An incredible amount of planning and preparation goes into the design of any stage of a clinical trial program, but especially the third and final one. It’s the most comprehensive and complicated phase, and the most critical. It represents the culmination of years of research and clinical development, and the success of a Phase III trial can lead to the ultimate goal of getting a drug candidate approved.
So when a company in the midst of a late-stage trial provides an update to the program, it’s a pretty big deal. Cardiol Therapeutics (Nasdaq: CRDL) (TSX: CRDL) recently did just that. The company is investigating its lead drug candidate, CardiolRx™, for the treatment of recurrent pericarditis – a fairly rare and debilitating condition for which there is currently only one FDA-approved therapy.
Let’s take a look at the trial update and what it might mean for investors.
The MAVERIC Trial
Pericarditis is the inflammation of the sac surrounding the heart. It can be very painful and sometimes even mistaken for a heart attack. It’s not easy to diagnose, and often results from a separate viral infection. The only drug that is currently approved by the FDA to treat the recurrent form of the disease is an injectable immunosuppressive IL-1 blocker called rilonacept (trade name ARCALYST®). But it has its limitations including risk of infection, dependence, high rate of relapse on discontinuation, and high cost. Cardiol believes that CardiolRx™ could offer an improvement due to fewer side effects, oral administration, and a cost anticipated to be lower than the $300k+/year price tag for rilonacept.
The MAVERIC Phase 3 trial is enrolling patients who suffer from recurrent pericarditis – inflammatory episodes that keep coming back, sometimes for many years. Participants enrolling into the trial are required to have been using rilonacept for at least 12 months and are discontinuing it. In the placebo arm of the Phase 3 RHAPSODY trial of rilonacept, 75% of patients who discontinued the IL-1 blocker suffered recurrences within about 3 months of withdrawal. Other studies and real-world observations support this approximate 75% recurrence rate on discontinuation.
Cardiol’s trial is designed to test whether CardiolRx™ can reduce the risk of recurrence by 40% or more over the placebo group, in a population at high risk to recur (i.e., patients withdrawing from rilonacept).
Why Cardiol Made the Change
Cardiol recently announced that the original 110-patient enrollment target was achieved ahead of the company’s end-of-September guidance. The trial is recruiting patients at major heart health centers across the United States and patients are randomized 1:1 to receive either placebo or CardiolRx™ in a double-blind format, meaning neither the patient nor clinicians/site staff know who is receiving what.
Up to this point, following a blinded review of the overall number of recurrences, fewer-than-expected recurrences have been observed.
Against the backdrop of high recurrence rates following IL-1 blocker withdrawal in prior trials and real-world studies, this lower-than-anticipated number of pericarditis recurrences observed thus far in MAVERIC is encouraging and raises the possibility that CardiolRx™ may be helping patients remain recurrence-free. However, the blinded nature of the ongoing trial means that any treatment benefit can only be established following unblinding and analysis.
In response to the observation, the MAVERIC Steering Committee recommended expanding enrollment up to 150 patients to capture sufficient events needed to preserve the trial’s planned statistical power and deliver a robust assessment of the potential for CardiolRx™ to reduce recurrence risk. The positive side of the move is that more data is better, and the upsizing will provide the definitive evidence of the benefits of CardiolRx™. The impact of this expansion? Topline results will be modestly delayed from Q1 2027 to mid-year 2027.
Market vs. Analysts
Following the trial extension announcement, the stock price has been under pressure, down about 39% since the morning of the press release.
While the share-price decline reflects a cautious market response to the trial extension announcement as well as likely profit-taking from the summer run-up, broader market forces are also likely having an outsized role. Analysts covering Cardiol on the other hand have maintained their bullish outlook despite the recent trading weakness – a very encouraging sign.
HC Wainwright’s analyst Brandon Folkes reiterated a Buy rating and a $9/share price target on the day of the press release.
Canaccord Genuity’s analyst Edward Nash reiterated a Buy rating and a $10/share price target on the day of the press release.
Mayank Mamtami from B. Riley Securities did a deep dive on the reconfigured trial and reiterated his Buy rating with an $11 price target. We got a look at his report where he notes, “Precedent suggests a placebo rate below plan is not unusual in this setting, i.e., KNSA’s Ph3 RHAPSODY for Arcalyst (rilonacept) also had recurrence rates that tracked below its design assumption, and that trial succeeded overwhelmingly. MAVERIC’s efficacy bar is far lower, requiring a 40% relative reduction in 24-week recurrence vs. the 96% reduction in recurrence risk rilonacept delivered.”
Brookline Capital Markets analyst Fozia Ahmed reiterated a Buy rating and a $5/share price target on the day of the press release.
Christian Orquera at First Berlin Equity Research reiterated his Buy rating on October 2. He adjusted his price target down from $7.50 to $7.40 as a result of the slightly delayed results and some dilution from the recent exercise of warrants. He stated, “We view the lower-than-expected recurrence rate as encouraging, particularly given the high relapse rates reported following rilonacept withdrawal. CardiolRx-mediated recurrence suppression represents a credible explanation for the lower pooled event rate, considering the efficacy signal observed in the Phase II MAvERIC-Pilot study and management’s statement that it is unaware of changes in routine clinical practice that would explain the finding.”
Investor Takeaway
The analysts are in general agreement: the change in the structure and timing of the trial does not materially impact their assessment of Cardiol’s value. The comments tend to express the view that the trial is actually stronger now, and the addition of more patients is an appropriate response to blinded overall event rate. Price targets remain largely the same, implying upside ranging from approximately 500 – 800%.
Perhaps the market is misinterpreting the importance of the announcement to deliver a more robust and definitive outcome with less statistical risk. It is also likely there are general biotech market forces at play right now that are putting pressure on the stock price. Anything is possible, really. But the evidence from the experts seems to suggest that the current stock price is significantly undervaluing Cardiol Therapeutics.
Author’s Disclosure: This article reflects the author’s independent analysis and personal views. The content is provided for informational purposes only and should not be considered financial or investment advice. Readers are encouraged to conduct their own independent research and due diligence before making any investment decisions.
