Corbus Pharmaceuticals: Doubtful Future of Lenabasum

• Lenabasum has more than 20 years of history with no detailed proof of concept.
• CB2 agonism is unlikely to significantly improve the condition of patients with dcSSc.
• The company has less than a quarter of cash runway.
• Phase-3 fail may bring Corbus' stock price to cash/per share level.

Corbus Pharmaceuticals (Nasdaq: CRBP) is Massachusetts-based company focused on targeting endocannabinoid system to treat inflammatory diseases. In this article we will try to assess the prospects of company’s lead drug candidate Lenabasum in the late stage RESOLVE-1 trial. We will try to share our thoughts on vague prospects of the company’s drug and to explain our pessimism about Corbus’ approach.

Moreover, the company has an alarming cash position now and the possible failure of the Phase 3 study may bring the company's share price below $ 1.

From this point of view, Corbus is an attractive short for us.

Zigzags of Lenabasum

Lenabasum is the company's lead drug candidate in Phase-3 for the treatment of diffuse cutaneous systemic clerosis (dcSSc).

The company claims that Lenabasum is CB2 receptor agonist, however we didn't find any scientific publication proving MOA of the drug. Moreover, the company didn't share detailed pharmacodynamics (PD) and pharmacokinetics (PK) of lenabasum.

Lenabasum has a long history of uncertainties and zigzags in its development. Let’s have a look at some key milestones:

We believe that the past of the company was deeply covered by other authors, and we would not like to take your time repeating previous publications. But for those who are interested please click here and here.

We would like to share some concerning points regarding the past of the company:

• In each case of a new clinical trial, it is obvious that the company was in no hurry to conduct them. In many cases, their “positive” press releases followed with additional dilutive fund raising. For example, dermatomyosis Phase-2 trial (started in 2015) was designed for 16 weeks (112 days) but it took almost 2 years to conduct the trial for A cohort and then extend the trial again. Of course, the company can claim that it’s a rare disease and it was hard to enroll patients. But we are talking about 22 patients (planned enrollment) while there are about 9.63 cases per million people with this disease in US alone.
• The company had multiple Phase-2 trials for cystic fibrosis but continued to share positive results of INVITRO and PRE-CLINICAL studies in 2017 and 2018 following them with dilutive fund raise:

Let us emphasize that Phase-2 trial was completed 3 months prior to announcement of an offering and the market was expecting Phase-2 data in Q1 2017.

• Despite the fact that it’s almost 18 years since the drug entered first in human trial, the company didn’t share proper PK/PD data for this compound. We still have no idea about pharmacodynamics and pharmacokinetics of Lenabasum (former Anabasum, Resunab, JBT-101 or Ajulemic acid).

What about RESOLVE-1 Phase-3 study of Lenabasum for the treatment of diffuse cutaneous systemic sclerosis (dcSSc)?

In May 2020, the company announced that it would announce the results of RESOLVE-1 Phase 3 study of lenabasum in the summer of 2020:

RESOLVE-1 Phase 3 (NCT03398837) study is doubleblind, randomized and placebo-controlled study to evaluate the efficacy and safety of lenabasum for the treatment of diffuse cutaneous systemic sclerosis (SSc). This is the most important milestone for lenabasum. The results of RESOLVE-1 trial will determine the future of the company and of course will affect the stock price as well.

According to recent study the global scleroderma therapeutics market size (all subtypes of the disease) was $1.6 billion in 2018. Lenabasum is the only late stage drug candidate in the company’s portfolio. In the case of strong results Corbus Pharmaceuticals may claim a share in this market, but in the absence of strong evidence, the company's share price may drop significantly to cash/per share level.

Let’s try to assess the probable outcomes of RESOLVE-1 trial prior to data release. Here are the primary and secondary outcome measures of the trial:

Source: clinicaltrials.gov

Primary endpoint of the study has been changed to ACR CRISS improvement while the FDA will evaluate both primary and secondary outcome measures including mRSS.

Source: press release by Corbus Pharmaceuticals

It’s obvious that CRISS improvement alone will not be enough for the FDA to approve the drug in future, but a slight improvement may allow the company to share a positive PR.

Systemic sclerosis / diffuse cutaneous systemic sclerosis

Before we dive into lenabasum Phase-3 trial outcome probabilities, we would like to share what is diffuse cutaneous systemic sclerosis and what treatment options are available in the market.

