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Biotech Beat: RXi Pharmaceuticals Corp (RXII), Zafgen Inc (ZFGN), Five Prime Therapeutics Inc (FPRX)

RXi Pharmaceuticals Corp

On October 15, 2015, RXi Pharmaceuticals Corp (NASDAQ:RXII) announced positive phase 2a results for its RXI-109 compound. The trial, known as RXI-109-1402, was comparing RXI-109 treated scars against scars that were revised by surgery — control group. To test out dosing though Rxi gave one cohort of patients 5 mg/cm of RXI-109 while another cohort received 10 mg/cm of RXI-109. One quick thing to note is that both cohorts had a control group to determine which one performed better.

The end results was that both the 5 mg/cm RXI-109 and 10 mg/cm RXI-109 performed better than control according to investigators and panelists. These investigators and panelists were given photos to determine whether RXI-109 performed better than control. These independent reviewers were asked if “Scar A” looked better “Scar B” looked better or “not different” at all. There were two different scales used.

The investigators used a Physician and Observer Scar Assessment Scale — POSAS — and panelists used a Visual Analogue Scale  — VAS. In each of the different scales the observers more correctly identified RXI-109 scars as being better than the control group. In the final assessment all observers were given all photos to make a final conclusion on the efficacy of the RXI-109 compound in scarring.

The final conclusion by panelists and investigators was that Rxi-109 showed better scar improvement over the control group with a p-value of p < 0.001. That means that over 3 months RXI-109 proved to be statistically significant in treating scars. We believe that these results validate that the sd-rxRNA technology platform works and that the company should not be trading with a market cap of $30 mil. Instead we believe a more fair value after these results posted last week should value the company with a $200 mil or higher market cap making this an attractive long-term buy.

Zafgen Inc

On October 16, 2015, shares of Zafgen Inc (NASDAQ:ZFGN) tumbled 32% in one day after the company had announced a partial clinical hold by the FDA for its obesity trials. There are two clinical trials that are on partial clinic hold now. The two trials on partial clinical hold are ZAF-311 and ZAF-312 both of which use the compound known as beloranib to treat patients with obesity. Once clinical trials are put on partial clinical hold trials are suspended until the FDA decides to finally release the hold.

The reason that the FDA had decided to put a partial clinical hold on the obesity trials was because of the death of one of the patients in the ZAF-311 trial. The ZAF-3111 trial was the one that was recruiting patients with Prader-Willi Syndrome — PWS. More specifically this ZAF-311 trial is a phase 3 clinical trial where one of the patients had died due too unknown circumstances. All the FDA knows is that the patient died while taking beloranib in the ZAF-311 trial.

The FDA is taking a closer look at this death because previous trials with beloranib saw some patients experience thromboebolic events. Therefore the FDA doesn’t want to take any chances of anyone else in the trial being adversely effected. The FDA even stated that Zafgen must screen all patients for thrombotic disease before any of them can continue with the company’s treatment. The investigation will probably take a long time to complete, but nobody knows which direction this will end up going. Although if you are a long-term investor and believe this one death to be a one time event then this is a good time to take advantage of the weakness.

Five Prime Therapeutics Inc

On October 15, 2015, shares of Five Prime Therapeutics Inc (NASDAQ:FPRX) soared as much as 62% after the company announced a collaboration agreement with Bristol Myers. The reason for this collaboration was that Bristol Myers wanted to obtain a partnership for Five Prime’s anti-body program for the treatment of multiple types of cancers. The total deal of this collaboration is a $1.74 billion type of a deal, although Five Prime received an upfront payment of $350 million.

This collaboration, as mentioned above, encompasses both companies to create a multitude of compounds for various types of cancer.  The initial program will be testing a phase 1 trial in this anti-body program. This candidate will be known as FPA008 and is known as an immunotherapy drug. Immunotherapy drugs are created to stimulate the immune system by allowing T-cells in the body to target and kill cancerous cells. This is because right now T-cells are unable to recognize and kill off cancerous cells in the body. Cancerous cells have a way to hide themselves from a patient’s own immune system thus the huge mortality rate that cancer causes.

This deal is a good one for Five Prime because it will allow them to advance the program with ease. This is because Five Prime received an upfront payment of $350 million which is the capital the company needs to advance the program to completion. Although Five Prime will still do good when the drug is marketed because it is expected to receive double-digit sales on royalty therefore it will bring in some potential future revenue as well. This deal proves that Five Prime’s anti-body program will do well in the long run and like most companies that receive big pharma backing  the company’s share price should continue to go higher in the coming months.

Disclosure: This Author Is Long Rxi Pharmaceuticals (RXII)

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