Pfizer spinout Cerevel sees stock double on success of early phase schizophrenia trial

Cerevel Therapeutics’ schizophrenia prospect has impressed in a phase 1b clinical trial, triggering a 136% surge in the stock price.

Shares rose to $29.69 in pre-market trading Wednesday. The Pfizer spinout is now preparing to move into phase 2 and looking into additional indications including dementia-related psychosis.

Having come through the multiple-ascending dose part of the study, Cerevel randomized 81 patients to receive placebo or one of two doses of CVL-231. The drug is designed to selectively target the M4 muscarinic receptor to provide antipsychotic activity without causing the side effects that contribute to limited patient compliance and high relapse rates associated with current treatment options.

Participants who received 30 mg of CVL-231 once a day experienced a 19.5-point reduction in severity of schizophrenia symptoms as assessed by the Positive and Negative Syndrome Scale (PANSS). Cerevel said the improvement is clinically meaningful and, when compared to the 6.8-point reduction in the placebo arm, statistically significant. 

A cohort of patients who received 20 mg of CVL-231 twice a day performed slightly worse, notably, on the PANSS Positive Score, but the combined treatment data set still beat placebo on the total and subscores.

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Analysts at Jefferies said “PANSS improvement came in above expectations on both an absolute and placebo-adjusted basis and looked similar to, if not better than, competitor [Karuna Therapeutics].”

Cerevel's data "look impressive," according to Mizuho's Vamil Divan, but he urged the company's investors to hold their horses a bit given the small size of the study. Divan wants to see clearer data from both Karuna and Cerevel's products before reaching a conclusion on which one is best. 

Karuna's M1-M4 muscarinic agonist spurred 17.4- and 11.5-point improvements in schizophrenia symptoms on an absolute and placebo-adjusted basis. The trial benefited from a smaller reduction in the placebo group, however.

Divan believes the competing results from Karuna and Cerevel are similar. But Boston-based Karuna has the advantage of being ahead, as the company's results—released 20 months ago—were for a phase 2 trial, whereas Cerevel is just now planning a phase 2. The schizophrenia market is also large and drugs for the condition can often move into adjacent indications, such as dementia-related psychosis.

Shares in Karuna, which is trying to resurrect an old Eli Lilly drug, fell 9% in the wake of Cerevel’s data.

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Safety scuttled muscarinic receptor agonists in the 1990s and were an area of concern going into the phase 1b readout on CVL-231. Cerevel came through the early test, finding the dropout rates in the treatment and control groups were similar and the adverse event results were free from red flags. Notably, while one patient on CVL-231 suffered increased heart rate, the feared cardiovascular side effects otherwise didn’t materialize.  

“CVL-231 looks pretty clean on [cardiovascular] tox … and likely attributed to its selectivity for M4 and ability to avoid peripheral activation of M1,” the Jefferies analysts wrote in a note to investors. The study found no link between CVL-231 and extrapyramidal side effects or weight gain and only infrequent cases of gastrointestinal adverse events. 

Divan said both Karuna and Cerevel's data helps bolster the idea that muscarinic receptor agonists can be used for schizophrenia.

Investors sent shares in Cerevel soaring after seeing the data. The surge reflects increased confidence that Cerevel can deliver on its vision of establishing CVL-231 as the new standard of care in the blockbuster schizophrenia market.

Cerevel still has a long way to go to deliver that vision, starting with a planned phase 2 study.