Bhavneesh Sharma

Top 20 Ranking (28.2% Avg Return) --TipRanks

Chiasma Stock Could See More Downside

Chiasma (CHMA) recently reported successful phase 3 data for its oral octreotide formulation, Mycapssa in treating acromegaly (a syndrome due to excessive growth hormone). The stock had a brief pop and has pulled back after the announcement of a $55M secondary equity offering. I looked at the company and feel that the stock has more room to fall in the coming months.

The reasons are:

  •  I also listened to a KOL call (acromegaly expert). He thinks that patients who are already stabilized on injectable octreotide forms may be reluctant to switch to an oral form (which does not seem to match the efficacy of injectable form). 25% patients in the Mycapssa arm in the phase 3 OPTIMAL trial needed rescue therapy with injectable formulation during the 36 weeks period.
  • Patient compliance may be an issue with the oral form. Even if the patient misses one or two does per week, it may throw the disease control out of balance.
  •  It may be difficult for Chiasma to show direct head to head non-inferiority vs injectable octreotide formulations in the ongoing phase 3 MPOWERED study (required for European approval), data in 2H, 2020).
  • In the recently announced results of OPTIMAL phase 3 study (required for U.S. approval), only 58% of patients in the Mycapssa arm maintained the biochemical IgF-1 response at week 36 (the comparator was placebo pill), thus leaving more room for improvement. No head to head comparison with injectable octreotide is available and the company’s comparison is based on historical data of 51-67% IgF-1 response by injectable octreotide LAR (Novartis, the largest selling injectable octreotide formulation). It may also be difficult for a small company like Chiasma to match the marketing power of a large rival like Novartis.
  • Octreotide LAR (now generic) has been the market leader in acromegaly. Novartis developed Signifor LAR (injectable form) which showed higher response than octreotide LAR in clinical trials but never caught up on the sales (just $72M sales in 2018). Novartis sold Signifor LAR to Recordati.
  • Crinetics Therapeutics (CRNX) appears to have a better molecule CRN00808 (oral highly selective nonpeptide somatostatin receptor type 2 agonist, a new class of drugs) compared to Mycapssa to treat acromegaly and may show higher disease control rate in clinical trials than injectable or oral octreotide formulations. CRN00808 appears to have the potential to disrupt the medical treatment of acromegaly, including injectable SSA analogues.


More detail:

Acromegaly is caused by excessive secretion of growth hormone (GH) from the pituitary gland. Over 98% cases are due to a benign pituitary tumor called pituitary adenoma. Patients present with enlarged hands, feet, liver, spleen, kidneys, carpal tunnel syndrome, elevated blood pressure and higher risk of cancers.

Surgical removal of the pituitary adenoma is the first line therapy but is effective in only 50% of cases. Most patients need medical treatment with somatostatin analogues (SSAs) to suppress the GH and insulin-like growth factor, IGF-1 (a metabolite of GH). Approximately 24K known acromegaly cases are known in the U.S., 8000 of which are on chronic SSA injections). Usually IGF-1 levels are followed to assess the response to somatostatin analogues. Currently, the only forms of somatostatin analogues available are injectable. Octreotide LAR (once monthly intramuscular injection) by Novartis is the best selling somatostatin analogue formulation with over $2.5 billion/year global sales ($750M/year of global sales from acromegaly indication). The EU market size for acromegaly treatments is estimated as $300M/year.

51-67% of patients achieve IGF-1 response on Octreotide LAR. Other injectable formulations have been marketed as second generation, for example, Signifor LAR which showed higher response than octreotide LAR but failed to match its sales.

In the absence of an orally administered form of octreotide, this is an area of interest for drug developers since an oral form may be more convenient for the patients. Chiasma has been attempting to develop an oral form of octreotide, Mycapssa for many years. In 2016, its regulatory application for Mycapssa received a CRL from the FDA since the phase 3 trial was open-label (without a placebo control arm). Chiasma conducted another randomized, placebo-controlled phase 3 OPTIMAL trial to satisfy FDA requirements.

Results of OPTIMAL phase 3 trial (for U.S. approval) were released last week. 58% patients on the drug arm achieved IGF-1 response at 36 weeks compared to 19% in the placebo arm, meeting statistical significance. I was not satisfied with the study showing that 25% of patients on the drug arm needed rescue therapy with SSA injections during the 36 weeks period, thus suggesting that Mycapssa still doesn’t have the efficacy to match the disease control provided by the SSA injections. Treatment-emergent adverse events leading to study drug discontinuation were also almost 2x in the drug arm (7.1% patients discontinued Mycapssa due to side effects like headache, fatigue, perspiration, soft tissue swelling). NDA submission for FDA approval is planned by year end 2019. The company is also conducting another phase 3 trial (EMPOWERED) for EU approval where the comparator arm is injectable SSA (rather than placebo in the OPTIMAL trial), thus raising the bar for success (data expected in 2H, 2020).

Mycapssa also faces competition from Crinetics’ CRN00808 which is different in its MOA since it is highly selective for somatostatin 2 (ss2) receptors in agonism than the currently available SSA anlogue formulations (see the attached figure). CRN00808 has the potential to disrupt the medical treatment of acromegaly.


Internalization and desensitization of sst2 receptors is thought to contribute to approx. 50% patients not responding to octreotide. In in vitro studies, CRN00808 was 75 times more potent for cAMP inhibition than receptor internalization (see the figure 2 below). Of note, Mycapssa is just the oral formulation of octreotide and does not possess the highly selective agonism of sst2 receptors like CRN00808. CRN00808 is currently in phase 2 trials.




This article represents my own opinion and is not a substitute for professional investment advice. It does not represent a solicitation to buy or sell any security. Investors should do their own research and consult their financial advisor before making any investment. Investing in equities, especially biotech stocks has the risk of significant losses and may not be suitable for all investors. While the sources of information and data in this article have been checked, their accuracy cannot be completely guaranteed. I/we have no positions in the stocks mentioned.

Bhavneesh Sharma covers biotech as one of the original contributing analysts at FATRADER. A market expert with a medical degree and MBA, he is ranked among the top 15 financial bloggers and top 100 overall financial experts (including Wall Street analysts) on TipRanks.
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