Pulling down about $142 million from a public offering of 8 million shares priced at $17.75 each, Neurocrine Biosciences Inc. is moving ahead with phase III plans for the vesicular monoamine transporter 2 (VMAT2) inhibitor for tardive dyskinesia candidate NBI-98854.

The compound fared clinically better than expected in January, when San Diego-based Neurocrine reported stock-tickling phase IIb data from the trial called Kinect 2. After six weeks of treatment, NBI-98854 yielded a significant change from baseline in the abnormal involuntary movement scale (AIMS) for patients with tardive dyskinesia, a movement disorder similar to Tourette syndrome and involving the lower extremities. (See BioWorld Today, Jan. 8, 2014.)

Kinect 1 did much less well in September 2013. Neurocrine said the difference was probably because of the modified AIMS scale used, central assessment of AIMS by movement disorder specialists, and the blinding of the videos – particularly the sequence of the videos – for any given patient. That took away some variability and made for more precise measures of AIMS in the intent-to-treat (ITT) and per-protocol populations.

In Kinect 1, a 50-mg dose missed its primary endpoint, but a 100-mg dose showed a statistically and clinically significant improvement. The Kinect 2 study showed that at six weeks AIMS scores were reduced by 2.6 points (49 percent) in the ITT group compared to a reduction of 0.2 points (18 percent) in the placebo group. And the favorable data from the second trial were achieved with dose escalation only as high as 75 mg with the small molecule, though Neurocrine had planned to move forward in more phase II studies using 100 mg.

Christopher O’Brien, Neurocrine’s chief medical officer, pointed out during the company’s conference call related to fourth quarter earnings earlier this month that “no one has successfully registered any drug for the treatment of tardive dyskinesia, so we had no track record or pathway that had been carefully laid out before us.”

A big problem with neuropsychiatric drug trials is that subjects may enroll to get paid for doing so, but then skip the medication. Hence, participants are screened for the drug in their bloodstreams at the time they are evaluated.

“We had to sort out a lot of the issues surrounding registration path for tardive dyskinesia,” too, O’Brien said. “I think we’ve been successful in understanding how one mitigates that placebo affect magnitude in clinical trials, how to recruit and find appropriate subjects for these trials and, most importantly for us, how to assess dyskinesia in the context of a clinical trial.”

Enter the AIMS scale. “No one had been successful in using any kind of validated endpoint or scale for the assessment of dyskinesia,” O’Brien said. “The AIMS scale was validated and developed back in the 1970s and initially used as a safety scale.” But how the scale is evaluated is important, as the positive data in Kinect 2 seemed to prove.

The happy findings of Kinect 2 let Neurocrine forgo more phase II trials at higher doses, which would have held off pivotal trials until 2015. Instead, an end-of-phase-II meeting with the FDA lies immediately ahead, with a phase III protocol shortly in hand and the experiments to start in late summer. It could mean approval of NBI-98854 by 2017.

TOURETTE SYNDROME NEXT

Full Kinect 2 data could emerge at the International Congress of Parkinson’s Disease and Movement Disorders in Stockholm in June. Meanwhile, the company will re-analyze the Kinect 1 data using the new AIMS score and the same approach of blinded central readers as Kinect 2, though it seemed at first that Neurocrine might not disclose the outcome.

“We would encourage management to reconsider [withholding the results], given the variability observed from Kinect 1 to Kinect 2, and the potential for reanalysis of Kinect 1 to provide a second validation for the endpoint changes made in Kinect 2, which are being applied in phase III,” wrote Jefferies analyst Thomas Wei in a research report.

The company filed paperwork with the SEC earlier this week, disclosing the results.

“The AIMS blinded central review process used in the Kinect 2 study consisted of video assessed AIMS total dyskinesia scores, items one through seven, which rate facial, extremity and trunk movement severity, as determined by blinded central raters,” according to the 8K filing. “These raters are movement disorder neurologists, with expertise in dyskinesia assessment, who were blinded to both the treatment sequence (baseline or week six) as well as treatment group (placebo or NBI-98854) and were required to concur on a final AIMS score for each subject at each time point (baseline and week six).”

