic Diseases Advisory Committee (GeMDAC) signaled that the FDA is likely to approve govorestat as the first-ever treatment indicated for classic galactosemia on or before its Prescription Drug User Fee Act (PDUFA) target decision date of November 28.
That expectation, reinforced by favorable comments from two analysts, in turn, set the stage for a buying surge that sent Applied’s stock price soaring 72%, paced by a 69% jump Wednesday from $4.65 to $7.85.
Shares of Applied continued to rise late this past week, inching up 2% to an even $8 Thursday after climbing 13% to $8.87 shortly after midday. On Friday, shares rose 3.5% to $8.28 five minutes into the trading day, before sinking to $7.93 as of 1:55 p.m., a nearly 1% dip.
“Although the FDA’s decision to not host an AdCom meeting for govorestat is unexpected, we view this outcome as favorable for Applied as it suggests that the regulators are comfortable with the totality of the clinical data submitted to make a regulatory decision on or prior to the November 28 PDUFA,” Lachlan Hanbury-Brown, an analyst covering biotech companies for William Blair, and three colleagues wrote Wednesday in a research note.
Added Brian P. Skorney, senior research analyst with Baird, in a Thursday research note: “While we expected the AdCom to be positive anyway, management told us they had a collaborative late-cycle meeting with the agency. Our takeaway was that this cancellation is part of a broader favorable development within this division and we believe Applied should be moving into labeling discussions by Halloween.”
Joseph P. Schwartz, a biopharma analyst who focuses on rare disease drugs with Leerink Partners, offered a similarly upbeat analysis.
“We are incrementally more positive on a potential approval and are increasing our PoS [probability of success] from 70% to 85%,” Schwartz wrote Wednesday in a research note. “We see the potential for substantial upside on approval and commercialization.”
Substantial upside exists not only in galactosemia, Schwartz wrote, but in the second indication for which govorestat is being developed, the hereditary neuropathy sorbitol dehydrogenase (SORD) deficiency. On that basis, Schwartz also raised Leerink’s 12-month price target on Applied shares 27%, from $11 to $14, adding: “We are raising our PoS for both galactosemia and SORD deficiency.”
In SORD deficiency, Schwartz raised Leerink’s PoS for approval from 60% to 85%, reasoning that govorestat “is arguably an easier sell on approval” since the canonical polyol pathway is directly implicated in the disease—and since the FDA’s neurology division has shown greater willingness to apply “regulatory flexibility.”
$870M peak sales forecast
Govorestat (AT-007) is a central nervous system (CNS) penetrant aldose reductase inhibitor designed to treat several rare neurological diseases—including galactosemia, SORD, and PMM2-CDG—by blocking the conversion of glucose to sorbitol.
Schwartz and Leerink have forecasted worldwide peak sales for govorestat in classic galactosemia of ~$870 million in 2035. While Applied retains U.S. commercialization rights, it has partnered with privately-held Advanz Pharma on exclusive commercial rights in the European Economic Area, Switzerland, and the U.K. for govorestat in both galactosemia and SORD deficiency.
In Europe, Applied could receive development milestone payments for clinical trial completion and marketing authorization, as well as commercial sales milestones, all potentially totaling over €130 million (about $145 million), plus royalties of 20% on future net sales of govorestat.
As a result, Leerink’s peak sales estimates translate to Applied receiving unadjusted total revenue of ~$560 million in 2035, just for the classic galactosemia indication.
Leerink cited figures from Applied, which last year estimated a potential patient population of ~3,000 classic galactosemia patients in the United States and another ~4,000 in the EU for govorestat. The company estimates that ~75–80 new classic galactosemia patients in the U.S. and ~115–120 new classic galactosemia patients in the EU are born every year.
“We assume pricing of $325,000 per patient per year in the U.S. and $275,000 per patient per year in the EU and relatively modest peak penetration in 2035E (30% in U.S. and 22% in EU),” Schwartz estimated.
Joining Skorney, Schwartz, and Hanbury-Brown in expressing bullishness on Applied’s shares was Citi analyst Yigal Nochomovitz, who raised his firm’s price target 38% from $8 to $11 and maintained its “Buy” rating.
So far this year Applied shares have more than doubled, zooming 116% from $3.64 on January 2. As StockWatch reported a month later, Applied shares began taking off February 14–16 when they soared 101% to $5.38 after Applied reported positive interim 12-month results for govorestat from another Phase III trial—the INSPIRE study (NCT05397665), which assessed once-daily oral govorestat in 56 patients ages 16–55 with SORD in the United States and Europe. Govorestat met INSPIRE’s primary endpoints and several of the trial’s key secondary endpoints.
