As COVID-19 has claimed millions of victims worldwide, biotech firms have raced to develop treatments and vaccines.
In recent weeks, several national health agencies were in discussions with CytoDyn (OTCMKTS: CYDY) to approve Leronlimab, the monoclonal antibody that CytoDyn owns, for emergency use. On March 5th, CytoDyn released Phase IIb/III testing results. Sadly, data was mixed, creating confusion among investors.
CytoDyn touted the trial as an overall success, claiming they met six different endpoints. However, critics have pounced on the core data, using it to show the trial didn’t meet its primary endpoint.
What is going on here? In this post, we’ll disclose everything biotech investors need to know.
LeronLimab Successfully Met Six Endpoints
If you’ve been following CYDY recently, you might think LeronLimab is a bust. Following CytoDyn’s March 5th report, investment news outlets led with the most disappointing aspect of its Phase IIb/III trial – a lack of a statistically significant reduction in 28-day, all-cause mortality.
Now, that sounds bad. But appearances are not what they seem – in the study, sample sizes were skewed in a manner that significantly affected the data. But more on that later – in this study, SIX encouraging results emerged:
1) Absolute 28-day, all-cause mortality fell by 6.5% when doctors combined Leronlimab with common COVID-19 treatments. For relative death risk reduction, that number increased to 28.1%.
2) 28-day, all-cause mortality decreased by 5.7% when doctors added Leronlimab to Dexamethasone treatments. The relative risk reduction numbers were even better, with a 26.2% reduction.
3) Critical COVID patients had their hospital stay reduced by 5.5 days. With a p-value of 0.005, this finding is the strongest of the trial.
4) When doctors mixed Leronlimab with common COVID-19 treatments for critically ill patients less than 65 years of age, absolute 28-day, all-cause mortality plunged by 20.9%. The relative death risk reduction was an even more stunning 73%.
5) The absolute death risk fell by 6.5% for critically-ill patients on a Leronlimab and Dexamethasone treatment regimen. Relative death risk dropped by 23.5%.
6) There was a significant reduction in hospital stay length by critically-ill patients below the age of 65. Patients in this cohort left hospital 6.8 days earlier than those in the placebo group.
As you can see, there were many positive takeaways – certainly enough to pursue emergency use authorization with national health authorities.
Over-65 Patients in the Leronlimab Group Greatly Exceeded the Placebo
However, we can’t ignore the elephant in the room. The primary endpoint of CytoDyn’s Phase IIb/III trial was a reduction in 28-day, all-cause mortality. On this point, they failed to achieve a p-value below 0.05.
The shorts blasted this result on social media, proclaiming that CYDY was a failure. Eventually, the financial press picked up the story, fueling a near 50% drop in CYDY stock.
However, let’s take a closer look at the data. As you’ll see, things are much less bleak than they appear. First and most importantly, researchers erred in the allocation of patients to study groups. Initially, the study called for a 2:1 assignment ratio of patients to the treatment and placebo groups. But as it happened, the Leronlimab group was assigned almost three times as many over-65 patients as the placebo group. That meant the assignment ratio was nearly 3:1.
Real-world implementation of medical studies frequently produces these inequities. To resolve such issues, researchers often perform age-adjustment analysis. As it was, the trial data produced placebo death percentages outside typical confidence levels for COVID-19.
When CytoDyn performed age adjustment analysis on their data set, the placebo death rate jumped from 21.6% to 25.6%, placing it within the expected confidence range. Simultaneously, the death rate of patients treated with Leronlimab fell from 20.46% to 18.91%. With a gap of 6.7% between Leronlimab and the control group, the p-value drops below 0.05.
In other words, Leronlimab probably met its primary endpoint, despite claims to the contrary.
Secondly, in the unadjusted data, the primary endpoint fell just outside statistical significance. Even if the treatment vs control groups weren’t improperly balanced, a borderline result could become statistically significant with a larger sample size.
Shorts Have Been Attacking CYDY Since February
In finance, everyone’s trying to make money. So, if you’re short CYDY and have the resources, you’ll engage in behaviors designed to induce sell-offs. In February 2021, Adam Feuerstein, a highly-regarded finance journalist with STAT News, turned his sights on CytoDyn.
As the self-proclaimed Night King of Biotech, he has developed a ferocious reputation in the industry. If he doesn’t like a company (and there are many), he pulls no punches. So, who better to give credibility to a short attack than this seasoned veteran?
Together with fellow shorts (like Paul Santos), they’ve amped up their social media attacks on CYDY. From February to the present, they’ve pounced on any data that has made their case. And as the share price of CYDY shows, they’ve enjoyed a great deal of success.
At CytoDyn, Life Goes On
Despite short shenanigans, it’s just another day at CytoDyn HQ. In recent weeks, they’ve continued to file for approval in jurisdictions around the globe. They also launched a new study into the effects of Leronlimab on COVID long-haulers. And most recently, they appointed Christopher Recknor as their new COO.
They have more important things to worry about than a muckraking finance journalist. If you’re assessing the viability of CYDY as an investment, that’s a great sign.
Biotech is a Tough Sector to Invest in
CytoDyn is not a penny stock scam. In recent months, there’s been a lot of innuendo and bluster from both shorts and longs. But, at the end of the day, CYDY is a biotech firm that’s deep in the trenches every day, carrying out real, scientific work.
It’s a cold reality that roughly 90% of biotech trials experience failure of some sort. Because of this, this sector is a haven for short-sellers. By executing a tried-and-true scare tactics, shorts can effectively print money off the backs of paper-handed speculators.
Trial & error is the backbone of the scientific method. However, in finance, even one high-profile failure can sink your business. Even a trial with mixed results (like the one CytoDyn just had) can have a decidedly negative effect on a company’s fortunes.
CYDY didn’t hit a home run this month, but they didn’t strike out either. They hit a sac fly – thanks to skewed data, they didn’t meet their primary endpoint. But they met six other endpoints – because of this, there are promising possibilities to explore in the months ahead.
In a sense, you could view CYDY’s current share price (2.46 as of March 19) as a half-off sale. If you believe in this biotech firm, there’s no better time to get in.