CRL for Iclaprim
On February 14, 2019, Motif Bio Plc (NASDAQ:MTFB) announced that the U.S. FDA issued a complete response letter (CRL) for the new drug application (NDA) for the company’s lead asset iclaprim for the treatment of acute bacterial skin and skin structure infections (ABSSSI). The CRL stated that the FDA is unable to approve iclaprim at this point and that additional data would be required to determine the potential for liver toxicity. The CRL made no mention of any issues regarding the clinical efficacy of the drug.
We are surprised by the CRL, particularly since the FDA is citing the potential for liver toxicity as the reason for not approving the drug. It’s also strange there wasn’t an Advisory Committee meeting to discuss the potential for liver toxicity if the agency was concerned about it. The company has published extensively on the Phase 3 program for iclaprim, which included two randomized, double blind clinical trials (REVIVE-1 and REVIVE-2) where iclaprim was compared to vancomycin in patients with ABSSSI. The following tables show the incidence of increased alanine aminotransferase (ALT) and aspartate aminotransferase (AST) for each of the trials, with similar incidences for patients administered iclaprim and vancomycin. In addition, there was no incidence of increased bilirubin or other liver damage, thus we are unsure of why the FDA is concerned about potential liver toxicity.
View Exhibit I
The company is planning to request a Type A meeting with the FDA very soon, and those meetings are typically granted 30-45 days after the request. Following the meeting, the company will receive the official meeting minutes approximately 30 days later, at which time we anticipate an update from the company. We don’t believe that any additional clinical trials will be required, however we will be unsure of a timeline regarding resubmission of the NDA until after the company’s meeting with the FDA.
On February 18, 2019, Motif announced that it entered into an amendment agreement with Hercules Capital, Inc. (HTGC) regarding the loan agreement entered into in November 2017. Motif had previously drawn down $15 million, and as part of the amended agreement Motif will make an immediate payment of $7 million with a further repayment of $0.5 million within the next 90 days or upon receipt of funds from an equity raise in excess of $2 million, whichever comes first. There will be a three-month interest only period on the remainder of the borrowed funds and there is no prepayment penalty. Following the $7 million payment to Hercules, Motif will have approximately $3 million in cash and cash equivalents and $7.7 million of outstanding debt, thus the company will need to raise additional capital soon.
The unexpected CRL for iclaprim is clearly a setback for Motif, however we are hopeful the company will be able to better understand the FDA’s concerns and get clarity regarding what additional information will be necessary in order to refile the NDA. We anticipate an update in the next couple of months following the Type A meeting with the FDA. Reducing the debt load was a smart move, particularly as the company looks to raise additional capital in the near future. With the uncertainty surrounding the approval of iclaprim and the necessity to raise additional capital following the significant decrease in the share price we have made significant changes to our model that has resulted in lowering our valuation to $7 per share, although this valuation is highly fluid and ultimately will be dictated by the outcome of the FDA meeting.
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