For smaller public company drug developers clinical trial results are major catalytic events. Positive readouts can catapult valuations forward and negative or neutral data can set the company back significantly. Investors following these companies eagerly await topline results, even though the initial announcement may not be definitive. In some cases, the market can pounce on an interpretation, positive or negative, without fully understanding the implications of the early data.
This dynamic played out recently with Cardiol Therapeutics Inc. (Nasdaq: CRDL)(TSX: CRDL) and the release of its Phase II topline results. Cardiol specializes in developing novel therapeutics to address problematic heart conditions, including pericarditis, myocarditis, and heart failure. The company is currently in a Phase III trial for recurrent pericarditis, backed by the Orphan Drug Designation from the U.S. Food and Drug Administration. The recently concluded Phase II ARCHER trial of its lead drug candidate, CardiolRx™, in acute myocarditis is the subject today.
What the Press Release Contained
First, it should be noted that acute myocarditis is a leading cause of sudden cardiac death among people under 35 years of age and has no FDA approved treatment. The ARCHER study was an ambitious swing at an unsolved problem. The trial’s two primary endpoints were extracellular volume (“ECV”) and global longitudinal strain (“GLS”). The results were negligible for GLS, and encouraging, but barely missing statistical significance for ECV.
The market reacted pretty much as you might expect – the stock dove about 21% from the previous day’s closing price. But it is clear that the market missed the nuances in the results.
The Real Meaning of the Results
Cardiol has submitted the results and is planning to present them to a major cardiology-centric scientific meeting while also publishing them in a peer-reviewed journal. Last fall the company presented its Phase II pericarditis results to the American Heart Association Scientific Sessions 2024. The topline results are just that – a first blush look at data that will be picked apart and interpreted in depth for submission to and review by the scientific community. The company is constrained in what it can say at this stage, but there are nuggets in the press release that have subsequently been fleshed out somewhat by company executives that point to very positive signals.
The key here centers around the reduction in left ventricular (LV) mass. The press release notes in multiple places a significant reduction in LV mass. The quotes from cardiology experts all point to the study justifying further clinical development.
“ARCHER’s results provide sound rationale for advancing the clinical development of this novel therapy in conditions of the myocardium characterized by edema, fibrosis, and remodeling, including the growing challenge of immune checkpoint inhibitor-induced myocarditis which can be fatal.”
“The results offer exciting new insights into the treatment of acute myocarditis and strongly support advancing the clinical development of this novel therapeutic approach for inflammatory cardiac conditions, including myocarditis and heart failure.”
At this point, we’ll let Cardiol CEO David Elsley take over. In this interview with Barchart, Elsley discusses the results in depth.
The whole interview is worth a watch, but we’ll point you to the most pertinent sections for the purposes of this article. Starting at the 7:00 mark, Elsley covers the relationship of heart mass reduction to certain forms of myocarditis, and to heart failure.
In the next segment at the 9:36 mark, Elsley talks about how the ARCHER results, and the LV mass reduction finding, support accelerated development of the company’s heart failure program. He also mentions the optionality to potentially partnering with a larger pharmaceutical company in the space in order to effectively address such a large market opportunity, and at 16:35 discusses the unique dynamics in the biotech and pharma investment environments that could lead to a new wave of innovation, partnership, and acquisitions in the space.
Notably, while patients with heart failure with preserved ejection fraction (HFpEF) still suffer 75% mortality rates when hospitalized, a LV mass reducing therapy could help address the unmet needs in the heart failure market by improving outcomes and reducing such risks. Cardiol’s heart failure drug candidate, CRD-38 is a novel subcutaneous drug and is in the preclinical stage for the treatment of heart failure, having shown excellent results to this point.
A Look at the Science of LV mass Reduction
An increase in LV mass is notable in many cardiovascular conditions. Here are two that fit what Cardiol Therapeutics is investigating.
Heart Failure with Preserved Ejection Fraction
Regarding the scale of the problem, HFpEF represents a growing public health crisis driven by aging populations and rising cardiometabolic risk factors. It accounts for more than half of all heart failure cases in the U.S., affecting over 3 million people out of the approximately 6.7 million Americans living with heart failure.
Heart failure with preserved ejection fraction (HFpEF) represents a particularly compelling application for LV mass-reducing drugs. Unlike traditional heart failure, HFpEF patients maintain normal systolic function yet experience significant morbidity and mortality. LV mass serves as an independent predictor of outcomes in HFpEF, even when ejection fraction appears normal.
A review from 2022 noted the lack of large-scale clinical trials investigating the effectiveness of anti-inflammatory treatments in HFpEF. LV mass reduction in this context could address fundamental pathophysiological mechanisms rather than merely treating symptoms. Enhanced diastolic function, improved compliance, and better exercise capacity represent direct benefits that could transform quality of life for millions of HFpEF patients.
Myocarditis with Preserved Ejection Fraction
A study from 2022 examined how LV mass assessment can guide treatment in this underserved population. Among 61 patients with acute myocarditis and preserved ejection fraction followed for 4.8 years, delayed enhancement left ventricular mass (DE-LVM) emerged as the only significant predictor of the composite endpoint of all-cause mortality and heart failure hospitalization.
Patients who experienced adverse events had significantly higher DE-LVM (18 g vs. 12 g, p=0.028) representing a greater burden of myocardial scar tissue. Remarkably, each additional gram of DE-LVM increased the hazard ratio by 13%, demonstrating that even small increases in inflammatory cardiac mass carry substantial prognostic implications.
The mechanistic insight extends beyond simple mass measurement. Patients with higher DE-LVM also demonstrated elevated neutrophil counts (76±7% vs. 61±11%, p=0.014), suggesting that the extent of inflammatory myocardial damage directly correlates with long-term cardiovascular risk. This finding suggests that anti-inflammatory therapies targeting LV mass reduction could provide substantial clinical benefits in this population currently lacking evidence-based treatments.
The Upshot
Cardiol Therapeutics is very pleased with the ARCHER Phase II results, even if the market didn’t fully comprehend, for understandable reasons, the implications. The ability to reduce LV mass for patients in the trial, though not publicly quantified in the topline announcement, is obviously a significant finding that merits further development and opens the door to other indications beyond acute myocarditis. CEO David Elsley lays it all out as plainly as possible in the Barchart interview.
For those interested in another discussion of the topic, we highly recommend watching this Fireside Chat with Canaccord Genuity. Chief Medical Officer and Head of R&D Andrew Hamer joins Elsley in fleshing out the results and the company’s path forward. For a company like Cardiol, with a market cap around $100 million and a Phase III trial in progress, the LV mass reduction finding could lead to much larger things soon.
