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Msg  189 of 193  at  6/2/2022 8:57:38 PM  by


Article on Sesen Bio


Sesen Bio: Another Net-Net Biopharma Exploring Strategic Alternatives

Jun. 02, 2022 12:56 PM ETSesen Bio, Inc. (SESN)4 Comments1 Like


  • SESN is a clinical-stage biopharma company working on the treatment of patients with BCG-unresponsive non-muscle invasive bladder cancer (NMIBC).
  • FDA declined to approve the company's flagship drug Vicineum.
  • Subsequently, management has started a strategic review.
  • SESN trades at $0.58/share vs $0.75/share of net cash.
Bottling vaccine vials in a pharmaceutical factory

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Sesen Bio (NASDAQ:SESN) is a clinical-stage biopharma company working on fusion protein therapeutics ("TFPTs") for the treatment of cancer patients. In August 2021, FDA declined to approve their flagship drug Vicineum used in the treatment of patients with BCG-unresponsive non-muscle invasive bladder cancer (NMIBC). The FDA pointed out certain procedural issues in the trial process and requested additional clinical testing. This effectively expands the timeline for the approval of the drug and its possible commercialization by additional 2-3 years. On May 3rd, a couple of months after the announcement, the company started a strategic review exploring a potential sale, partnership, or merger opportunity. SESN now trades at $0.58/share vs $0.75/share of net cash.

Given that company has a good pipeline and trades at discount to net cash, it should be able to find interested parties in the firm and its assets. Importantly, the company's main drug has not been rejected. FDA asked the company to address certain procedural issues in the process of the trial and a need to conduct an additional trial to test the efficacy of the drug. On top of the other drugs, the company still maintains its flagship drug in the pipeline which should be a big plus in the eyes of potential buyers. Though, several uncertainties need to be addressed by the company before the position can be initiated in SESN.

The problem is that we don't know what exact issues were raised by the FDA as they don't disclose the details of the response letter to the public unless the drug is approved. The day after the FDA decision, an article from STAT news came out that rejection should not have been a surprise alleging a plethora of violations of the study rules, and misconduct from study investigators in the process of the trial.

We do not know whether some or all the allegations noted by the STAT News played a role in the FDA's decision to not approve the drug. Despite this, certain investors felt that they were misled by the company which led to several lawsuits against the company alleging breach of fiduciary duty, waste of corporate assets, and violation of federal security laws concerning its BLA for Vicineum. The litigations are in the early stages with very limited information on how the proceedings are progressing.

After all the turmoil, it seems that the company would be able to continue the development of Vicineum, given how the follow-up meetings with FDA are progressing. The company informed investors that they have addressed the questions raised on the manufacturing process and have discussed the details of the study design with the FDA before proceeding with the additional trial. Certain questions remain outstanding which would be discussed with FDA on July 11, in a Type B meeting, after which we will probably know when the company restarts the trials.

I wrote the company on the STAT allegations, trying to get a bit more color on the situation, especially, on the trial investigator's misconduct. As mentioned above, the company only released information on only one trial investigator's misconduct and not on the two others noted in the STAT article. I have also inquired about the ongoing class-action lawsuits. The company has not responded to my questions, so far.

SESN Background

Sesen Bio is a late-stage biopharma working on fusion protein therapeutics ("TFPTs") for the treatment of cancer patients. The company has several products in the pipeline with only one in phase 3 clinical trials (Vicineum). Vicineum is a locally administered targeted fusion protein used in the treatment of non-muscle-invasive bladder cancer.

The company started its phase 1 clinical trials on Vicineum back in 2004 and phase 2 in 2007. Right before finishing Phase 2 trial in 2009, Valstar (one of the comparable drugs developed by Endo Pharmaceuticals) was re-launched in the US for the treatment of bladder cancer in patients. Valstar did not get widely adopted, and it was not approved in Europe at all. Because of this, SESN's transition into phase three was disrupted as its clinical trial design was based on that of Valstar's.

