Washington Editor

Shares in OrthoLogic Corp. lost almost half their value on news of a Phase III failure.

The company, of Tempe, Ariz., said top-line data showed that 10 micrograms of Chrysalin (TP508) did not demonstrate a statistically significant benefit compared to placebo in the study’s primary endpoint, the length of time to removing immobilizations, such as casts. The synthetic peptide was being studied for its ability to help heal unstable, displaced wrist fractures.

"I am disappointed about this," President and CEO James Pusey told BioWorld Today, "but this study shows that this drug has an effect." Remaining optimistic, he said during a conference call that "there is a potential pathway forward for Chrysalin, both in wound healing and fracture repair."

The company’s stock (NASDAQ:OLGC) Wednesday fell $2.55, or 49.1 percent, to close at $2.64. Pusey, who noted that the study was designed for a 25 percent difference between Chrysalin- and placebo-treated patients, said reaching the primary endpoint was difficult given that it was previously untested, and "we were essentially asking surgeons to remove a cast early."

OrthoLogic hopes that a higher dose will produce the desired effect of lengthening the time of removing immobilization between the groups, and a near-term answer to that question should come through an interim analysis of a Phase IIb study that includes a 30-microgram dose. To date, that dose-ranging trial in distal radius fractures has enrolled 272 patients, and recruitment is ceasing immediately, as that number of patients is "sufficient for us to get a trend to know whether there is a dose response with this drug," Pusey said. He later added that its design is identical to the Phase III trial, save for the multiple doses.

The company expects to communicate those results in the third quarter. In addition, should the data prove positive, the company’s statisticians would meet regulators at the FDA to re-estimate the Phase IIb study’s sample size and reopen enrollment to increase the number of patients on 30 micrograms of Chrysalin.

"It would be unlikely that we would re-examine the 10-microgram dose," Pusey said. The trial was designed to evaluate Chrysalin’s safety and efficacy in the rate of healing among adult subjects with unstable and/or displaced distal radius fractures.

A total of 503 patients were enrolled in the U.S. and were evaluated after surgery for the first eight weeks, as well as after 10, 12, 26 and 52 weeks. The primary efficacy endpoint was measured by the elapsed time between the date of fracture surgery and the first study visit at which the investigator, based on clinical and radiographic assessments of healing, removed all rigid immobilization hardware used to stabilize the fracture.

While Pusey said patients in the Chrysalin arm fared better than those on placebo, he declined to provide specific data.

A secondary endpoint, radiographic evidence of time to radial cortical bridging, showed a statistically significant benefit for Chrysalin-treated subjects (p=0.049). That benefit proved similar to Phase I/II findings, which Pusey said "provided the foundation for doing the Phase III study." Such a positive effect led him and the company’s chief scientific officer, Jim Ryaby, to conclude that "further investigation of Chrysalin is warranted."

However, no difference was observed between Chrysalin and placebo patients in the other secondary endpoints, which included assessments of the fractured wrist range of motion and grip strength relative to the contralateral limb, as well as clinical outcomes measured by a patient questionnaire.

The trial met its pre-specified safety endpoint, as there were no significant differences in adverse event rates between the Chrysalin and placebo groups.

Chrysalin, a peptide that represents a receptor-binding domain of the human thrombin molecule responsible for blood clotting and the potential to accelerate the natural cascade of healing events in both soft tissue and bone repair, also has been studied for healing diabetic foot ulcers, and a multidose study in that indication is scheduled to begin in the second half of this year. Notably, Pusey said OrthoLogic would approach the trial cautiously in light of the coming interim analysis in fractures, although he added that its diabetic foot ulcer plans "remain unchanged at the current time."

But there remains considerable excitement for its wound-healing abilities, given statistically significant Phase I/II data showing that the median time to full wound closure was 82 percent faster among patients treated with 10 micrograms of Chrysalin compared to those on placebo. Pusey said "accelerating healing is a good thing for diabetic patients, and it also saves precious health care resources." The program is testing a topical formulation.

The company, which had about $84 million in cash reserves at the end of its last fiscal quarter, owns Chrysalin’s exclusive worldwide rights. Pusey said its financial guidance would be revised in its next quarterly report in light of foreseeable changes to its clinical trial plans.

In addition to Chrysalin, the company’s portfolio includes a preclinical peptide, AZX100, the first of a new class of compounds in the field of smooth muscle relaxation called Intracellular Actin Relaxing Molecules (ICARMs). It is being investigated for the treatment of vasospasm associated with subarachnoid hemorrhage, the prevention of keloid scarring and the treatment of asthma.

Critical Therapeutics Stops Phase II

In other disappointing trial news, Critical Therapeutics Inc. halted a Phase II study of CTI-01, an anti-inflammatory compound, because of stability issues that potentially could affect the integrity of drug supplies currently at sites.

The company, of Lexington, Mass., said it is evaluating those issues and noted that no significant safety concerns have arisen to date. The trial was designed to evaluate CTI-01 in patients at risk of complications, including organ damage, while undergoing cardiac surgery involving the use of the cardiopulmonary bypass machine.

Of its 150 planned patients, 102 have received medication, and Critical Therapeutics plans to report safety and efficacy data on them later this year. After that, the company will determine the program’s next steps.

On Wednesday, its shares (NASDAQ:CRTX) lost 10 cents to close at $5.43.

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