Facebook Linkedin Tumblr Twitter
Home Blog Page 14625

Ebola Silver Bullet a Social Not Financial Win for Merck

By
Jennifer Aldershot
-
Merck & Co., Inc.

Since the Ebola outbreak in March 2014, big Pharma has rushed to develop a vaccination for the virus. There have been a number of high-profile failures in the space so far, but as we head into the second half of 2016, it looks like we have finally got some progress. In November last year, we learnt that Merck & Co., Inc. (NYSE:MRK) had acquired the rights to an experimental Ebola vaccine called rVSV-ZEBOV, which was at that time being independently developed by NewLink Genetics Corp (NASDAQ:NLNK). The deal saw Merck pay NewLink $30 million upfront, and an additional $20 million during the first quarter of this year when clinical trials got underway. There are also certain royalty payments involved with the deal. Shortly after, on January 5, we learnt that the trial, which had recently been derailed as a result of adverse side-effects (joint pains in about 15% of all patients treated), had been resumed at a lower dose. The lower dose came in at 300,000 vaccine particles compared to a previous treatment of 10,000,000 to 50,000,000 vaccine particles, and as a result of the steep discount, there were concerns from that it would not be able stimulate and antibodial response. However, fast forward to August, and we have just heard that the Ebola vaccine showed 100% efficacy. In groups vaccinated immediately, there were no cases of Ebola in patients from 10 days after vaccination. The significance of this is huge, and backed up by a statement made by Børge Brende, the foreign minister of Norway, which helped fund the trial, and called the vaccine a:

“Silver bullet against Ebola, helping to bring the current outbreak to zero and to control future outbreaks of this kind”

To address the science quickly, scientists created a vaccine by taking out a gene from the vesicular stomatitis virus – a virus similar in structure to, and a member of the same family of, the virus that causes rabies. Having removed the gene, they replaced it with a gene of the Ebola virus that cannot cause Ebola on its own. The question was then whether this single gene could be enough to elicit an immune response. As current results allude to, it was.

On the news, stocks of both companies are up, but in this instance, it will likely be NewLink that sees more benefit from the proven efficacy than Merck. As mentioned, Merck must pay NewLink royalties on sales of the treatment on approval in different countries in Africa. Not only this, but the company will also distribute milestone payments as certain royalty levels are reached. The problem for Merck is that the vaccine is currently targeted at healthcare professionals who are working on the front-line to contain the Ebola crisis. As such, these administrations are funded and – in turn distributed – at low prices by charities and the aforementioned health organization. Currently Merck generates around 10% of its $40 billion revenue from a number of vaccinations, including shingles and HPV, but these are prevalent in first world’s developed nations, unlike Ebola, which will likely remain in the Third World foreseeable future. However, this said, the introduction of this vaccine could be a real game changer as far as containing the Ebola virus is concerned, and while perhaps not a game changing financial win for Merck, it certainly is a game changing social win for the company. From an added value perspective, there is therefore a certain level of attributable financial value – the result of which is the stock price increase we have seen over the last couple of days.

From a short-side perspective, the success of the Merck vaccine could put pressure on both GlaxoSmithKline plc (ADR) (NYSE:GSK) and Johnson & Johnson (NYSE:JNJ), both of which are developing their own treatments in combination with a number of small organizations and international health authorities. Johnson & Johnson committed up to $200 million to accelerating significant expand Ebola vaccine production late last year, and if Merck can demonstrate efficacy in this trial and in turn, a wider scale global trial scheduled for next year, this could be a wasted commitment.

Related Posts:

  1. Phase III Success Makes this Company a Potential Blockbuster Biotech
  2. Frost Closes SciVac Deal, A Potential Blockbuster Lineup in Hepatitis?
  3. The How, What and When of Semaglutide

 

Story continues below

A $44B trade deficit sounds scary, but it’s really a fiction

By
TradeCircle
-

Put the words “trade” and “deficit” together and you’ll get lots of people who call themselves fiscal conservatives in a tizzy. The word deficit sounds pretty scary. If we’re talking about the Federal budget or someone’s personal bank account, fear about persistent deficits may be warranted, but regarding trade it does not matter. Why not?

The Commerce Department released numbers on Wednesday showing that US imports totaled $232B with exports $188.6B. The difference is the so-called deficit. But what does the difference really mean? It means that the US exported 232 billion US dollars in exchange for imports, but only absorbed 188.6 billion US dollars in exchange for goods. All it means is that 44 billion currency units were shipped out of the country on net. So what?

If would be one thing if those dollars had to be redeemed for something, if the dollars were claims on some commodity that had to be paid, but they aren’t. There is no gold standard anymore, so they just sit there, in wherever country they were sent to in exchange for imports. Dollars are created by fiat, so no actual resources are expended in bringing these dollars into existence. The result is essentially $44B of “free stuff”.