After the FDA came up with the necessary trial design framework in 2014, phase 3 trials on Vicineum started. In December 2020, SESN was allowed to submit a Biologics License Applications (BLA) for Vicineum for the treatment of BCG-unresponsive NMIBC to the FDA. The application was accepted by the FDA in February 2021. Approval was expected to be announced in August 2021. Right before the FDA decision company initiated a $100m equity financing having a high conviction that Vicineum would be approved, already preparing for commercialization.

SESN's pipeline:


Company fillings

FDA Decision Timeline

To the surprise of the management, FDA rejected the approval of the Drug. In the complete response letter (CRL) FDA indicated that it could not approve the BLA for Vicineum in its present form and provided recommendations specific to additional clinical/statistical data in addition to pointing out issues in the company's CMS process, basically regarding the trial specifications and practices essential in guaranteeing product safety and consistency.

The day after receiving CLR from the FDA and the company held a conference call. On which management expressed surprise over the decision. Stating that everything was going well and the greenlight was given to them by the FDA every step of the way. When asked about the FDA decision, the CEO dismissed any possible trial-specific issues but rather pinned it on a high level of risk-averseness in FDA after the incident year prior.

CEO quote:

"And I would say, at the macro level, there is an unprecedented level of scrutiny at the FDA, maybe the most scrutiny we've seen since the early 1960s. First of all, as you said, there was the approval of the Alzheimer's drug in June despite a very negative ADCOM vote and at least 3 of those ADCOM members stepped down. That triggered an independent review by the Office of Inspector General of the FDA, which is very unusual. There's been tremendously heavy, really toxic media coverage. And still, there's no permanent FDA commissioner. So -- and several senior positions are not filled. So, there's kind of a leadership vacuum."

But then, a couple of days later, Stat released an article, based on undisclosed internal documents claiming that SESN clinical trials were marked by more than 2,000 trial protocol violations -215 of them serious. And three trial investigators were reported to the FDA for serious misconduct, according to the Stat report. Stating that the decision should not have been a surprise as this was a likely reason for the FDA's decision.

In October 2021, the former study investigator received a warning letter from FDA for not complying with applicable statutory requirements and applicable regulations regarding the conduct of clinical investigations. On the same day, the company released a statement that the issues related to the trial investigator's misconduct were addressed 4 years ago by discontinuing the use of the clinical site and the suspension of the study investigator when the company learned of the professional misconduct by the study investigator that was unrelated to Phase 3 VISTA trial. SESN states that they have notified the FDA of the misconduct at the time.

From the SESN statement:

"When the clinical site was closed, five patients had completed treatment and were in post-treatment follow-up. There was no evidence found that patients were harmed by the study investigator's actions. The Company included the corresponding patient data from the clinical site in its BLA submission to the FDA, which were thoroughly analyzed and discussed during the BLA review."

Following all the turmoil, the company held several follow-up meetings with FDA which seem to be progressing in the right direction. The company held a meeting with the FDA in which they agreed on the details of an additional phase 3 clinical trial that the company plans to conduct for potential resubmission of Vicineum BLA. The company stated that they have been working on the alignment of the study design protocols as well as addressing the issues raised by FDA on their Chemistry, Manufacturing, and Controls (CMC) process. It seems that the issues raised by the FDA have been addressed by SESN and they should be able to conduct the additional clinical trials providing FDA with extra data requested. The latest meeting is set for July 11th during which the company and regulator have to sort out the remaining details before deciding to start a new trial.


With SESN we have another intriguing setup in the net-net biopharma bucket. For now, SESN is a hold before several risks such as litigation overhang, limited information on the strategic review, and the outcome of the Type A meeting on July 11th is cleared.

This article was written by

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Private investor focused on event driven trades and special situations. 15+ years of investing and equity research experience globally across various sectors. Always looking for an edge.

Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in SESN over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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