Kodiak's Eylea rival hits 'major disappointment' with failure in first of 6 phase 3 studies

Kodiak Sciences' attempt to rival Regeneron and Bayer's blockbuster drug Eylea, KSI-301, has flopped the first in a series of six phase 3 studies, casting an ominous cloud over the rest of the program. 

Results of the 559-patient trial were a "major disappointment and surprise for most investors," Jefferies analysts wrote in a Wednesday note. Investors were clearly not happy, as shares plummeted nearly 80% as the markets opened to $10.55 apiece as of 10:02 a.m. ET.

KSI-301 failed to best Eylea in improving visual acuity for patients with wet age-related macular degeneration, or wet AMD, in the phase 2b/3 DAZZLE study, Kodiak said Wednesday. The drug also had higher inflammation than Eylea at 3.2% versus 0%. The condition, in which abnormal blood vessels grow and leak into a part of the retina in the back of the eye, impacts about 1.1 million people in the U.S.

The failure is a major setback for Kodiak as the biotech is testing the antibody-biopolymer conjugate across six phase 3 studies in people with wet AMD,  diabetic macular edema (DME), retinal vein occlusion (RVO) and diabetic retinopathy. 

RELATED: Roche, with an FDA nod for Vabysmo in hand, looks to challenge Regeneron's dominant Eylea

Jefferies assumes investors and management will now want to run another wet AMD study. Kodiak already has another late-stage trial of KSI-301 recruiting patients with wet AMD, dubbed DAYLIGHT, but the analysts "wouldn't think" that monthly study would be enough to support the drug. The DAYLIGHT study is slated to read out in the first quarter of 2023, the company has said.

Before then, KSI-301 is anticipated to have a readout in patients with RVO in the third quarter of this year. Two studies in patients with DME are scheduled to produce primary endpoint data in the first quarter of 2023.

Study investigator Carl Regillo, M.D., chief of retina services at Wills Eye Hospital, said RVO and DME are "very different diseases from wet AMD." The studies in RVO and DME are designed to "provide more frequent treatment for high-need patients," and the DAYLIGHT trial should "answer the question as to the effectiveness of early and intensive treatment," Regillo said in a statement. 

But even if all of those trials notch their primary endpoints, today's results could still spell disaster for KSI-301. Kodiak needs a successful late-stage win in wet AMD to file the drug for approval for its initial label, Jefferies wrote.

RELATED: Kodiak bags $225M in exchange for $1B-plus in future royalties

Kodiak highlighted a secondary endpoint, analyzed at Year 1, in which the drug showed durability as 59% of patients receiving KSI-301 achieved a five-month dosing with visual acuity gains that were comparable to the overall Eylea group. 

The trial failure is a dent in Kodiak's path toward market as it hopes to carve a niche in a market dominated by Eylea. The Regeneron and Bayer drug generated $9.4 billion in 2021 worldwide net sales, Regeneron reported earlier this month. 

Kodiak now also has to catch up to Roche's Genentech, which scored an FDA green light for Vabysmo last month. The drug gained a nod in both DME and wet AMD.