Novus Therapeutics plunges deep into penny stock territory after failed ear trial
After a more than 15-year run, a California-based biotech is exploring options, including a sale, after its lead experimental therapy failed an exploratory mid-stage study in patients with middle ear infections characterized by a build-up of fluid behind the eardrum.
The company, initially called Tokai Pharmaceuticals but which subsequently changed its name to Novus Therapeutics in 2017, saw its shares more than halve on Monday after the drug — OP0201— did not pass muster as an adjunct therapy to oral antibiotics in infants and children aged 6 to 24 months with acute otitis media (OM).
Otitis media is often caused by a blockage in the passageway that connects the middle ear to the back of the nasal cavity called the Eustachian tube. Comprised of a surfactant (dipalmitoylphosphatidylcholine) and a spreading agent (cholesteryl palmitate) suspended in a propellant, OP0201 is administered intranasally via a pressurized metered-dose inhaler to “de-stick” the tube restore ventilation in the middle ear.
In the trial, patients were treated twice daily for 10 days and followed up to one month. There were two main goals: the resolution of bulging tympanic membrane and resolution of middle ear effusion.
So far, there have been no therapies approved to specifically treat OM. Antibiotics are used to address bacterial infections that may arise as a result of the condition, but they have no impact on viral infections. In order to deal with recurrent or chronic otitis media, surgery is recommended in which the tympanic membrane is perforated to improve drainage and ventilation of the middle ear.
After the failed study, Novus’ stock closed down about 52% at 62 cents.
“We recognize that continued development of our surfactant-based nasal aerosol will require significant time and capital,” said company chief Gregory Flesher in a statement. “We must fund the company for several years in order to complete additional formulation and device development, initiate the next otitis media clinical trial, and ultimately deliver clinical data. Given our current valuation relative to our capital needs, and given the operational challenges with the ongoing COVID-19 pandemic, we believe that exploration of all options is the appropriate course of action.”
In January, the company said it had enough in the coffers to keep the lights on until the fourth quarter of 2020.
There is now a crowded pipeline addressing ailments of the ear, given that most products such as hearing aids and cochlear implants address ear damage caused by genetics, noise, aging, or drugs, but nothing quite cures or indeed targets the biological underpinnings of hearing loss. Vying to fill that gap, a plethora of developers is working on therapeutics in a burgeoning field.
Boston-based Akouos is working on a therapy designed to help individuals with sensorineural hearing loss due to mutations in the otoferlin (OTOF) gene. Also in Boston is Decibel Therapeutics, which is working on regeneration by targeting tiny hairs that grow in the inner ear to address congenital hearing loss or age-related balance disorders. Frequency Therapeutics has a mid-stage hair cell regeneration program using progenitor cells.
Across the Atlantic, UK-based Rinri Therapeutics is working on treating hearing loss by transplanting otic neural progenitor cells into the inner ear. Amsterdam-based Audion Therapeutics has a compound in-licensed from Eli Lilly, which is designed to turn on a chemical switch to produce new sensory hair cells from other cells in the inner ear to improve hearing.