Acelyrin fails late-phase clinical trial months after $540M IPO, sending stock hurtling downward

Acelyrin has given its investors a nasty shock. Months after raising $540 million in a rare biotech IPO, the company has reported the failure of its lead prospect in a phase 2b/3 inflammatory disease clinical trial, causing its share price to plummet by 58% in premarket trading. 

Los Angeles-based Acelyrin went public in May, continuing a whirlwind rise that saw it raise hundreds of millions of dollars privately to fund development of an IL-17A inhibitor. Existing drugs including Eli Lilly’s Taltz and Novartis’ Cosentyx hit the same target, but Acelyrin persuaded investors that its use of a small protein, rather than a monoclonal antibody, has created a differentiated asset with higher potency. 

The phase 3 trial in moderate to severe hidradenitis suppurativa was a key early test of that hypothesis. Acelyrin’s candidate, izokibep, failed to beat placebo on the primary endpoint, sending the stock down to $11.60 before the market opened Tuesday. The share price had climbed to around $28 in the run-up to the readout late Monday.

In the study, 175 patients took placebo or one of two izokibep regimens. After 16 weeks of treatment, the proportion of people with a 75% or greater improvement in total abscess and inflammatory nodule count was statistically no higher in the izokibep arms, 39% and 34%, than the placebo group, 29%. 

After digging below the primary endpoint fail, Acelyrin sees reasons to continue to have confidence in its candidate. The biotech noted that some patients who responded to izokibep dropped out of the trial as early as Week 4, unrelated to adverse events, and it reported a “marked increase” in placebo responses over the course of the trial. Acelyrin is unable to explain the dropouts and placebo responses.

“We're really not seeing a pattern [in discontinuations] at all,” Acelyrin CEO Shao-Lee Lin, M.D., Ph.D., said on a call with investors to discuss the data. “There was no increase relative to historical precedents [in placebo at an interim analysis]. By the end of the trial … that placebo rate had doubled relative to historical precedents. We really don't have a good explanation for why that should be happening.” 

Amid the uncertainty, Acelyrin is publicly confident on one point. In its view, izokibep has a future. The biotech began a second late-phase clinical trial of izokibep in hidradenitis suppurativa in June and is now looking into ways to counter discontinuations and placebo responses to improve its chances of success.

“An obvious one is that one can talk about sample size adjustments,” Lin said. “Our ongoing phase 2 has 125 subjects per arm. If we were simply to power relative to the … unprecedented placebo response rates, as well as discontinuations, that comes to about 200 subjects per arm. So, that's one thing that one can do. It's not the most elegant, and there are additional approaches.”

Acelyrin has the cash to work through the setback in the first phase 2b/3 study. The biotech ended June with $823 million to its name and has additional data drops that could reinvigorate investor enthusiasm for izokibep coming up. Top-line data from a phase 2b/3 clinical trial in psoriatic arthritis are due in the first quarter of next year.

The more downbeat view is that Acelyrin has a lot resting on a drug that has failed its first key test. The biotech sees izokibep as a pipeline in a product, leading it to embark on a multifront push to show the candidate improves outcomes in a range of settings. Beyond izokibep, the biotech has an anti-IGF-1R antibody, but it is still several months from delivering proof-of-concept data.