Disappointing Phase 2 psoriasis data reported for the monomethyl fumarate prodrug, XP23829

• Despite early support, fumaric acid esters only became an established  psoriasis therapy in 1994 and then, primarily in Germany as Fumaderm.  This product is a combination of dimethylfumarate and monoethylfumarate salts
  
• Tecfidera (dimethyl fumarate, DMF) is a prodrug developed by Biogen Idec.  This molecule is converted to monomethyl fumarate (MMF) prodrug and has been approved for multiple sclerosis but is associated with common AEs (eg 18% abdominal pain; 40% flushing)
• XenoPort has developed XP23829, another MMF prodrug using technology linking DMF to a carrier facilitating GI transport.  This improves PK and potentially reduces AEs
• Positive top-line results have now been presented from a Phase 2 study of XP23829 in 200 moderate-to-severe psoriasis patients [see today's presentation]
  
• XP23829 at both 800mg QD and 400mg BID met its primary endpoint, improvement from baseline to 12wks in PASI score (see figure below).  A responder analysis reported PASI75 rates of 22% vs 9% at 400mg BID
  
• Efficacy was considerably greater in biologic naive patients (eg mean PASI change of 59% vs 38% at 400mg BID for naives and experienced respectively).  Of note PASI75 rates were similar irrespective of treatment history
  
• There were two SAEs potentially attributed to XP23829: acute cholecystitis and enterocolitis.  GI AEs were relatively high, especially at 400mg bid and within the range seen in Phase 3 studies of Tecfidera.  Flushing AEs were however reduced considerably compared to Tecfidera
• Phase 3 studies are expected to open in 2016 with Xenoport suggest QD dosing would be the regimen of choice
  

Comments:  The development of XP23829 appears to have reduced the flushing AEs seen with Tecfidera.  Our concern however is that GI AEs remain present.  This is despite titration to target dose over the initial 3wks.  Xenoport suggested that this may reflect in part observer bias given that the drug class has been previously associated with GI AEs.  We are also concerned that the PASI75 efficacy rates were relatively low, reaching just 22%.  With the advent of IL-17 mAbs, very high rates of skin clearance can now be expected and PASI75 rates now exceed 80%.  There remains a place for molecules with lower efficacy rates.  For example, the oral treatment Otezla has shown good uptake.  This PDE4 inhibitor produces PASI75 rates of approximately 30% at 16wks although like  XP23829 efficacy is quite slow in onset.  Showing further similarity, Otezla is also associated with GI AEs although the rate of diarrhea appears considerably higher with XP23829.  Although Xenoport is planning Phase 3 studies, we believe limited efficacy and at best similar tolerability vs Otezla will present challenges given that the two would likely compete compete should XP23829 enter the market.  Of note Xenoport shares fell 25% today suggest the market likewise believes XP23829 may struggle in the competitive psoriasis market.  Xenoport did stress the point that XP23829 efficacy is expected to accumulate slowly and suggested that it would be competitive when followed for longer periods; it remains to be seen whether this is indeed the case