Investors may be staring down a lucrative value opportunity as the shares of Soligenix (NasdaqCM: SNGX) continue to consolidate around extremely positive news related to its ongoing SGX942 trial to treat oral mucositis in patients with head and neck cancer, an unmet medical need. Most recently, the Data Monitoring Committee (DMC) provided what many think is a clear message that this late-stage Phase 3 trial is meeting its 90% statistical powering measure associated with the trial design thus far. 

Specifically, on August 28th, Soligenix announced a positive recommendation from the DMC to continue enrollment in the company’s ongoing Phase 3 trial targeting the treatment of oral mucositis in patients with head and neck cancer. Keep in mind that the DMC had several options. First, it could have stopped the trial for futility. Second, it could have interrupted the study for safety concerns. Or, third, it could do what it ultimately decided upon, asking SNGX to increase enrollment by 70 patients to maintain statistical power of 90% for the primary outcome of the trial. Why is that recommendation important? Because with the trial blinded to SNGX, many are starting to believe that the DMC sent a veiled message to Soligenix indicating that they like what they see and want to make sure that the study can maintain a 90% statistical power achievement.

Furthermore, the requested increase in enrollment to 260 patients from the original 190 study sample size is not going to cause a reporting delay either, and Soligenix has already commented in an interim analysis update that they are expecting to release topline data during the first half of next year.

Video Link: http://www.youtube.com/embed/DTu70x8XFdQ

Reading Between The Lines Of The DMC Recommendation

For investors, it’s essential to read between the lines of what the DMC told the company. And, when doing so, it should become clear that the opportunity to take advantage of what is likely a temporary slide in share price may be short-lived ahead of the SGX942 data release.

In addition, both the company and its investor base pointed out that the recommendation to increase the sample size may be an indication of a promising signal that the company is on track to achieve its primary endpoint. Further, far from showing concern, the DMC’s request to increase the sample size was likely required to account for any potential variability observed in the Phase 3 trial that differs from the trial’s original design assumptions. Thus, it’s not a stretch to conclude that the trial data is close to its 90% statistical power; otherwise, the DMC would have likely ended the trial for futility, noting that the end result could not be met. However, that’s not what they did. Moreover, not only is the trial presumably meeting the 90% criteria with the patient increase, there have been no safety concerns cited by the DMC based on the interim analysis.

Furthermore, Dr. Richard Straube, Soligenix’s Chief Medical Officer, provided the markets with a compelling opinion that the interim trial data is likely impressing the DMC. Investors should keep in mind that the data is 100% blinded to SNGX, so any assumption that the stock is weakening ahead of known bad news is unwarranted.

Soligenix CMO Discusses DMC Recommendation

In a recent Q&A with Zack’s Small Cap Research, Dr. Straube made some poignant observations about the DMC’s request to increase the enrollment numbers. Responding to whether or not he was surprised by the required increase of 70 patients to the study, he responded by saying,

“Nothing is wrong with the study. Given the uncertainties involved with predicting outcomes for any clinical trial, the recommended increase in sample size is not dramatic. Reviewing the medical histories of the patients currently enrolled in the trial, there is nothing to lead us to believe that there is anything other than increased inter-patient variability that always changes between clinical trials. This could easily arise with expansion of the trial to a larger number of clinical sites and expansion into Europe that was required to complete the larger trial in a reasonable timeframe, and to support use of the study for a marketing authorization application with the European Health Authorities.”

Additionally, he went on to explain that an increase in a study’s sample size is not uncommon, especially when it’s related to maintaining statistical significance. In that same interview, he gave a layman’s explanation of how the process works by saying –

“I will try to explain without being too technical. Please bear with me. The initial sample size of 190 was a “best estimation” based on both statistical requirements and expected relative outcomes in the treated and control arms of the Phase 2 clinical trial. Statistically, you must decide the degree of risk that you will accept that the trial will be “negative” despite the drug actually working (false negative result) referred to as the power of the trial (statistical jargon “1-β”; in our case set to 90%) and the risk that the trial is “positive” despite the drug actually working (false positive result), referred to as the statistical threshold. But again, differences between the Phase 2 and Phase 3 study are anticipated given the broader number of clinical centers in more countries included in the Phase 3 study, which was critical to ultimately allow us to pursue marketing approval in Europe and the US, and other jurisdictions, as well as enabling us to complete the trial in a reasonable timeframe.”