It’s obvious that any new drug should present clinical benefit not only in comparison with placebo, but it also should have at least some benefits in comparison with available treatment options.

Diffuse cutaneous systemic sclerosis (dcSSc) or diffuse cutaneous scleroderma is one of the subtypes of Systemic Sclerosis (SSc). For those who are interested in the classifications of SSc please click here.

Diffuse cutaneous scleroderma (dcSSc) has some particular features:

• Raynaud phenomenon followed, within one year, by puffy or hidebound skin changes
• Truncal and acral skin involvement; tendon friction rubs
• Nailfold capillary dilation and capillary drop-out
• Early and significant incidence of renal, interstitial lung, diffuse gastrointestinal,and myocardial disease
• Anti-Scl-70 (30 percent) and anti-RNA polymerase-I, II, or III (12 to 15 percent)antibodies

There is no cure for SSc and all current treatment options are to modify the disease symptoms. According to EULAR treatment recommendation update (2016) there are 4 recommended drugs for skin improvement in dcSSc: methotrexate, cyclophosphamide, mycophenolate mofetil and azathioprine.

These drugs are administered depending on severity, time of onset of the disease and symptoms.

Here are the treatment options based on expert consensus (focusing on individual organ systems in SSc):

Source: Rheumatology (Oxford) 2015

Please also have a look at comparative results of the efficacy of mycophenolate mofetil and cyclophosphamide in improving skin condition with dcSSc:

Source: Efficacy of Mycophenolate Mofetil and Oral Cyclophosphamide on Skin Thickness: Post Hoc Analyses From Two Randomized Placebo-Controlled Trials / Arthritis Care & Research 2018

These drugs led to meaningful improvement in dcSSc patients comparing with placebo. However, some serious improvements were observed in placebo groups as well, which is believed to be related to disease natural course.

There are also interesting observations from previous clinical trials in SSc and dcSSc. We can see meaningful mRSS improvement in placebo cohorts starting from week 16-20.

Source: Efficacy and Safety of Tocilizumab for the Treatment of Systemic Sclerosis: Results from a Phase 3 Randomized Controlled Trial

That's why a meaningful difference with placebo at the same timeframe is essential to evaluate the drug efficacy.

There are many studies to understand the pathogenesis of SSc, including the role of pathogens in the onset of disease and the “permissive” genetic makeup. The following diagram visualizes the processes associated with the development of SS and helps to understand potential targets in the treatment of diseases:

Source: Emerging targets of disease-modifying therapy for systemic sclerosis / Nature 2019

Corbus' Approach

Corbus Pharmaceuticals (NASDAQ: CRBP) tries to target endocannabinoid system (ECS) to improve inflammation in SSc patients.

First of all, ECS is a very complex system where various receptors, enzymes and proteins interact in different processes in which their joint roles are often required. That may be a reason explaining a complexity of targeting some ECS receptors alone.

Source: A Guide to Targeting the Endocannabinoid System in Drug Design / International Journal of Molecular Sciences 2020

Now let’s come back to lenabasum (former Ajulemic Acid - a synthetic analog Δ8‐tetrahydrocannabinol (THC)‐11‐oic acid synthesized by Prof. Burnstein). Here are some interesting discoveries of Professor Bershtein himself (the study was published in the journal "Molecular Pharmacology" in 2003):

However, the mechanism of AJA action remains unknown. Here we report that AJA binds directly and specifically to the peroxisome proliferatoractivated receptor gamma (PPARgamma), a pharmacologically important member of the nuclear receptor superfamily. Functional assay indicates that AJA activates the transcriptional activity of both human and mouse PPARgamma at pharmacological concentrations.

Does it mean that lenabasum is more PPARgamma activator rather than CB2 agonist (based on in-vitro studies)?

Another study also confirms this thesis later in 2007:

Our results show a binding mode that is compatible with other known partial agonists of PPAR, explaining their moderate activation of the receptor, as well as the structural basis for isotype selectivity, as observed previously in vitro. The structure also provides clues to the understanding of partial agonism itself, suggesting a rational approach to the design of molecules capable of activating the receptor at levels that avoid undesirable side effects.

If the drug acts through PPAR-y agonism then it has even higher chance to fail Phase-3 trial. The results of Inventiva’s (IVA) one year double-blind, randomized, placebo-controlled Phase IIb study of Lanifibranor (more potent pan-PPAR agonist) were indicative in this point:

Source: press release by Inventiva

What if lenabasum is really potent CB2/PPAR-gamma agonist as the company claims? (though we don’t have such an evidence).

