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By Grant Zeng, CFA OBB:SNGX

Earlier this morning (Dec. 14, 2015), Soligenix (SNGX) announced the initiation of its much anticipated pivotal Phase III trial of SGX301 for the treatment of cutaneous T-cell lymphoma (CTCL). Background For those who are not familiar with Soligenix, here is the background of the program. In early September 2014, Soligenix entered into an asset purchase agreement with Hy Biopharma, Inc. Pursuant to the agreement, Soligenix acquired a novel orphan drug candidate, known as SGX301 (synthetic hypericin) for the treatment of cutaneous T-cell lymphoma (CTCL). As part of the acquisition, Soligenix acquired all rights for synthetic hypericin, including intellectual property, and preclinical and clinical data. In addition to SGX301, the acquired technology package also includes preclinical and clinical data supporting other potential indications for hypericin photodynamic therapy, such as psoriasis. Psoriasis is an autoimmune inflammatory disease that is similarly characterized by cutaneous accumulation of T-cell lymphocytes but without cancerous transformation. The total purchase price including all milestones is $14.025 million, of which approximately 2% is payable in cash and approximately 98% is payable in restricted securities of the Company, and the assumption of certain liabilities of Hy Biopharma related to the hypericin assets. Over the years, Hy BioPharma has developed a novel topical photodynamic therapy using a synthetic hypericin (a powerful photosensitizer) and safe, visible light to treat early-stage CTCL and mild to moderate psoriasis. CTCL and psoriasis have a common link of malfunctioning T-cells. CTCL is a type of non-Hodgkin's lymphoma (NHL) caused by a T-cell mutation, whereas psoriasis is caused by overactive T-cells that attack healthy skin cells. In hypericin photodynamic therapy, fluorescent light (not cancer-causing ultraviolet radiation) energizes topically applied hypericin, thereby producing singlet oxygen molecules that kill malignant T-cells (apoptosis) in CTCL. Hypericin photodynamic therapy is selective for killing the malignant T-cells since the drug is applied directly onto the affected skin sites without exposing the normal skin cells to the drug. Only the area where hypericin has been applied to the skin will be directly affected by the therapy. Thus, hypericin photodynamic therapy is focused and selective to malignant T-cells. Hy Biopharma conducted both Phase I and Phase II studies of hypericin. Topical hypericin was safe and well tolerated in a Phase I clinical study in healthy volunteers. In a Phase II, placebo-controlled, clinical study in CTCL patients, the drug was safe and well tolerated, with 58.3% of the CTCL patients responding to topical hypericin treatment compared to only 8.3% receiving placebo (p < 0.04). The Pivotal Phase III TrialSoligenix has been working with leading CTCL centers, as well as with the National Organization for Rare Disorders (NORD) and the Cutaneous Lymphoma Foundation (CLF) to conduct the pivotal Phase III clinical study of SGX301 in the treatment of CTCL. NORD and CLF will assist the Company in educating patients and raising awareness of the Phase III clinical trial among patients who are eligible for participation. The Phase III trial, referred to as the FLASH study (Fluorescent Light Activated Synthetic Hypericin), will be a multicenter, randomized, double-blind, placebo-controlled study that will enroll 120 evaluable subjects.
The study is anticipated to complete enrollment with primary data available in the second half of 2016. Our Takeaway SGX301 is a novel, first-in-class, photodynamic therapy that combines synthetic hypericin, a potent photosensitizer that is applied to the cancerous skin lesions and activated using a brief safe, fluorescent light treatment. This treatment approach avoids the risk of secondary malignancies (including melanoma) inherent with the frequently employed DNA-damaging chemotherapeutic drugs and other photodynamic therapies that are dependent on ultraviolet exposure. We think the initiation of the Phase III trial marks an important milestone in the development of SGX301 as a treatment for CTCL. We believe the collaboration with NORD and CLF will greatly accelerate the patient enrollment process and therefore accelerate the completion of the Phase III trial. We estimate SGX301 could be approved by the FDA in late 2017 or early 2018 if data from the Phase III trial are positive. SGX301 has received orphan drug and fast track from the FDA for the treatment of CTCL. It also received orphan drug designation in EU for CTCL. CTCL is a class of non-Hodgkin's lymphoma (NHL). It is estimated that CTCL affects over 20,000 individuals in the US, with approximately 2,800 new cases seen annually.

With CTCL mortality is related to stage of disease, with median survival generally ranging from about 12 years in the early stages to only 2.5 years when the disease has advanced. There is currently no cure for CTCL. We welcome the acquisition of late stage candidate SGX301, and the collaboration with NORD and CLF to advance the candidate, which, we think, will have positive impact for the company’s operations and valuation. Soligenix becomes a late development stage biotech company through the acquisition of SGX301, which is highly synergistic with the company’s existing development pipeline. SGX301 may also be developed for other indications such as psoriasis, which further expands the company’s pipeline. Psoriasis is a common autoimmune disease that affects over 7 million adults in the US. Photodynamic therapy is a frequently used initial therapy for psoriasis, despite the need for ultraviolet light exposure and its attendant risk of melanoma and non-melanoma skin cancer.SUBSCRIBE TO ZACKS SMALL CAP RESEARCH to receive our articles and reports emailed directly to you each morning. Please visit our website for additional information on Zacks SCR and to view our disclaimer.