Using the videos from Kinect 1, the same Kinect 2 AIMS blinded central rater assessment process was performed by the same two movement disorder neurologists who had no prior involvement with Kinect 1.

“When employing this methodology, the Kinect 1 study, consistent with the Kinect 2 study, showed a statistically significant reduction in tardive dyskinesia,” the 8K stated. “At week six, AIMS scores assessed by the blinded central movement disorder specialists were reduced by 1.3 points in the NBI-98854 [ITT] group, compared to a reduction of 0.1 point in the placebo arm (p = 0.0442).”

As for partnering, the company said talks regarding territories outside the U.S. probably won’t happen until the phase III program starts, and probably not this year. Meanwhile, an investigational new drug application for NBI-98854 in Tourette syndrome is due this year.

NBI-98854, though, is not the company’s lead compound. Elagolix, a gonadotropin-releasing hormone antagonist partnered with Abbvie Inc., of Chicago, is set to yield phase III data from one of two pivotal trials in endometriosis this summer. A late-stage program with the same compound in uterine fibroids also is in the works, and phase III experiments could begin next year.

Jefferies LLC and J.P. Morgan Securities LLC are acting as joint book-running managers for the offering, with Deutsche Bank Securities Inc. and Credit Suisse Securities (USA) LLC acting as co-lead managers and Cowen and Co. LLC as co-manager. Neurocrine has granted the underwriters a 30-day option to purchase up to an aggregate of 1.2 million more shares.

Neurocrine’s stock (NASDAQ:NBIX) closed Thursday at $17.80, down 59 cents.

In other financing news:

Adma Biologics Inc., of Ramsey, N.J., secured a loan commitment for up to $15 million from Hercules Technology Growth Capital Inc., a specialty finance company focused on providing senior secured loans to venture capital-backed companies in technology-related markets. The capital committed from this loan facility will enhance Adma’s cash position and allow the company greater flexibility as it progresses with its phase III trial and plasma collection center expansion plans, Adma said.

Inovio Pharmaceuticals Inc., of Blue Bell, Pa., priced an underwritten public offering of about 18.9 million shares of common stock at $2.90 per share. The gross proceeds to Inovio from this offering are expected to be about $55 million. The company has granted underwriters a 30-day option to buy up to about 2.8 million more shares to cover overallotments. The offering is expected to close on or about March 4. The company intends to use the proceeds for general corporate purposes. Piper Jaffray & Co. and Stifel, Nicolaus & Co. Inc. are acting as joint bookrunning managers for the offering. Brean Capital LLC and Maxim Group LLC are serving as co-managers. Shares of Inovio (NYSEMKT:INO) closed Thursday at $3.42, down 31 cents.

Oncolytics Biotech Inc., of Calgary, Alberta, entered a share purchase agreement with Lincoln Park Capital Fund LLC that will provide an initial investment in Oncolytics of $1 million and make available additional periodic investments of up to $25 million over a 30-month term. Upon execution of the agreement, Oncolytics received an investment of $1 million in exchange for the issuance of 600,962 common shares to LPC at a per-share purchase price of about $1.66. Oncolytics, at its discretion, may sell up to $25 million worth of common shares to LPC over the 30-month term.

Sunesis Pharmaceuticals Inc., of South San Francisco, priced an underwritten public offering of about 4.6 million shares with two warrants to purchase one share of the company’s common stock at $9.25 per unit, resulting in gross proceeds to the company of $43 million. Net proceeds are expected to total about $40 million. If exercised in full, the warrants could result in additional net financing proceeds to Sunesis of $95.3 million. The offering is expected to close on or about March 4. The per-share exercise price of the first warrants (series A warrants) is $8.50 and the per-share exercise price of the second warrants (series B) is $12. The series A and series B warrants may be exercised at any time on or after the unblinding date, which is the date on which data from Sunesis’ VALOR trial, a phase III pivotal study with vosaroxin in combination with cytarabine in patients with relapsed or refractory acute myeloid leukemia, is first publicly disclosed by the company. Cowen and Co. LLC and Cantor Fitzgerald & Co. are acting as joint bookrunning managers in the offering.