CB2 is one of two “classical” ECB receptors. CB2 was found in many immune cell types. Normally CB2 is activated by our body’s own endocannabinoids: 2-AG and AEA. These 2 lipids have totally different effects. 2-AG modulates functions related to immune cells recruitment, chemokine release, migration. So, generally it plays pro-inflammatory role while AEA seems to downregulate some leukocyte function like pro-inflammatory cytokine release, which may point to anti-inflammatory role of AEA.

The table below shows pro- and anti-inflammatory roles of CB2 depending on the activation by certain endocannabinoids:

Source: The CB2 receptor and its role as a regulator of inflammation / Springer 2016

This factor is one of the most significant among the problems of exogenous activation of CB2.

CB2 receptors & neutrophils

Higher neutrophil count is a hallmark of early SSc and may lead to more severe skin/lung disease. Many studies indicate a clear connection between the activity of neutrophils and severity of SSc.

Source: Association of simple hematological parameters with disease manifestations, activity, and severity in patients with systemic sclerosis / Clinical Rheumatology, Springer 2019

Although СB2 was detected on the surface of many types of white blood cells, there is a huge question in the case of neutrophils:

Source: The CB2 receptor and its role as a regulator of inflammation / Springer 2016

Thus, it is doubtful that CB2 agonist can greatly affect neutrophil modulation and reduce inflammatory processes associated directly with neutrophils.

Lack of CB2 on cell surface during Human B-cell activation

B-cell activation plays a significant role in autoimmune processes during SSc. The table below shows another distinguishing feature of dcSSc - the presence of antibodies against topoisomerase I:

Source: Cytokine and chemokine levels in systemic sclerosis: relationship with cutaneous and internal organ involvement / Clinical & Experimental Immunology 2004

Moreover, there are many scientific publications about the role of B-cells in pathogenesis of SSc and dcSSc subtype respectively.

But there is a problem with CB2 receptors on the surface of activated B-cells too. Various studies show the lack of CB2 receptors on the surface of activated B-cells:

Source: Regulation of Cell Surface CB 2 Receptor During Human B Cell Activation and Differentiation / Journal of Neuroimmune Pharmacology 2017

CB1 receptor interference

Another important point is that the role of CB1 receptors in immune cells is not researched well yet. There are evidences of CB1 antagonism leading to antiinflammatory activity which indicates a poor understanding of joint role of these two receptors in immune cells so far. That is, in fact, even minimal activation of CB1 may play opposite role and may reduce the theoretical anti-inflammatory impact of CB2 activation.

The study by Prof.Burstein in 2014 points to reduced (but not eliminated) CB1 activation of ultrapure ajulemic acid - JBT-101 (lenabasum).

Success in animal models can give a false picture in SSс.

We can observe many promising studies evaluating CB2 agonism in animal models, but later they do not show a significant improvement in human studies. There is an important issue regarding animal studies in SSc: There is no successful SSc animal model replicating human SSc. For those interested in detailed information on the limitations and problems of animal models in SSc, please click here.

Based on the above arguments, we believe that the results of phase-3 of Lenabasum have a high probability of fail and the subsequent significant drop in the company's share price.

Financials

According to the recent 10-Q SEC form Corbus Pharmaceuticals had about $46.61 million cash & cash equivalents as of March 31, 2020.

Source: Company’s 10-Q SEC form

Source: Company’s 10-Q SEC form

Source: Company’s 10-Q SEC form

Quarterly cash burn was around $29.65 million, so, the company’s cash & cash equivalents currently is about $17 million. This means that cash per share is about $0.23.

Conclusions

Corbus Pharmaceutical’s lead drug candidate lenabasum has about 20 years of clinical trial history with no transparent and solid data so far. The company didn’t share detailed PK/PD data of it’s lead and the only late stage drug candidate. The company also did not share the proof of concept or scientific understanding about the real mechanism of action of their drug candidate.

Given the arguments presented in the article, even in the best case, taking on faith the mechanism of action of the drug, lenabasum has a high probability to fail Phase-3.

On the other hand, the company has less than 3 months cash runway now.

We believe that Corbus’ stock price at $8 with $0.23 cash/per share ratio is an attractive short.

Shorting any stock involves high risks. We strictly do not recommend to short the stock for investors with low risk tolerance.

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