Amit Mun­shi’s tenure at Are­na Phar­ma­ceu­ti­cals has al­most ex­clu­sive­ly been one of suc­cess: Tak­ing the reins of a com­pa­ny in the Nas­daq gut­ter, he’s steered it through mul­ti­ple pos­i­tive read­outs and even bagged an $800 mil­lion up­front deal on a non-lead drug.

On Mon­day, though, the com­pa­ny an­nounced a fail­ure: Its lead drug, the S1P in­hibitor etrasi­mod, missed the pri­ma­ry end­point on a Phase II tri­al for atopic der­mati­tis, fail­ing to re­duce symp­toms on a stan­dard clin­i­cal scale bet­ter than place­bo. Yet they will con­tin­ue on with a Phase III, bet­ting that aber­ra­tions at one tri­al site thwart­ed that end­point and that they can re­peat suc­cess on a met­ric the FDA us­es to eval­u­ate ap­proval.

“We be­lieve we have a mol­e­cule that is head­ed to­wards be­ing a safe and ef­fec­tive oral op­por­tu­ni­ty,” Mun­shi told End­points News. “We think that’s go­ing to be a po­ten­tial game chang­er for this space.”

In­vestors, at least ini­tial­ly, weren’t buy­ing it. Are­na’s stock $AR­NA fell from $87 to $70 post-mar­ket in the min­utes af­ter the an­nounce­ment.

It’s not un­com­mon for com­pa­nies to launch Phase II­Is af­ter Phase II went bust, al­though the re­sults are not al­ways pret­ty. In the past few months, such turn­around at­tempts from Gen­fit and Au­rinia each failed.

Mun­shi, though, says he has a case. The drug, he not­ed, hit on 4 dif­fer­ent sec­ondary end­points, in­clud­ing the one FDA asks for to ob­tain ap­proval: a clin­i­cal score called val­i­dat­ed in­ves­ti­ga­tor glob­al as­sess­ment.

Chris Ca­bell

They on­ly failed on the pri­ma­ry end­points — re­duc­tion on the eczema area and sever­i­ty in­dex, or EASI — be­cause of a “slight anom­aly,” CMO Chris Ca­bell ar­gued.

Nine pa­tients on the drug arm, most of whom were at a sin­gle tri­al site, were tak­en off the drug af­ter their white blood cell counts fell.

Ca­bell said the com­pa­ny point­ed out that re­duced white blood cell counts were part of the drug’s mech­a­nism of ac­tion and how it re­duced symp­toms of au­toim­mune dis­eases. The pa­tients were put back on and re­spond­ed to the drug again, he said, but nev­er reached the lev­el of re­sponse seen in oth­er par­tic­i­pants.

If you re­move those pa­tients from the cal­cu­lus, the tri­al would hit the pri­ma­ry end­point, Mun­shi said.

“The drug was do­ing ex­act­ly what it was sup­posed to be do­ing,” Mun­shi told End­points. “There were a hand­ful of sites — par­tic­u­lar­ly one site — that over­re­act­ed.”

Mun­shi said they got the da­ta over the week­end and reached out to a half-dozen ex­perts, who en­cour­aged them to run the Phase III tri­als.

They’ll now have a chance to prove if it was just those 9 pa­tients. The goal is to bring for­ward a drug that has the ef­fi­ca­cy of Sanofi and Re­gen­eron block­buster Dupix­ent but in a more ac­ces­si­ble oral form and with­out the safe­ty con­cerns of JAK in­hibitors. They’ve al­ready brought the drug in­to Phase III for ul­cer­a­tive col­i­tis af­ter a suc­cess­ful Phase II.

The FDA’s Oncology Center of Excellence has been a bright spot within the agency in terms of speeding new treatments to patients. That flexibility was on full display this morning as FDA released new draft guidance spelling out exactly how oncology drug developers can fulfill both the accelerated and full approval’s requirements with just a single randomized controlled trial.

While Congress recently passed legislation that will allow FDA to require confirmatory trials to be recruiting and ongoing prior to granting an accelerated approval, the agency is now making clear that the initial trial used to win the AA, if designed appropriately, can also serve as the trial for converting the accelerated approval into a full approval.

US regulators cleared an ultra-rare drug from Pharming Group, by way of Novartis, on Friday afternoon.

The Dutch biotech said the FDA greenlit leniolisib for an immunodeficiency disease known as activated phosphoinositide 3-kinase delta (PI3Kδ) syndrome, or APDS. People 12 years and older can receive the oral drug, to be marketed as Joenja, beginning early next month, Pharming said, five days ahead of the decision deadline set by the FDA as part of a priority review.