Stemline admits it learned of—but did not disclose—patient death in cancer trial before $45M stock offering

The death is the third linked to capillary leak syndrome.

Stemline Therapeutics has admitted it learned of a death in its phase 2 cancer trial the day before it went ahead with a $45 million stock offering. The admission follows a report in The Street about the death—the third linked to the same side effect—that wiped more than 40% off Stemline’s stock price.

The events date back to last month. On January 19 Stemline filed a prospectus with SEC to raise money. The offering was priced the following day, generating $45 million for Stemline. What has now become clear, following The Street article and subsequent company statement, is Stemline was told on January 18 of the death of a patient in a phase 2 trial of SL-401. Stemline disclosed its knowledge of the death on February 2. 

In a statement, Stemline said the patient developed capillary leak syndrome (CLS), the same side effect linked to the deaths of two participants in earlier studies. When Stemline designed the second part of its phase 2 trial of SL-401 in blastic plasmacytoid dendritic cell neoplasm (BPDCN)—a rare blood cancer—it added dosing and safety parameters to the lead-in stage of the study to cut the risk of severe CLS.

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The precautions looked to be working. When Stemline presented data from the potentially-pivotal trial at the 2016 American Society of Hematology Annual Meeting in December, it reported 19% of the 32 evaluable patients had experienced treatment-related CLS. No patients enrolled since the precautions were implemented experienced a severe form of the side effect. And only 8% of the overall study population had suffered grade 3 or above CLS.

Stemline is yet to determine the cause of the patient’s death, but it appears to threaten the clean safety record the company was accruing. What, if anything, that means for the prospects of SL-410 remains to be seen.

If all goes to plan, Stemline will wrap up enrollment in the BPDCN study in the coming months, setting it on a path it thinks will lead to a filing for FDA approval before the year is over. With the trial generating an overall response rate of 84%—and complete response rate of 56%—as of the December update, the efficacy aspect of the plan looks to be on track.

Analysts at Jefferies were not impressed, and questioned management's decisions. "STML reported it received notification of a patient death on Jan. 18 but believed this was not material and the reason this was not disclosed earlier. Recall that two patients deaths from CLS had been observed earlier in the trial (1 BPDCN pt tx'd at 7ug/kg/day and 1 r/r AML pt tx'd at 16ug/kg/day)," the firm said in a note to clients.

"Prior to this event and after new safety protocols had been implemented, STML reported no CLS >Grd 2 at ASH '16. We feel that the lack of disclosure highlights the inability of mgmt to make decisions with shareholders in mind. Further, as of 8:00pm STML has not returned our calls. Collectively, we believe that the most meaningful upside to the stock would be remedies to regain investor confidence. Furthermore, we would advise mgmt to host an investor call where these issues may be addressed."

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