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Political Heavies Lose Big On Biotech

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Innate chief Simon Wilkinson put it succinctly after the multiple sclerosis developer’s phase-two trial bombed out, spurring a share sell off that wiped off 90% of the company’s value in a matter of minutes.

“Clearly it’s been a very bad day at the office for myself and my staff,” he said, adding that he was distressed about the impact on the advanced (SPSM) MS patients involved in the trial.

Not for the first time, the shock result highlights the high stakes of big-ticket drug trials that, in the case of ASX listed developers, have a tendency to fall short.

MS is a disabling condition of the nervous system, with 60% of sufferers advancing to the SPSM stage.

Globally, MS drug development has proved especially tricky and there is no current approved treatment for SPMS.

To management’s credit, the company made little attempt to spin the results as a temporary setback. It baldly admits the trial drug, MIS416, showed “no clinically meaningful or statistically significant differences in measures of neuromuscular function or patient-reported outcomes.”

The trial – at five sites in Australia and NZ – enrolled 93 patients, 62 of which were randomly (and evenly) assigned the drug or a saline placebo.

Among the group receiving the drug, 17 patients (27%) discontinued treatment for various reasons – a high drop out rate even for a cohort with an advanced disease.

As is the norm, the company plans to parse the data to check if the drug was more effective with a particular sub-group of patients. It is also analysing the treatment effect among the “per protocol” patients, that is, the ones who completed at least 75% of the required study visits. But “there is nothing to suggest at this time that this analysis will result in a favourable conclusion.”

While there are never any guarantees with clinical trials, the results are baffling because MIS416 has been made available to needy patients for the last eight years, under a compassionate use exemption that allows a non-approved drug to be approved.

These patients had reported benefits, such as reduced fatigue and pain or improved hand movement and bowel control.

Only on June 21 received FDA approval for IND application, which would have allowed the company and the regulator to co-operate on the design of a phase-three trial. But without some radically improved data emerging from the clinical review, this one is going nowhere.

Bizarrely, the NZ-based Innate was an investment of choice for a group of White House insiders: Innate’s (biggest) 17% shareholder (and director) Chris Collins is a New York congressman who sits on the health subcommittee of the House Energy and Commerce committee. He is also Trump’s congressional liaison.

Tom Price, Trump’s pick as health secretary, also owns shares acquired when he was a member of the House ways and means sub committee. Suffice to say, the smart money on Capitol Hill now looks not so clever.

"For those that invested in Innate including me, we all were sophisticated investors who were aware of the inherent risk," says Collins .

View More Articles By Tim Boreham

The New Criterion is authored by Tim Boreham.

Many readers will remember Boreham as author of the Criterion column in The Australian newspaper, for well over a decade. He also has more than three decades' experience of business reporting across three major publications.

Tim Boreham has now joined Independent Investment Research and is proud to present The New Criterion, which will honour the style and purpose of the old column. These were based on covering largely ignored small to mid cap stocks in an accessible and entertaining manner for both retail and professional investors.

Disclaimer: The author nor Independent Investment Research have received a fee or any kind of inducement for this article. The New Criterion is not intended as specific investment advice and readers should contact a licensed financial adviser.



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