But Applied saw a setback to govorestat in March, when the FDA extended by three months its PDUFA date for the drug, from the initial target of August 28. According to a company announcement, the FDA told Applied that it “required additional time to review supplemental analyses of previously submitted data” provided in response to routine information requests from the agency.
The FDA concluded that the additional information constituted a Major Amendment to Applied’s New Drug Application (NDA) for govorestat, which the agency is reviewing under “Priority Review.”
Submission package
The FDA accepted Applied’s NDA filing in February, based on a submission package that included clinical outcomes data from the Phase III registrational ACTION-Galactosemia Kids trial evaluating govorestat in children aged 2–17 with galactosemia; the Phase I/II ACTION-Galactosemia trial (NCT04117711) in adults with galactosemia, and preclinical data.
ACTION-Galactosemia Kids was designed to evaluate the impact of govorestat vs. placebo on clinical outcomes over time in 47 children aged 2–17 with galactosemia. The primary endpoint was the Global Statistical Test, a composite consisting of four endpoints: OWLS-2 Oral Expression, OWLS-2 Listening Comprehension, BASC-3 Behavior Symptoms Index, and the BASC-3 Activities of Daily Living. An additional pre-specified sensitivity analysis included cognition in the primary endpoint (NIH-Toolbox Cognition Battery).
While acknowledging that govorestat did not meet statistical significance defined as a p value of <0.05 on the primary endpoint, Applied emphasized that govorestat showed consistent and sustained clinical benefit vs. placebo across the range of functional measures. Applied said govorestat patients also demonstrated systematic improvement over time for the overall primary endpoint (p=0.1030) and pre-specified sensitivity analyses that included cognition (p=0.0698).
Applied also cited biomarker data from the dose range finding pharmacokinetic/pharmacodynamic portion of the study, which showed a 40% reduction in mean plasma galactitol—a reduction the company said was not only substantial but statistically significant vs. placebo.
“We continue to believe that govorestat has demonstrated a strong efficacy/safety profile, with some patients on continuous govorestat treatment out to three years, which should lead to an approval of govorestat on or before the November 28 PDUFA, in our view,” Hanbury-Brown of William Blair predicted.
In dropping the planned advisory committee, Applied said, the FDA told the company that the priority review of the NDA was continuing as planned toward the target PDUFA date, with the agency and Applied expected to align on post-marketing requirements next month.
“We are incredibly pleased by the ongoing collaborative dialogue with the FDA during the NDA review process, and we look forward to continuing to work together with the agency to bring the first potential treatment to classic galactosemia patients,” Shoshana Shendelman, PhD, Applied’s founder and CEO, said in a statement.
“Canary in the coal mine”
Skorney of Baird said Applied’s NDA for govorestat will hinge in part on the FDA’s decision on Zevra Therapeutics (ZVRA)’s arimoclomol, an oral first-in-class treatment for Niemann-Pick disease type C (NPC) that won agency approval Friday under the name MIPLYFFA™: “This decision serves as a canary in the coal mine for Applied’s submission, indicating how much flexibility the DRDMG [Division of Rare Diseases and Medical Genetics] reviewers will employ for these rare diseases with high unmet need but controversial efficacy data.”
Citing Applied’s positive description of its talks with the FDA, Skorney predicted: “Short of a deficiency letter in the next few weeks, which we see as unlikely given the back-and-forth between Agency and sponsor to this point, our takeaway is that the galactosemia NDA is on pace for approval by the November 28 PDUFA date.”
Govorestat has also been granted the FDA’s Rare Pediatric Disease Designation and will, upon approval, qualify for a Priority Review Voucher (PRV)—as long as the PRV program is reauthorized so it can continue past September 30. Absent reauthorization, as of that date, the FDA may not award a rare pediatric disease designation while the agency can only continue awarding PRVs through September 2026.
PRVs have been sold for as much as $350 million and are now trading at around $100 million, according to Kids V Cancer, a nonprofit that advocates for biopharmas to develop drugs for children with cancer and other life-threatening diseases.
On Wednesday, the U.S. House of Representatives’ Energy and Commerce Committee approved an extension of the PRV program through September 30, 2029, by passing 43–0 and reporting to the full House the “Give Kids a Chance Act of 2024” (H.R. 3433) led by Rep. Michael T. McCaul (R-TX) and Anna Eshoo (D-CA).
McCaul and Eshoo joined Reps. Gus Bilirakis (R-FL), Lori Trahan (D-MA), Michael Burgess (R-TX), and Nanette Barragán (D-CA), in introducing the Creating Hope Reauthorization Act of 2024 (H.R. 7384) earlier this year, which was folded into Give Kids a Chance. A Senate version of the Creating Hope Reauthorization Act (S. 4583)—introduced by U.S. Sens. Bob Casey (D-PA) and Markwayne Mullin (R-OK)—would extend the PRV program through September 30, 2030.
