The Friday Biotech Perspective #32
Were Coya’s mixed Alzheimer’s trial results a speedbump or partly by design?
Coya Therapeutics, Inc. (NASDAQ:COYA) disclosed generally positive results on October 29 from a placebo-controlled, phase II trial of LD IL-2 (low-dose interleukin-2) in patients with mild to moderate Alzheimer's disease (AD). While the company’s stock since has recovered to October levels following the US presidential election result, Coya’s stock declined by ~35% in the days following the announcement. How so?
Coya created an alliance with the Houston Methodist Research Institute, which conducted the phase II trial. The LD IL-2 tested is part of Coya’s pipeline, named COYA-301. The phase II trial was funded by the Gates Foundation and the Alzheimer’s Association (AA). The primary endpoint was the incidence and severity of adverse events (AEs), with the secondary endpoint evaluating changes in a type of anti-inflammatory immune cells also known as Tregs.
The Houston Methodist trial was moved forward to set up a more compelling trial for Coya in which COYA-301 (LD IL-2) would be combined with abatacept (COYA-302), an approved drug to treat inflammation in conditions such as rheumatoid arthritis and psoriatic arthritis. (LD IL-2 is approved to treat metastatic renal cancer and melanoma.) The expectation from Coya and the Houston Methodist investigators is the combination therapy, over time, will improve treatment for AD patients by enhancing the Treg cell population. The Houston Methodist investigators set out to establish the role of LD IL-2 in AD.
For the primary endpoint of safety and tolerability, LD IL-2 passed. No serious adverse events or deaths were reported among the 38 participants, and the rate of adverse events was similar between the treatment and placebo arms. On the key secondary endpoint regarding Treg cells, LD IL-2 delivered a mixed bag.
LD IL-2 showed significant expansion of Treg populations when administered every 4 weeks, but it did not exhibit benefits in exploratory endpoints in the group that was dosed every 2 weeks. Because of the improvement in the 4-week cohort, Coya said it probably will advance 4-week dosing of LD IL-2 in the next trial. The data also indicated a slight improvement in Alzheimer’s Disease Assessment Scale–Cognitive Subscale scores on day 148 following LD IL-2 dosing every 4 weeks versus placebo. However, the cognitive effect was not observed in the LD IL-2 every 2-week administration, which demonstrated a similar decline as placebo.
The inconsistency of the data led to the selloff after the results were announced. LD IL-2 did not meet did not perform better than the placebo at either of the two key endpoints when administered every 2 weeks. Demonstrating success at administration every 4 weeks is impressive but investors likely were scratching their heads at why no benefits were observed on a more frequent dosing schedule. Once again, Alzheimer’s disease remains a very difficult condition for researchers to defeat.
Arguably, the phase II results did what a phase II trial should do: Guide the design of the next trial. However, investors appear to demand more now from results of early trials. Coya may deliver more solid data in the next trial because it combines COYA-301 and COYA-302. Which may have been the company’s plan all along.
Dr. Reddy’s Laboratories Limited (NYSE:RDY) is preparing to launch a biosimilar to abatacept which, if approved in the AD combo, would be significant driver of revenue for Dr. Reddy’s. The phase II trial of COYA-301 established a proof of principle for the use of LD IL-2 in AD. COYA-302 is the real therapeutic effort to treat AD by Coya and Dr. Reddy’s, as it combines LD IL-2 and abatacept. The effect of COYA-302 will not be known until it is tested in patients. However, through Coya and Houston Methodist investigators, the backers of COYA-302 now can advance the drug to the next stage of development, in spite of the mixed phase II data.
About those backers. Shortly before the phase II results were released, Coya raised $10 million in a private placement. The company said the majority of the investors in the offering were existing institutional stockholders.
Dr. Reddy’s, directly and indirectly, is a key investor in Coya. In late 2023, Coya licensed US, UK and Canadian commercialization rights to COYA-302 to Dr. Reddy’s for $7.5 million plus nearly $700 million in milestones and future royalties. A $4.2 million milestone is set to be paid as soon as Coya establishes the terms for phase II trial for COYA-302. Thus, while it would appear the mixed phase II trial results for COYA-301 did not satisfy investors, it likely met the goals of Coya and Dr. Reddy’s effort to advance COYA-302 into a phase II trial. The $10 million private placement probably was made to provide a cushion for results from the COYA-301 trial.
Coya also announced Arun Swaminathan was promoted to CEO, effective November 1, 2024. Swaminathan was instrumental in securing the $700 million licensing deal with Dr. Reddy’s Laboratory in December 2023. While the transition to Swaminathan as CEO was announced earlier this year, the timeline of the private financing, the data release, and the CEO ascension probably are not coincidental.
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