[Updated 5/25/16 2:35 pm with analyst comments. See below.] After advancing its experimental prostate drug to late-stage clinical trials, San Diego-based Sophiris Bio (NASDAQ: SPHS) has been assessing its strategic options before choosing the best way to continue the clinical trials and seek FDA approval.
In the past few weeks, Sophiris has raised additional capital to extend its operations for at least one more year. It also has hired an investment banking firm to help evaluate its strategic alternatives, and has cut its workforce in half to reduce its operating expenses.
[Updates with analyst comments here and below.] Sophiris is most likely seeking a big pharmaceutical partner to help underwrite additional clinical studies needed before the company can seek FDA approval for its sole drug candidate, according to Jason McCarthy, a biotech analyst for Maxim Group, a New York investment banking firm.
Sophiris moved to San Diego from Vancouver, BC, five years ago, after completing pre-clinical studies and related testing of PRX302, an experimental drug for treating men diagnosed with an enlarged prostate, formally known as benign prostatic hyperplasia (BPH).
Since then, Sophiris CEO Randy Woods says the company has advanced the drug, now known as topsalysin, through an initial Phase 3 clinical trial that demonstrated a statistically significant improvement in treating BPH symptoms. Men with BPH usually experience difficulty urinating, and get up frequently at night to urinate. The symptoms vary; their urinary stream may be weak or intermittent. In some cases, BPH can lead to infection, bladder stones, and reduced kidney function.
The current standard of care often begins with prescription drugs such as tamsulosin (Flomax), finasteride (Proscar), and tadalafil (Cialis), and moves to various surgical options, or laser, ultrasound, or microwave therapies. Potential side effects range from nausea and decreased sex drive from the drugs to urinary incontinence, sexual dysfunction, and infertility from more invasive procedures.
The company estimates that roughly 3 million men are prescribed BPH drugs each year in the U.S., but many experience side effects like sexual dysfunction that diminishes their quality of life.
According to Sophiris, topsalysin could provide long-term relief of BPH symptoms with no quality-of-life impairments. In addition, Sophiris says the drug shows promise as a potential treatment for low-grade, localized prostate cancer, based on a preliminary review of biopsy data from the first seven patients in an early Phase 2 proof-of-concept study.
Topsalysin is a recombinant form of proaerolysin, a biologic that converts to the toxin aerolysin. Sophiris genetically modified proaerolysin so the toxin can be activated by only one enzyme—the prostate-specific antigen (PSA), which is found only on the surface of prostate cells and nowhere else in the body. The drug is injected into the prostate near the urethra, where PSA activates the toxin, causing nearby prostate cells to rupture and disintegrate—thus alleviating the symptoms of BPH.
“We are not aware of any other drugs in development that use the same mechanism of action,” Woods says.
In the clinical study, which involved 479 patients in the United States and five other countries, patients who got a single injection of topsalysin reported a statistically significant improvement in their BPH symptoms. As Sophiris reported in November, topsalysin also demonstrated a favorable safety profile, with no evidence of any treatment-related sexual or cardiovascular side effects.
The primary endpoint of the “Plus-1” study was based on the questions that make up the International Prostate Symptom Score (IPSS). It showed the topsalysin-treated patients reported an overall 7.6 point improvement in their IPSS scores over a 52-week period.
“That single, four-minute administration gives a patient at least 12 months of relief, with no sexual dysfunction or adverse cardiovascular events,” Woods says.
For cancer patients, the method of injecting the drug into the prostate would be the same, aided by advanced 3D imaging that enables doctors to guide the needle more precisely into tumorous prostate cells. The drug acts in the same way, with PSA produced by cancerous prostate cells converting proaerolysin into a toxin that causes cancerous cells to rupture.
The encouraging results of both studies have Sophiris at something of a crossroads, with a single biologic drug candidate that could qualify in two different therapeutic categories. As Woods puts it, “The fact that we’re talking about one drug with two indications means that we get two shots on goal.”
Before Sophiris could seek FDA approval for topsalysin as a treatment for BPH, however, the company would have to complete a second Phase 3 clinical trial. To advance the biologic as a potential drug therapy for prostate cancer, Woods says the next step would require another Phase 2 clinical trial with a larger cohort.
As a first-in-class therapy for BPH, which is first in the pipeline, Woods says topsalysin would be positioned as an alternative to minimally invasive surgical techniques after a patient has discontinued standard oral medications.
As a treatment for localized prostate cancer, Woods says topsalysin would likely compete against procedures such as high-focused ultrasound and cryotherapy.
Earlier this month, Sophiris raised net proceeds of $4.6 million from a secondary public offering of its common shares and warrants. Woods says the additional capital, combined with the $8.4 million in working capital and cash equivalents Sophiris had at the end of March, will give the company sufficient funds to operate for at least another 12 months.
Sophiris also hired Oppenheimer & Co to help the company evaluate its strategic alternatives for advancing topsalysin, including partnering with a big pharma, financings, or a possible buyout.
Woods notes that the timing couldn’t be much better. While Sophiris takes a pause to consider its options, San Francisco-based Medivation (NASDAQ: MDVN), maker of the prostate cancer drug enzalutamide (Xtandi), has reportedly attracted interest from Pfizer after rejecting a $9.3 billion takeover bid from Sanofi. With Amgen, AstraZeneca, and Novartis also rumored to be interested in acquiring Medivation, the situation could turn into a bidding war, and perhaps boost Sophiris’s value in a buyout deal.
That notion, however, struck the Maxim Group’s McCarthy as wishful thinking. “I don’t think Sophiris would get taken out at this stage,” said McCarthy. A buyout might be possible, but the biotech analyst said it’s unlikely the company would get the kind of valuation it’s looking for.
McCarthy said Sophiris shares never really recovered from a misstep in late 2014, when the company disclosed that interim results from the Plus-1 study showed “that a predefined efficacy threshold following treatment was not achieved.” Sophiris later reported the Plus-1 study had met its primary goal after all.
“The bounceback in valuation never occurred,” McCarthy said. “For us, it was an issue of timing. The market was terrible at that time.”
In addition to finishing its prostate cancer trial, Sophiris reported last week that it has laid off half its staff, from 10 to five, which is intended to reduce expenses. “I wouldn’t read too much into that,” McCarthy said.
“The idea here is not to close the door on any opportunities,” Woods says, “but to really assess the best path forward with Oppenheimer’s help.”