In September, Acelyrin (NASDAQ:SLRN) fell 60% overnight after producing poor data from a mid stage trial of its lead drug izokibep in the treatment of the skin disorder hidradenitis suppurativa. While Acelyrin fell, MoonLake (MLTX), which I covered recently in bullish articles, went up, because both are targeting the same large skin disorder market.

Acelyrin and MoonLake are developing IL-17 inhibitor therapies for hidradenitis suppurativa, or HS, and psoriatic arthritis, or PsA, a type of arthritis that affects people with psoriasis. With the failed HS trial, and MLTX’ own positive HS trial, the focus is now on PsA to compare the two companies. As Seeking Alpha noted:

The drugs will face off again in the next several weeks, this time in the treatment of PsA, with MoonLake expected to report topline Phase 2 data on SLK in the first half of November and Acelyrin slated to report topline Phase 2b/3 data for izokibep in Q1 2024.

MLTX reported mixed results from this PsA trial, with the trial reaching statistical significance but failing in one critical measure.

Psoriatic arthritis (PSA’) is a chronic inflammatory arthritis that occurs in some people with psoriasis, which is a skin condition characterized by red, scaly patches. Psoriatic arthritis can affect various parts of the body, including the joints, skin, and nails. It belongs to a group of conditions known as spondyloarthritis, which typically involve inflammation of the spine and large joints.

The exact cause of psoriatic arthritis is not fully understood, but it is believed to involve a combination of genetic, environmental, and immune system factors.

Treatment typically involves a combination of medications, including nonsteroidal anti-inflammatory drugs (NSAIDs), disease-modifying antirheumatic drugs (DMARDs), and biologics. There are three targeted DMARDs approved to treat PsA: apremilast (Otezla), and two Janus kinase (JAK) inhibitors, upadacitinib (Rinvoq) and tofacitinib (Xeljanz). Additionally, lifestyle modifications, such as exercise and maintaining a healthy weight, can also be beneficial.

About approved biologics, here’s what the Arthritic Foundation says:

These medications are for people with more severe PsA. A type of biologic called a tumor necrosis factor (TNF’) inhibitor is often the first medication doctors recommend for active PsA. TNF inhibitors approved for psoriatic arthritis include adalimumab (Humira), etanercept (Enbrel), infliximab (Remicade), golimumab (Simponi, Simponi Aria) and certolizumab pegol (Cimzia). If your disease is very severe or it doesn’t respond to one or more TNF inhibitors, your doctor might try a biologic that blocks interleukin-17 (IL-17) or interleukins 12 and 23 (IL 12/23) — either secukinumab (Cosentyx), guselkumab (Tremfya), risankizumab (Skyrizi), ustekinumab (Stelara) or ixekizumab (Taltz). Certain people who can’t take these or who don’t have adequate response may try abatacept (Orencia), a type of biologic that works differently in the body. Some are more effective for skin symptoms while others work better for joints. You will not be prescribed more than one biologic at a time.

Recall from my MoonLake coverage that Cosentyx was pitted against sonelokimab in plaque psoriasis, and although the phase 2 trial wasn’t exactly powered for a proper comparison, data showed that sonelokimab was able to do numerically better than the blockbuster Novartis drug. That was a different but related indication, however.

Going back to the data from the failed trial in HS, what the press release said was:

…topline results from a Phase 2b/3 clinical study for its lead product izokibep in the treatment of moderate-to-severe hidradenitis suppurativa showed it failed to meet its primary endpoint at week 16.

More details:

The primary endpoint of HiSCR75 at week 16 did not meet statistical significance in the Non-Responder Imputation (NRI’) primary analysis.

HiSCR75 did meet statistical significance at week 16 in a Last Observation Carried Forward sensitivity analysis.

HiSCR response rates of izokibep 160mg weekly (QW) were consistent with Part A open label results, demonstrating early onset of HiSCR100 at week 4, increasing through week 12 to 38% of patients in the Independently Conducted Pre-Planned Interim Analysis.

Response was dose ordered, and safety was consistent with prior izokibep experience and not dose-limiting.

Spookier appears to be demonstrating consistent early and high orders of response without safety or tolerability limitation.

Now, a few months later, the company came out with another interesting bit of news. They are now saying that one of the vendors hired by their CRO made a dose sequencing error. Specifically, they said:

…a vendor engaged by the clinical research organization, or CRO, conducting the study incorrectly programmed the trial’s protocol, which resulted in some patients receiving placebo and active treatment dosing in random order rather than an alternating pattern. The dosing errors occurred in two arms of the four-arm study.

Acelyrin said there was no risk to patient safety due to the error and that the sequencing order has been corrected. The company said it is working to “determine the implications” of the dosing issues in the two affected arms.

It is difficult to understand whether the company thinks that this may have a positive implication for the data they produced, or whether correcting this will somehow turn the data positive. In fact, no such scenario has been implied, so we just have to wait. Meanwhile, MLTX, which soared 2x on their own positive plaque psoriasis data, has now returned to its earlier levels after the mixed PsA data.

Financials

SLRN has a market cap of $993mn and a cash balance of $788mn. Research and development expenses were $74.6 million for the third quarter, while general and administrative expenses were $19.9 million. At that rate, they have a cash runway of 6-7 quarters. The company has a high cash balance, but their R&D expenses are on the higher side. If, even with such high expenses, their CRO hires a vendor who makes a critical error in the trial process, that isn’t a measure of efficiency.

Bottomline

I covered SLRN mainly to get a measure of MLTX. The score now is: MLTX wins in HS and plaque psoriasis but has mixed data in PsA; SLRN fails in HS, has no plaque psoriasis program, and has upcoming data from PsA. This is looking interesting. If SLRN manages to win on PsA, there may be some upside.