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I covered Lyra Therapeutics (NASDAQ:LYRA) in October, and the stock has done very well in these past couple of months. They have some important updates from November, a month after my article was written, but there’s not much that has happened since. Even so, I think I should take a second look at the company, and cover these updates while I am at it.
To quickly recap: LYRA is a smallcap founded by MIT’s Bob Langer to develop treatments for sinus using the XTreo platform. XTreo is a proprietary platform that develops a biocompatible mesh scaffold, an engineered elastomeric matrix, and a versatile polymer-drug complex that can deliver sustained therapy to deep tissues for up to six months with a single, non-invasive, in-office procedure. They successfully completed two phase 2 studies in chronic rhinosinusitis or CRS, and will be producing phase 3 data early this year, possibly even in January for the second part of the study. Of their two products, both targeting CRS, LYR-210 is in phase 3 trials for surgically naive CRS patients, while LYR-220 is in a phase 2 study for patients who have recurrent disease post-surgery. The difference between the products is basically that 220 has a larger mesh for patients whose nasal passage is enlarged due to surgery.
About the “successful” phase 2 studies, here’s what I wrote earlier in June:
Thus, although the study did not exactly achieve stat sig in its primary endpoint (timeframe: 4 weeks; measure – 4CS), it seems to have been a successful study with a long duration of drug effect in patients. Interesting to note that the primary endpoint of the phase 3 ENLIGHTEN studies have been changed accordingly, to CFBL in the 7-day average composite score of 3CS with a time frame of 24 Weeks, up from the 4-week time frame seen in the phase 2 study.
I also noted that the company does not have composition of matter patents. This is obvious because what does their product consist of? – a mesh or scaffold coupled with a cheap generic. The cheap generic cannot be directly patented, and the scaffold thing is a different matter altogether. Here are some details about the kinds of protection they have from their four lines of patent estates:
1st lineage – to 2030, includes issued patents … that are not limited to any particular drug, site of delivery, or patient condition, but specify features of the implant, delivery system, method, and polymers
2nd lineage – to 2036, includes issued patents with ENT-specific method claims directed to the specific drug, site of delivery (i.e., middle meatus), and patient condition.
3d lineage – to 2038, attempts to capture the product’s drug release features and patient results from the recent clinical trial.
4th lineage – to 2042, directed to a higher drug load (7500 ug).
Thus, 2038 is what we seem to have here as a moderately strong IP foundation. I am still not happy, but I guess for a product like this, this is the best that can be done.
The other issue that rankles is the LYR-210 program’s failure to meet the 4CS primary endpoint. I discussed this in some detail in my earlier articles. The company has made efforts to explain the situation. Their basic explanations include the arguments, first, that given that these patients are unable to smell adequately, the 3CS measure rather than the 4CS should have been a more appropriate primary endpoint – which begs the question: why choose 4CS then? The company explains that the product candidate did very well (i.e., worked with statistical significance) on the 3CS measures. They also note that the phase 3 trial is now going to have the 3CS measure as the primary endpoint. Lastly, they also say that the LYR-220 trial, while meeting its bare minimum safety endpoint, also did well with all the 4CS measures.
The argument is not without merit, but the failure still rankles, and could become something of a bone of contention when the FDA reviews the NDA.
In November, the company, during its earnings release, announced a few news items, as follows:
– Additional Phase 2 BEACON trial CT scan data demonstrated statistically significant improvement in sinus opacification with LYR-220 and provided radiological evidence of improvement in chronic rhinosinusitis (CRS’) patients who have had prior ethmoid sinus surgery –
– Emerging data further support the previously reported positive BEACON topline results demonstrating CRS symptom improvement –
– ENLIGHTEN I pivotal Phase 3 trial of LYR-210 in CRS patients who have not had ethmoid sinus surgery is fully enrolled; topline results expected in 1H 2024 –
There’s not a lot to comment on here barring that the ENLIGHTEN study seems to be running on course. This data drop is a major catalyst.
Financials
LYRA has a market cap of $275mn and a cash balance of $103mn. Research and development expenses for the quarter ended September 30, 2023 were $12.4 million , while general and administrative expenses for the quarter ended September 30, 2023 were $5.0 million. At that rate, the company has a cash runway of 4-5 quarters, or just into 2025. Thus, expect a dilution in the first half of 2024, hopefully from a position of strength after the company hopefully publishes positive phase 3 data.
Bottomline
LYRA has its problems, which I highlighted here. However, the stock has done well for me in the last few months, and if they manage to crack the phase 3 trial, they, I expect, will do well again. I will continue holding.
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