Bottom Line: Leerink's statistical power analysis confirms an ~85% likelihood of success for BLISS-76 data in November. They considered the major factors which could influence p-value via effect size and variability in the context of past results for Benlysta in BLISS-52 and Phase II. Reiterate Outperform, raising 12-month fair value to $30 from $16.
As shown by the tables within, 67 of the 80 (84%) most likely combinations of response rates and standard deviation included in Leerink's sensitivity analysis would produce statistically significant (p<0.05). They believe BLISS-76 has been derisked after BLISS-52 results since the major difference between the two trials is geography, and the patient population in BLISS-76 (US & EU) is more similar to the Phase II trial which was data mined in order to design Phase III.
An 8% response rate delta between Benlysta and placebo on the primary endpoint would be statistically significant in BLISS-76 if the same standard deviation as seen in BLISS-52 occurs. Furthermore, a 9% delta would be sufficient at all standard deviations analyzed. Recall that Phase III (10mg/kg), Phase III (1mg/kg), and Phase II showed deltas of 14%, 8%, and 17%, respectively. At the lowest standard deviation analyzed, even a 6% delta in response rates would achieve a p=0.042.
Standard deviation should not be that different in BLISS-76 as compared to BLISS-52. HGSI appears to have done a good job controlling for most of the factors which may cause variability, judging by the consistent standard deviations seen in Phase II and BLISS-52. On the one hand, lupus patients in North America and Western Europe (BLISS-76) may be more uniformly treated than in Asia, Latin America and Eastern Europe (BLISS-52); however, this may be offset by more genetic heterogeneity in the BLISS-76 population vis a vis BLISS-52.
Placebo response rate could be lower in BLISS-76, allowing an easier separation in the curves due to effect size. Studies done in the U.S. and Western Europe frequently show less of a placebo effect due to better care overall and less pronounced effect from entering studies.
Notablecalls: $30 from Leerink Swann is the new Street high for the stock. This should send the stock higher, testing for another breakout following ThinkEquity's upgrade a week ago. It's quite clear positive momentum ahead of the BLISS-76 data release in November is building.
Now that Leerink Swann, one the premier biotech houses is calling the trial a ~ 85% success, the stock should take off from here. Note that by many, Leerink is considered to be the Axe in HGSI.
Leerink was very positive on HGSI ahead of the BLISS-52, which sent the shares up 500% (!) in the March-July timeframe.
I suspect the stock will trade over $15 level today...reaching $15.50 (again) and possibly surpassing it.
Nice job Leerink!