An Investor’s Guide to Clinical Trials

Clinical trials can be one of the more challenging US Food and Drug Administration (FDA) processes to understand, but grasping the concept is key for investors.

Part of the confusion stems from the fact that there is no single routine that every drug must follow — new drugs or categories of drugs may have to meet different FDA requirements.

However, there is a general outline for what most drugs go through as they move from preclinical research to being marketed products.

To help both experienced and novice investors understand the process, the Investing News Network has gathered information to create an investor’s guide to clinical trials. Read on to learn more.

Clinical trials guide: Preclinical research

Before a company can use clinical trials to test a drug on humans, it must receive FDA approval for an Investigational New Drug (IND) application. An IND is a request for the FDA to authorize a company to administer a drug in humans. With an IND a company can also ship its drug in the US for trials.

Preclinical research provides the basis for an IND, and includes in vivo or in vitro testing. In vivo testing means that staff use a living organism to test the drug. This usually involves an animal whose cells have certain human qualities, such as rats or mice.

Some companies in preclinical research have partnered with iMetabolic Biopharma, which offers full access to its therapeutic antibody platform for an undisclosed price. The platform includes the OmniRat, OmniMouse, OmniFlic and OmniChicken, which are fully human antibody repertoires that are optimized in vivo to manufacture antibodies.

A few companies that have partnered with iMetabolic are Ligand Pharmaceuticals (NASDAQ:LGND), Pfizer (NYSE:PFE), Celgene (NASDAQ:CELG) and Amgen (NASDAQ:AMGN).

In contrast, for in vitro testing, scientists take part of a living organism, such as a cell or tissue, and test it using equipment.

All of this testing is to prove the drug in question will likely not cause serious harm to a patient. Study results can provide a basis for drug dosing and effectiveness, and are mandatory for an IND. Preclinical studies must be designed properly, and data must be recorded for the IND.

One example of a company completing preclinical research is Zymeworks (TSX:ZYME,NYSE:ZYME), which submitted its IND for ZW49 in late 2018. The potential drug candidate features Zymeworks’ Azymetric and ZymeLink technologies. ZW49 could serve as a treatment for high and low HER2-expressing cancer, including brain metastases.

Similarly, in May, Tonix Pharmaceuticals (NASDAQ:TNXP) received IND clearance for TNX-102 SL for agitation in Alzheimer’s Disease (AD). This will support Tonix’s Phase 2 efficacy study for the drug in a 5.6-milligram dose. Agitation in AD is a one of the most distressing and debilitating behavioral disorders and consists of emotional lability, restlessness, irritability and aggression.

Clinical trials guide: Phase 1

Once a drug candidate receives IND approval, it’s ready to enter the clinic in a Phase 1 trial. Designing a clinical trial is no easy task, and many factors are taken into account, such as if there will be a control group (also called a placebo). Other factors include which patients will qualify, how long the study will last, how many patients will be included and more.

Phase 1 clinical trials are used to assess safety and dosage. Multiple quantities and doses of the drug will be administered to determine the best-suited regime for patients. According to the FDA’s guide to clinical trials, 20 to 100 patients are enrolled in this level of trial. Patients are either healthy or have the disease or indication that the drug is approved to treat.

Researchers involved in these trials monitor and gather information on how a patient’s body interacts with the drug to adjust dosing based on previously gathered animal data. Acute side effects are also monitored. About 70 percent of drugs in this phase move to the next level, which is a Phase 2 trial.

In September, Five Prime Therapeutics (NASDAQ:FPRX) completed its Phase 1 trial and announced plans to move on to a Phase 3 trial. Bermarituzumab is the drug candidate, and it is a selective anti-FGF receptor 2b antibody. The Phase 3 trial will test the drug in combination with chemotherapy in patients with previously untreated advanced gastric cancer or gastroesophageal junction cancer.

Agios Pharmaceuticals (NASDAQ:AGIO) also announced data from its Phase 1 trial with ivosidenib or enasidenib midway through the year. The trial was testing the drugs as an acute myeloid leukemia treatment. The overall response rate was 78 percent and the complete response rate was 44 percent.

Clinical trials guide: Phase 2

By the time a drug reaches Phase 2 clinical trials, its safety and dosage has been proven. Safety, side effects, efficacy and adverse reactions are monitored in all trials, but each trial has a different focus for what objectives it will monitor. The main objective of Phase 2 trials is to assess efficacy and side effects.

The FDA’s guide on clinical trials shows about 33 percent of drugs move from this phase to the next. Hundreds of people can be entered into these trials and they can last for a few months up to two years.

In these studies, researchers administer a predetermined dose of a drug to patients. With a smaller patient size, efficacy isn’t clearly addressed, but the studies provide additional safety data. These results are used to design the next Phase 3 clinical trial, if the drug passes this phase.

Axsome Therapeutics (NASDAQ:AXSM) announced in November the completion of patient enrolment for its ASCEND Phase 2 trial of AXS-05 in major depressive disorder. The top-line results for this trial are expected in January 2019. The trial is randomized, double blind, active controlled and is taking place in multiple centers. About 74 patients are in the trial, which will last for six weeks.

Not all companies may follow this typical route of development. Oragenics (NYSE:OGEN) was asked by the FDA to conduct an interim safety review of its drug, as it was the first pharmaceutical candidate with a genetically modified bacteria. The company passed the trial and is now working on its Phase 2 trial for the candidate AG013 for the mouth disorder oral mucositis.

Although not traditional, situations such as Oragenics’ provide an example for how complex the paradigm of clinical trials can be.

Clinical trials guide: Phase 3

Phase 3 trials are the biggest and most costly, and arguably the most risky. These trials also serve as the greatest source of information for the FDA to review in order to approve a drug.

The largest focus of Phase 3 clinical trials is to demonstrate a drug’s efficacy and monitor adverse reactions. Trial length time can vary from one to four years depending on the drug and its indication, among other factors.

Not all trial lengths span this long. For example, Eyenovia (NASDAQ:EYEN) is working on numerous Phase 3 clinical trials for its drug formulas and dispenser. MIST-1 began in November and data is expected by the first half of 2019. The trial is for a micro-dosed fixed-combination phenylephrine 2.5 percent or tropicamide 1 percent ophthalmic solution.

Enrolment can be a problem if a company doesn’t have enough finances to reach the most patients with the disease or condition. Expanding clinical trials through additional sites and countries can mean a quicker finish to a trial.

Amicus Therapeutics (NASDAQ:FOLD) recently dosed the first patient in its PROPEL pivotal study of AT-GAA in Pompe disease patients. The trial will compare Amicus’ drug candidate to the current standard of care over 52 weeks. The primary objective of the trial is a six-minute walk, and other objectives are respiratory measures and additional muscle function and strength.

After a drug is approved, companies will facilitate a Phase 4 study that further measures safety and efficacy. These trials are examined by the FDA via post-market safety monitoring.

Investor takeaway

Companies developing drugs engage in FDA meetings for nearly every step of drug development, including preclinical research, trial designs and more.

Once any trial is underway, keen investors can look out for news on trial enrolment, patients dosed, interim results and, of course, top-line results.

Don’t forget to follow@INN_LifeScience for real-time updates!

Securities Disclosure: I, Gabrielle Lakusta, hold no direct investment interest in any company mentioned in this article.