Cardio3 shares suffer as biotech fires back at criticism of PhII study

Cardio3 BioSciences tasted a bitter downside of being public this week. The Belgian biotech today undertook damage control after a Forbes blog report on Monday about questionable data on the biotech's lead cellular therapy preceded a fall in its share price.

In a Monday blog post, Forbes contributor Larry Husten cited findings about several of inconsistencies in data from a Phase II study of Cardio3's C-Cure candidate for heart failure reported recently in the Journal of the American College of Cardiology and on the company's website. Shares of Cardio3, which highlighted the data prior to its successful IPO last week, slid down 4.32% to €19.29 as of late this morning.

Cardio3 dispatched a rebuttal of Husten's report, stating that the "blog contains a number of misinterpretations or misunderstandings." In FierceBiotech's conversation with Cardio3 CEO Christian Homsy this morning, he clarified a couple of the issues highlighted in the Forbes' article, but he also took responsibility for a couple of errors in the reporting of Phase II data from his company and in the journal article.

"We didn't have a chance to be able to comment on that piece before it was out," Homsy said in an interview, during which he took issue with Husten's suggestion in his post that patients might have been "cherry picked" to dress up the results during its campaign to go public. "It would probably be a much better piece if we had" commented, he said.

Here are four items from the Phase II data reports under scrutiny, the first two of which Homsy clarifies and second two for which he took responsibility because they were legitimate errors.

  • The Forbes article showed an inconsistent number of patients reported in the JACC paper, which says 48 patients in the text and then two lower numbers in a table and figure contained in the report. Homsy says that though 48 patients were randomized, there were three dropouts after one patient refused to take part in the study and two failed to qualify before the results were tallied. This was also explained in a supplemental section of the online version of the paper.

  • On a second point, Cardio3 sought to clarify the apparent conflict of interest that went unreported in the JACC paper, which didn't list co-founder and paper co-author Professor William Wijns as having financial ties to Cardio3. Homsy said that this was accurate at the time when the paper went online in April, before Homsy bought shares in a late-May private offering. In fact, he wasn't given shares in the company as a co-founder. Which is unheard of in U.S. biotech circles, but there you go.

  • Homsy took the blame for his company misreporting that the Phase II trial had 1:1 randomization when the correct ratio was 2:1 randomization of patients in the treatment versus control arms. Anyone can debate the importance of the ratio.

  • Husten also noted that there was apparently an incorrect percentage in the paper, which reported that 13 of 24 patients with high cholesterol on statins represented 96% of them. In that case, 54% is the correct percentage. However, Homsy said that the paper should have said that 23 of 24 of those patients were on statins, so 94% is the correct number. Homsy chalked this up to a "typo."  

As he did in an earlier interview in Reuters, Homsy told FierceBiotech that these issues should have been hashed out in a scientific journal, not in the business press. Okay. But findings of inconsistent data from any biotech company are fair game in business articles, and investors hunger for this kind of information. And this is a solid example of how publicly traded biotech groups—of which we're seeing a lot more this year as IPOs make a big comeback--will face more media and general scrutiny than they did as private companies.

- here's Cardio3's rebuttal statement
- see Reuterstake