DNB Markets - Isofol Medical: Potential approval still possible

Late last Friday, Isofol announced that the 300 PFS events triggering the analysis of the data of the ongoing phase III study will not be reached due to unusually high censoring of patients. The news sent the stock tumbling 27%. We understand the initial confusion in the market but highlight that this news should not negatively affect the possibility of a potential approval; nevertheless, the top line results might be delayed by a few months. We await the company’s analysis before making any adjustments to our assumptions.

Will not reach 300 PFS events due to unusually high censoring. Late last Friday, the company announced that 300 PFS events would not be reached in the ongoing phase III study due to a higher-than-expected number of patients being censored, as the result of patients proceeding to other treatments before reaching PFS. The company had requested to adjust the censoring rules according to the latest guidelines (adopted by the FDA in 2021), but the request was denied. The stock plunged 27% as markets opened today.

Confusion understandable, but this should not hinder a potential approval. The company has previously highlighted 300 PFS events as the next milestone that would trigger the unblinding and analysis of data; the announcement that this would not be reached understandably created some confusion in the market. However, we note the following: Firstly, the primary objective, of showing ≥10%-points improvement in ORR over SoC, is not affected. Secondly, the secondary objective is to show a positive trend in PFS. While the current censoring rules probably make it difficult to show any statistically significant change in PFS, this was never a requirement from the FDA. Thirdly, the iDSMB has repeatedly examined the data and reported no safety issues.

Top-line results probably somewhat delayed. The company and the FDA are still blind to the data and it will fall to an independent clinician to try to understand what could have caused the large censoring. While the cause remains to be determined, during a call management speculated that some patients might have been wrongly censored. Once the company has analysed and understood the impact and options, it intends to seek feedback from the FDA and agree on a new trigger point to start the analysis. Visibility is low, but our best guess is that there will be a few months' delay in top-line results (previously expected in H1 2022).

Fair value of SEK13–23 reiterated. We await further information from the company's analysis before making any adjustments to our fair value.

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Best regards 

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David Martinsson | Markets | Equity Research | Healthcare


Patrik Ling | DNB Markets | Equity Research | Senior Analyst Healthcare

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