APLT Surge on Regulatory Update | SKYE and CRBP Opportunity After Novo's Obesity Data
Lickety-Split Analytics
Good morning. This week we’re focused on Applied Therapeutics’ positive regulatory update and have a couple of stock ideas after Novo’s phase 2a CB1 targeted obesity data release.
Applied Therapeutics (APLT) Price Surge on Positive Regulatory Update
Applied Therapeutics (APLT), a clinical-stage biopharmaceutical company focused on rare metabolic diseases, received positive regulatory news for their Classic Galactosemia program.
Following a late-cycle meeting, the FDA decided to waive the previously planned Advisory Committee meeting, a decision that suggests confidence in the company’s clinical data. The stock traded up 68.8% last Wednesday from the previous day’s close.
This positive development could potentially prevent delays in approval, reduce regulatory burden, and expedite patient access. The phase 3 trial missed its primary endpoint over 18 months (p=0.103) which was the Global Statistical Test, a composite of activities of daily living, behavior, cognition, speech, and more. Speech therapy was included in both the active and placebo groups. After a reanalysis, excluding the erroneous speech endpoints from the composite score, the p-value was statistically significant (p=0.0205).
The FDA has confirmed that priority review is continuing as planned with alignment on post-marketing requirements expected in October 2024. The candidate’s PDUFA action date of 11/28/24 remains on track. The drug is positioned with the potential to be the first approved therapy for Galactosemia, a disease with significant unmet medical need. The EMA’s decision is anticipated in early Q1 2025.
Weakness in Corbus Pharmaceuticals (CRBP) and Skye Biosciences (SKYE) After Novo Released Obesity Data
Novo Nordisk announced phase 2a data for their CB1 targeted obesity drug on Friday, causing distress to other CB1 focused obesity companies: Corbus Pharmaceuticals (CRBP) and Skye Biosciences (SKYE).
On the day of the release, Novo Nordisk lost $29.7B in market cap, Skye Biosciences’ price fell 42.8%, and Corbus’ price dropped 62.2%.
Novo Nordisk’s (NVO) Data:
Novo’s phase 2a trial evaluated 10mg, 20mg, and 50mg dosing groups against placebo in 243 patients over 16 weeks. While all doses demonstrated statistically significant weight loss compared to placebo, the company emphasized the 10mg dose, which achieved a 7.1 kg (15.6 lbs) reduction versus a 0.7 kg (1.5 lbs) in placebo. Investors raised concerns surrounding the company’s statement, “limited weight loss was seen at higher doses of monlunabant,” suggesting efficacy plateaus at higher doses. Furthermore, the reported mild to moderate neuropsychiatric side effects could pose a huge challenge for an obesity focused drug, which we believe is the primary concern of investors.
The combination of these factors has led investors to write off CB1 as an obesity target, but potentially rashly and prematurely. The decision to proceed with a phase 2b trial suggests that Novo remains optimistic about the drug’s potential. The decision to initiate a phase 2b, rather than a large phase 3 study, is likely a prudent decision meant to answer lingering questions about the neuropsychiatric side effects. That being said, there was nothing mentioned about depression or suicide scales, a significant safety concern, however, neuropsychiatric events were centered on anxiety, irritability, and sleep disturbances, and their severity was dose dependent.
Even if Novo’s drug is to be written off completely, investors may be presented with an interesting entry point into Corbus and Skye.
Corbus Pharmaceuticals (CRBP):
While we are less familiar with Corbus and generally prefer later stage assets, they expect to initiate their phase 1 clinical trial for CRB-913 in Q1 2025. Preclinical data suggests that CRB-913 has higher peripheral exposure and lower brain penetration than competitors, 10x (correction: 21x) lower than Sanofi’s CB1 inverse agonist Rimonabant in their mouse models. Corbus also has a number of trials ongoing in solid tumors, but given the market’s reaction to their obesity candidate, it might make an interesting play for those seeking to bet against the prevailing sentiment.
Skye Biosciences (SKYE):
Skye’s recent press release highlighted its monoclonal antibody CB1 inhibitor as a potential outperformer against Novo’s small-molecule CB1 inverse agonist. Due to the larger size, the monoclonal antibody is less likely to cross the blood-brain barrier than the small-molecule, reducing the risk of neuropsychiatric side effects. This advantage was evident in preclinical non-human primate trials and observed in a limited patient population (N=62) during their phase 1 NAFLD study. Skye launched their phase 2 trial in obesity in August. The study is also assessing the combination of a GLP-1 and their CB1 inhibitor. Interim weight loss data is expected in Q2 2025, and topline data is anticipated in Q4 2025.
On the day Novo’s data was released, Cantor Fitzgerald released a report on Skye Biosciences that appeared bullish on the price weakness and somewhat unsure about what constitutes optimal weight loss given GLP-1 counterparts. Cantor assigned an overweight rating and a $14 price target. Piper Sandler also released a report the same day stating that they, “are buyers of SKYE on today’s weakness,” and gave a $20 price target.
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