Leaders and laggards
- Achilles Therapeutics (ACHL) shares surged 36% from $0.69 to $0.94 on Thursday, after the company announced it will shrink its workforce among a series of cost-cutting measures that include ending development of TIL-based cNeT therapy, as well as halting its Phase I/IIa CHIRON trial (NCT04032847) and Phase I/IIa THETIS trial (NCT03997474). Achilles said it will refocus its strategy to explore further partnerships with third parties developing alternative modalities to target clonal neoantigens for the treatment of cancers, such as neoantigen vaccines, antibody-drug conjugates (ADCs), and T cell receptor-engineered T cell (TCR-T) therapies. Achilles has hired BofA Securities as a financial advisor to assist in exploring and reviewing “value-maximizing strategies.”
- Corbus Pharmaceuticals Holdings (CRBP) shares nosedived 60% from $51.70 to $21.04 Friday as of 1:58 p.m. ET, as investors responded to Phase IIb data for a Novo Nordisk (NOVO-B.CO, NVO) weight loss candidate with a similar mechanism to Corbus’ CRB-913, a preclinical candidate for obesity and related conditions. Both CRB-913 and Novo Nordisk’s monlunabant (formerly INV-0202) are oral cannabinoid receptor 1 (CB1) inverse agonists. Novo Nordisk reported all doses of monlunabant achieved statistically significant weight loss vs. placebo 16 weeks after treatment from a baseline body weight of 110.1 kg (242.7 lbs.) Patients receiving a once-daily 10 mg dose of monlunabant lost 7.1 kg (15.65 lb.) vs. 0.7 kg (1.5 lb.) with placebo. But investors appeared spooked by Novo Nordisk’s disclosure of “mild to moderate neuropsychiatric side effects, primarily anxiety, irritability, and sleep disturbances,” which were dose dependent with monlunabant vs. placebo—and extended that concern to CRB-913, which is expected to enter Phase I and dose its first patient next year. Novo Nordisk shares traded on Nasdaq Copenhagen dropped 5% Friday from DKK 898.20 ($134.38) to an even DKK 850 ($127.17).
- Edgewise Therapeutics (EWTX) shares leaped 55% from $19.07 to $29.50 Thursday, after the company announced topline data from two trials assessing its oral selective cardiac sarcomere modulator EDG-7500. A Phase I trial in healthy subjects (NCT06011317) showed EDG-7500 to be well-tolerated without meaningful changes in left ventricle ejection fraction (LVEF). In the single-dose arm of the Phase II CIRRUS-HCM trial (NCT06347159) in patients with obstructive hypertrophic cardiomyopathy (HCM), EDG-7500 showed robust left ventricular outflow tract (LVOT) gradient reductions without meaningful changes in left ventricle ejection fraction (LVEF). Based on the strength of clinical and preclinical data, Edgewise said, it launched the 28-day portion of CIRRUS-HCM in patients with obstructive and non-obstructive HCM. The company expects to report initial 28-day data in the first quarter of 2025.
- NuCana (NCNA) shares more than doubled, zooming 151% from $2.54 to $6.37 September 16, the first trading day after the company presented positive final data from the Phase II NuTide:701 trial (NCT03829254) assessing the combination of NUC-7738 and Merck & Co. (MRK)’s Keytruda® (pembrolizumab) in patients with metastatic melanoma who were refractory to or had relapsed on prior PD-1 inhibitor therapy. In a 12-patient cohort, nine (75%) achieved disease control, including two who achieved partial responses. One of the two achieved a 55% reduction in tumor volume. Seven of the 12 patients had a progression free survival time of greater than five months, which according to NuCana “is highly atypical in this patient population.” The data was presented at the European Society for Medical Oncology (ESMO) Congress 2024. However, the stock surge quickly gave way to a selloff, as shares tumbled 42% to $3.70 Tuesday and fell another 7% to $3.44 Wednesday.
- Singular Genomics Systems (OMIC) shares jumped 31% from $12.81 Monday to $16.79 Wednesday, after Kevin Tang, managing director of life sciences-focused investment firm Tang Capital Management, snapped up $1.8 million worth of the company’s stock over three days, Investing.com reported. Tang acquired 50,416 shares averaging $12.74 a share on September 16, followed by 40,000 shares at a weighted-average share price of $15.33 on Tuesday, then another 32,000 shares at an average price of $17.21 a share. By Thursday, however, Singular’s shares fell 3% from $16.79 to $16.22 as word spread among investors that Concentra Biosciences—whose controlling shareholder is Tang Capital Management had made an unsolicited $12/share offer for Singular—an offer that Singular finally acknowledged in a statement issued about an hour after the closing bell.
