Twin failures in a pivotal phase III test of Dermira Inc.'s lead acne candidate, DRM-01 (olumacostat glasaretil), have left the company expecting to discontinue the drug's development more than six years after initially acquiring it through the purchase of Canada's Valocor Therapeutics Inc.

Despite successful midstage tests, neither late-stage trial, Clareos-1 or Clareos-2, met its co-primary endpoints. Investigators found no statistically or clinically meaningful differences between DRM-01 and placebo on two separate measures of lesion count at 12 weeks, nor in a five-point Investigator's Global Assessment (IGA) scale – a "stark contrast" to the positive phase IIa and IIb results the company saw earlier, Dermira CEO and Chairman Tom Wiggans said during a Monday conference call.

Wiggans called the outcome "completely unexpected," adding later that, "from a scientific and business standpoint, based on our analysis to date, it is difficult to see a path forward" for the program, making it the third Valocor-sourced asset the company has publicly disclosed discarding.

Menlo Park, Calif.-based Dermira's shares (NASDAQ:DERM) fell 65.9 percent to close at $8.59 on Monday as analysts, including Evercore ISI's Umer Raffat, contemplated the trial miss.

"It seems that the vehicle outperformance came back to haunt Dermira (just like other many acne trials) ... along with variability (look at Clareos-2's vehicle arm)," he wrote, adding that investor focus will now shift to progress on lebrikizumab, Dermira's phase IIb candidate for the treatment of moderate to severe atopic dermatitis, a program it's co-developing with Roche Holding AG subsidiary Genentech Inc. Dermira is currently enrolling patients with moderate to severe atopic dermatitis in a phase IIb dose-ranging study of lebrikizumab and anticipates top-line data in the first half of 2019. (See BioWorld, Aug. 9, 2017.)

Clareos-1 and Clareos-2, both two randomized, multicenter, double-blind, parallel-group, vehicle-controlled trials, were designed to assess the efficacy and safety of olumacostat glasaretil compared to vehicle to support a potential new drug application. The program enrolled a total of 1,503 patients, split about evenly between the studies. Participants were ages 9 and older with moderate to severe acne vulgaris in the U.S., Canada and Australia. In each trial, patients were randomized in a 2-to-1 fashion to receive either olumacostat glasaretil at a concentration of 5 percent or vehicle twice daily for 12 weeks.

Consistent with the phase IIa and IIb studies, the drug was well-tolerated. However, the reductions in the numbers of inflammatory lesions from baseline to week 12 in patients treated with DRM-01 in the trials fell short of expectations. In Clareos-1 and Clareos-2, the mean absolute change in acne lesion counts were 14.3 and 16.6, respectively, compared to 13.7 and 15.3, respectively, in patients in the corresponding vehicle groups. Reductions in the numbers of non-inflammatory lesions from baseline to week 12 in patients treated with DRM-01 in Clareos-1 and Clareos-2 were similarly disappointing, at 14.8 and 17.8, respectively, compared to 11.2 and 17.4, respectively, in patients in the corresponding vehicle groups.

The percentages of patients treated with DRM-01 who achieved a two-grade improvement from baseline to a final grade of zero or one on the IGA scale at week 12 were 19.1 percent for Clareos-1 and 16.3 for Clareos-2, compared to 20.8 percent and 11.8 percent, respectively, of patients in the corresponding vehicle groups.

None of the results were statistically significant.

Without explanation

Wiggans said that Dermira remains without explanation for the results of the phase III trials, but would look to three initial areas to better understand the reason for the outcome: the difference between the phase IIb and phase III studies, variability in the phase III studies, and the 5 percent concentration that the company used in the phase III program.

On the first point, he said that "we have looked at age, gender, geography, comparison of previously used vs. new sites, seasonality, baseline severity of disease and of course the IGA endpoint definition change. To date, we have found no evidence that any of these variables drove the outcome of the study."

With respect to variability, the company saw "standard deviations in the phase III results that were up to 1.5x the size seen in the IIb study, which of course is the opposite of what you would expect as trial size increases," Wiggans said.

And last, on the subject of concentration of olumacostat glasaretil in DRM-01, he said that while the company had previously identified a 5 percent concentration for the phase III program, it was possible that a concentration higher than 5 percent might have been required to demonstrate efficacy in phase III.

In addition to assessing the failed phase III trials, Dermira has now begun turning its attention to glycopyrronium tosylate (DRM-04), its once-daily anticholinergic for excessive underarm sweating (hyperhidrosis). With a June 30 PDUFA date set, the company is looking forward to the potential FDA approval and U.S. commercial launch of the product in the second half of this year.

A consensus sales forecast drawn from five analyst models projects that sales of DRM-04 could reach about $9 million in 2018, accelerating to $29.6 million in 2019. The company could also recognize revenue and milestone payments tied to its deal with Maruho Co. Ltd., which has exclusive rights to develop and commercialize the drug for the treatment of hyperhidrosis in Japan.

Prior to announcement of its failure, a consensus forecast for DRM-01 set expectations for 2019 sales of $14 million in 2019, rising as high as $220 million by 2023.

The small-molecule inhibitor of acetyl co-enzyme-A carboxylase was designed to treat acne by targeting sebum production following topical application. Sebum is an oily substance made up of lipids produced by glands in the skin called sebaceous glands. In excess, it's an important aspect of acne that's not addressed by available topical therapies, Dermira has said.

Dermira's DRM-01, like the PDE4 inhibitor DRM-02 and the photodynamic acne therapy DRM-05, were acquired with the acquisition of Vancouver, British Columbia's Valocor in 2011. Both of the latter programs, each early stage, were the subject of discontinuation and related impairment charges at Dermira in recent years.