FMX-101: Persistence pays off
“My ability to turn good news into anxiety is rivaled only by my ability to turn anxiety into chin acne” — Tina Fey
Foamix Pharmaceuticals (FOMX) is a clinical stage pharmaceutical company focused on the development topical drugs for dermatological conditions. FOMX’s lead drug is FMX-101 — a topical formulation of the antibiotic minocycline — and is in Phase 3 development for the treatment of moderate-to-severe acne.
Broad-spectrum oral antibiotics, such as minocycline and doxycycline, are the most commonly used treatments for moderate-to-severe acne. These antibiotics have been associated with a number of adverse events in clinical and post-marketing studies, including serious liver injury, autoimmune conditions, headaches, dizziness, fatigue, nausea, photo-sensitivity, and severe itchiness. FMX-101 uses a foam-based formulation to deliver minocycline to the acne-infected sebaceous glands in the skin. In theory, topical application of minocycline would minimize the risk of systemic side effects, as significant quantities should not enter systemic circulation. A topical treatment that is determined to be safe and effective by the FDA is likely to be preferable to dermatologists and patients, especially if the efficacy is not inferior to standard-of-care orals.
In a 12-week, placebo-controlled Phase 2 trial in 150 patients aged 12 to 25, FMX-101 demonstrated a 71% reduction in inflammatory acne lesions at 6 weeks and a 73% reduction in non-inflammatory lesions at 12 weeks relative to control, a statistically significant and clinically meaningful result.
FOMX followed up this Phase 2 study with a pivotal, dual-study Phase 3 comprising two 12-week studies (with a 9 month, open-label extension to track safety)[1]. 466 patients in Study 04 and 495 patients in Study 05 were randomized 2:1 to FMX-101 and control. Each study had two co-primary endpoints — mean change from baseline in inflammatory lesion count, and proportion of subjects with Investigator’s Global Assessment (IGA) scores of Clear or Almost Clear with improvement of at least 2 grades from baseline (on a six point scale).
Both studies hit the co-primary endpoint of reduction in inflammatory lesions at 12 weeks, with Study 04 showing a mean reduction of 14.16 lesions for FMX-101 vs 11.17 for vehicle (p=0.0071) and Study 05 showing a mean reduction of 13.46 lesions for FMX-101 vs 10.72 for vehicle (p=0.0058). In the pooled analysis, the mean reduction in lesion count for FMX-101 was 13.79 vs. 10.94 for vehicle (p=0.0001).
On the co-primary endpoint of proportion of patients achieving IGA treatment success at 12 weeks, Study 04 missed the threshold of statistical significance, with 8.09% of patients in the FMX-101 arm achieving scores of Clear or Almost Clear, compared to 4.77% in the vehicle arm (p=0.2178). In Study 05, 14.67% of patients achieved treatment success in the FX-101 arm, compared to 7.89% in the vehicle arm (p=0.043). The pooled analysis revealed an IGA success rate of 11.51% compared to 6.34% for the vehicle arm (p=0.0188).
Both studies hit the secondary endpoint of demonstrating a statistically significant reduction of non-inflammatory lesions for patients on FMX-101 relative to those on vehicle. In the pooled analysis, the absolute change in non-inflammatory lesion count or the FMX-101 group was -14.76 versus -8.64 in the vehicle group (p=0.0011). Furthermore, both studies demonstrated a statistically significant percentage reduction in inflammatory lesion count at weeks 3, 6, 9, and 12 relative to placebo — another secondary endpoint.
The frequency of adverse events was comparable between FMX-101 and vehicle in Study 04 (FMX-101: 16.9%; vehicle: 18.2%) and Study 05 (FMX-101: 33%; vehicle: 26.5%). The most common adverse event was nasopharyngitis (i.e. stuffy nose), with an occurrence of 2% in Study 04 and 7.2% in Study 05. No drug-related serious adverse events were reported.
FMX-101 compares favorably to Solodyn (minocycline), which is the market-leading oral drug[2]. The percentage change in inflammatory lesions for patients on FMX-101 (44% in Study 04 and 43% in Study 05) relative to vehicle (34% in both studies) are consistent with the results from Soldyn’s Phase 3 results below. The IGA success rate in Study 05 was also very comparable to the Solodyn results. Furthermore, FMX-101 has a more attractive safety profile than Solodyn, for which at least one treatment-emergent adverse event occurred in 56% of patients in Phase 3 trials.
The totality of the Phase 3 results indicate that FMX-101 is effective and well-tolerated, with an inconsistent result for the single subjective endpoint of IGA treatment success in Study 04. However, the pooled analysis for that endpoint did reach statistical significance, suggesting that the individual studies may have been underpowered to detect a difference in the IGA endpoint. Given that the pivotal Phase 3 trial did not meet all co-primary endpoints in both studies as outlined in FDA draft guidance, FOMX is unlikely to be able to register the drug for approval with its current dataset. Upon announcement of the results of the trial, the value of FOMX stock fell over 40% in a single day. The market cap of the company as of June 2017 is about $160M, which is slightly above its book value of $120M.
FOMX is continuing development of FMX-101 with a third Phase 3 study. The study is targeting enrollment of 1500 patients to be randomized 1:1 between FMX-101 and vehicle, with the same efficacy endpoints as for Study 04 and Study 05. 1500 patients should provide ample statistical power to detect a difference in all co-primary endpoints. In effect, FOMX is overpowering the trial in order to preclude a repeat of Study 04's near-miss on IGA success rate.
The precipitous selloff of FOMX stock after announcement of the Phase 3 results signals palpable investor fatigue, as there have been few meaningful catalysts for the company since its IPO in 2014, and the Phase 3 failed to replicate the exceptional efficacy demonstrated in the Phase 2 trial. Nonetheless, the available evidence suggests that the planned, third Phase 3 study is highly likely to be successful. Although the recent failure has delayed approval of FMX-101 by 1–2 years, the drug has a high ultimate likelihood of approval and subsequent commercial success, given its ease of use and safety profile.
As the company trades at such a low multiple to cash, the risk-reward profile is attractive. Furthermore, and the per-share price in the run-up to the subsequent Phase 3 results will almost certainly be higher than it is today, a scenario evocative of Warren Buffett’s discarded cigar butt. Although FOMX has been tossed aside and may look ugly, it is essentially free and is good for at least a few more satisfying puffs. I would hate to let those puffs go to waste, so I initiated a position of 3000 shares.
[1] Foamix Pharmaceuticals Presentation at the Jefferies 2017 Global Healthcare Conference
