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VIRI: Raises Gross Proceeds of $5 Million Through Underwritten Public Offering…

·4 min read

By David Bautz, PhD

NASDAQ:VIRI

READ THE FULL VIRI RESEARCH REPORT

Financial Update

On September 23, 2022, Virios Therapeutics, Inc. (NASDAQ:VIRI) announced the closing of a previously announced underwritten public offering of 10 million shares of common stock at a price of $0.50 per share. The company raised gross proceeds of $5.0 million before deducting underwriting discounts, commissions, and offering expenses. We estimate the company now has sufficient capital to fund operations into the second quarter of 2023, however the company will need to raise additional capital for any potential future trials of IMC-1 in fibromyalgia.

Business Update

FORTRESS Trial Does Not Meet Primary Endpoint

On September 19, 2022, Virios Therapeutics, Inc. (VIRI) announced topline results from the Phase 2b FORTRESS (Fibromyalgia Outcome Research Trial Evaluating Synergistic Suppression of Herpes Simplex Virus-1) trial of IMC-1 for the treatment of fibromyalgia (FM). The FORTRESS trial was a randomized double blind, placebo controlled study of IMC-1. The primary endpoint of the trial was reduction in pain and secondary endpoints included change in fatigue, sleep disturbance, global health status, and patient functionality (NCT04748705). A copy of the company’s data presentation can be found here.

The topline results showed that the FORTRESS trial did not achieve statistical significance on the prespecified primary efficacy endpoint of change from baseline to Week 14 in the weekly average of daily self-reported average pain severity scores comparing IMC-1 to placebo (P=0.302). The following graph shows the primary endpoint over the 16 weeks of the trial (all participants received placebo after Week 14). Patients receiving IMC-1 showed a statistically significant treatment effect over the first five weeks of the trial, however that separation diminished between the two treatment groups and by Week 14 there was no statistically significant difference.

A similar lack of separation between the two treatment groups was seen in the secondary endpoints examining the PROMIS Fatigue outcome as well as the FIQR Symptom Domain and the FIQR Function Domain, as shown in the following graphs.

The company performed an initial deeper examination of the data by separating out patients that were enrolled in the first half of the trial (“Cohort 1”) compared to patients that were enrolled in the second half of the trial (“Cohort 2”). It was noted that during the first half of the trial the Delta variant of SARS-CoV-2 was the predominant strain circulating in the U.S. while during the second half of the trial the Omicron strain was dominant. While the differing SARS-CoV-2 strains may not have impacted the FORTRESS trial, it is interesting that there seems to be a large difference in the efficacy outcomes for the two cohorts.

The following graphs show the primary efficacy daily pain score outcomes for Cohort 1 and Cohort 2. For Cohort 1, there was no statistically significant difference between the two treatment groups (P=-0.484). However, for Cohort 2 there was a statistically significant difference that favored IMC-1 treatment (P=0.030). This statistically significant difference was seen not just for the primary outcome but in the PROMIS Fatigue, FIQR Symptom Domain, and the mean change in HADS Depression Score, suggesting that those results may not just be a statistical artifact.

Importantly, IMC-1 was well tolerated during the trial. The following table shows adverse events that were reported in >2% of IMC-1 patients. COVID-19 infection was the most reported adverse event. This was self-reported by the patient as there was no official COVID-19 testing of participants in the FORTRESS trial. Interestingly, a higher percentage of patients discontinued from the trial due to adverse events in the placebo group (8.1%) than in the IMC group (4.6%).

Conclusion

We were disappointed and surprised to see that the FORTRESS trial did not meet the primary efficacy endpoint, as the company’s Phase 2a data showed a clear treatment effect for IMC-1 in FM patients. The company will continue to analyze the data in an effort to determine why the trial was unsuccessful and we anticipate an update on the development of IMC-1 when that analysis is complete. The initial examination of the trial data based on enrollment date is interesting, however at this point the presence of differing SARS-CoV-2 strains to explain the difference in outcome between patients enrolled in the first versus the second half of the trial is speculative and additional analysis will need to be conducted to better understand that phenomenon.

After incorporating the company’s recent financing into our model our valuation is now at $2 per share.

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