DMC Provides Clue To Meeting 90% Statistical Significance

After assessing that the news from the DMC is more likely a positive event than a negative, investors should not look to share price performance as an indicator of results. After all, the study is 100% blinded to the Soligenix management team. Instead, by reading between the lines, investors should more quickly recognize that a contributing factor of the resizing recommendation may be more likely related to the placebo population, which may be responding in a slightly different way than they did during the Phase 2 study, an event that is not to be unexpected. In fact, Soligenix noted that in almost every clinical study done in recent years to treat oral mucositis, the placebo populations have varied in their response from trial to trial. And, to address those issues, the trial design by Soligenix was intended to account for these variances, with interim results included in the design to take variability into account and be able to adjust to changing situations.

The interim analysis also has provided Soligenix a unique opportunity to double-check their assumptions on sizing by getting “real-time” information and then adjusting what they are doing. Compared to running a trial off of response rates based solely on historical results that offer a “hope and see” approach to success, Soligenix chose to receive the interim analysis as a proactive measure to address trial progression and response rates.

And, while the interim data demonstrate encouraging results, some investors may question why the company chose such a high statistical power of 90%, when perhaps an 80% power design may have been enough to warrant SGX942 approval. There’s an answer for that from the company’s CMO, as well.

Why 90% Power and How it Affects Potential Approval

Investors may question why Soligenix designed its study to meet a 90% statistical power measure, suggesting that the threshold is very high. But, according to Dr. Straube, there are critical elements to understanding how power affects a trial design. He responded to a question asking him about the 90% power design by stating:

“I know for those not living clinical development, this concept of power can be difficult to understand. Power basically measures the risk that an efficacious drug does NOT achieve statistical significance. A power of 80% vs. 90% doubles the risk that the drug works but does not achieve statistical significance. We believe SGX942 has the potential to dramatically affect these critically ill patients. This belief is anchored in the very consistent results ranging from preclinical to clinical studies. Therefore, we have determined that the additional sample size to give SGX942 the best opportunity for success is well worthwhile. Since Soligenix remains completely blinded, it is impossible for us to estimate what the sample sizes would be at other powers, but it’s safe to say it would be less.”

Moreover, with sample size being the focus of the DMC recommendation, investors may also be wondering what the results may have been for the 190 patient population. And, could that be a reason for share price weakness. According to Dr. Straube, not necessarily. He pointed out in that same Zack’s interview that –

“We have no idea what the power of the trial would be if the same rates of success in the two treatment groups continued through the remainder of enrollment to 190 patients, other than it is less than 90%. In fact, we may still have achieved statistical significance at 190 patients; however, you must keep in mind that for the efficacy analysis, the DMC was tasked with providing guidance so that our high power calculation of 90% was maintained, assuming there was a promising and meaningful signal in the primary endpoint, which there obviously appears to have been.”

But, at the end of the day, it’s the results of the trial that matter most.

Closing In On Top-Line Results

At the end of the day, both investors and the Soligenix team want positive results. And, as it stands, the chance fora positive trial enrolling 260 evaluable patients stands at 90%. Moreover, analysis of the current data suggests that the failure risk is reduced further with an increased patient population because the trial is based on actual enrollment size measured across sites the US and Europe. In addition to lowering the chances of an endpoint miss, the increased patient data also increases the chances that many of the trial’s secondary endpoints targeting infection rate and tumor resolution may also demonstrate statistical benefit. That could also position SGX942 with important distinguishing factors as it heads toward commercialization.

Also important in quieting skeptics, Soligenix has stated on multiple occasions that they have the cash resources to complete the trial without the need to raise additional capital. The company also does not expect any problems related to enrolling the additional patients and views the feedback from the DMC as an event that strongly suggests that SGX942 is demonstrating benefits. Even more of a positive note, Soligenix noted that the DMC may have also provided a clue that the analysis requires only 70 more patients to conclusively prove that the drug provides a meaningful benefit to patients.

Finally, to take the recommendation by the DMC to continue enrolling patients as anything but a positive event may be a shortsighted analysis of the facts. The DMC certainly would not subject additional patients to a treatment that was showing little benefit in treating oral mucositis. Furthermore, the addition of 70 subjects into the trial should not be a concern, either, especially with SNGX having the cash available to fund the expanded trial to completion.

Perhaps most importantly, for investors that are impatient, Soligenix does not expect any delay in the release of topline data, which is still expected in the first half of 2020. And, in addition to the compelling interim data already noted during the interim results, revenue models by Zack’s indicate that the commercialization and potential revenues from SGX942 could translate into a more appropriate valuation of $8.00 per share for the stock. That result could deliver a more than 750% return from current levels.

And, based on what investors know, and what they can infer from the DMC action, SGX942 appears to be on track to help drive shareholder value substantially higher.

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