An apt analogy would be a “trade deficit” between New York and Texas. Whoever ends up with more dollars and less stuff between the two would have the surplus. Whoever ends up with more stuff and less dollars would have the deficit. But it doesn’t matter who has what, because at the end of the day neither New York nor Texas would owe anything to the other, as all accounts are settled in either dollars or stuff.

Deficits only matter when accounts are not settled, for example when something is owed in the future as in a debt exchange. A deficit in the Federal budget is an issue because the deficits are financed by debt, which is owed later, and in the end that debt is paid by the public that is taxed directly or has its currency inflated to redeem the debt.

The real danger of a trade deficit is only indirect, in that when an economy gets used to exporting non-redeemable paper on net in exchange for stuff, it can get complacent and will have a hard time adjusting if the other side stops accepting the paper. In monetary parlance, if the value of the dollar plummets and can no longer finance the same amount of imports. The other danger, which is related, is what happens when all the net dollars exported come back to the US? High inflation would be the inevitable result.

So while there is nothing bad about a $44B trade deficit, the real trouble will only come when foreign countries stop absorbing these dollars the US prints in exchange for the things they produce.

Story continues below

Frost Closes SciVac Deal, A Potential Blockbuster Lineup in Hepatitis?

By
-
frost

Frost Closes SciVac Deal, A Potential Blockbuster Lineup in Hepatitis?

Towards the end of last year, we got word that Dr Phillip Frost, chairman and CEO of Opko Health, Inc. (NYSE:OPK), was looking to restructure then private company SciVac (now SciVac Therapeutics Inc. (SVACF) into a public entity. Little more was heard of the matter until March 2015, when gold and precious metals exploration company Levon Resources Ltd announced that it had entered into an agreement pursuant to which Levon would acquire 100% of the issued and outstanding ordinary shares of SciVac. OPKO had a 45% stake in SciVac, and so the deal would see current SciVac owners take 68.4% of the outstanding shares of the new company after its close, and Opko take a little over 30%. At first glance the arrangement can seem a little bit convoluted, but a closer look reveals it is very similar in structure to a number of other public shell spins Frost has orchestrated in the past.

On July 10, SciVac announced the completion of the transaction, and its granting of approval by the Toronto Stock Exchange. Frost has a dedicated following of both individual and institutional investors that monitor his activity, so any stock in which he has a hand has the potential to revalue quickly on positive news. Further, he has an outstanding track record in the biotech space, and for both these reasons, his hands-on involvement with the SciVac deal warrants attention.

SciVac’s flagship product is a Hepatitis B vaccine called Sci-B-Vac. Hepatitis B transfers from carrier to carrier through sexual contact, blood contamination and from mother to child. The virus gets into and replicates in hepatocytes, which are the primary functioning cell in the human liver. This invasion of hepatocyte cells leads to an immune response, during which the immune system attacks infected cells, causing damage not only to the infected cells, but also to wider liver function.

Currently, more than 170 countries have infant vaccination programs, and over 1 billion vaccines have been administered since 1982. The current standard of care necessitates three intravenous administrations over a period of six months. However, despite this vaccination effort, an astounding 2 billion people alive today have been infected with the virus at some point in their lives, an estimated 400 million people are currently carriers, 4 million individuals a year suffer from acute hepatitis B and 1.2 million people die every year from infection.

Infection rate is highest in central and southern Africa, Canada, the Middle East China and especially Southeast Asia where we see a higher than 8% prevalence. So if the current vaccination program is so widespread, why are there so many cases? First, there are a number of high-risk patients who don’t respond to the current vaccines, including sufferers of diabetes, cancer, HIV and renal disease. 50% of chronic liver disease sufferers of which there are 300 million globally, do not respond to current available vaccines. In addition, the current vaccinations are ineffective in the more than 2 million children born to infected mothers each year. Finally, with the current standard of care taking six months, frequent travelers are unprovided for.

So what’s different about Sci-B-Vac? It is a third-generation vaccine, and it differs from the second-generation vaccine currently used in the vast majority of cases in that it contains three hepatitis B surface antigens. Surface antigens are the viral antigen mimics, which display to the human immune system and initiate the immune response. In the second-generation, the vaccine only displays one antigen called the “S” antigen. Sci-B-Vac mimics two further antigens – “preS1” and “preS2”. These extra displays improve vaccine response.

scivac

Image illustrating the difference between 2nd and 3rd generation HBV vaccines.

The third-generation vaccine has demonstrated efficacy in more than 20 company sponsored or investigator initiated trials across 5000+ individuals. The treatment is also already approved in 10 countries, and has been administered to more than 500,000 patients in these regions. Further, in two independent comparative studies, Sci-B-Vac demonstrated it produced seroprotection (i.e. protection from the virus the vaccination is designed to treat) more rapidly in both adults newborns than in healthy individuals treated with Engerix B – the current SOC vaccination.

This is all well and good, but why has Dr. Frost gotten involved? Perhaps because of the mitigated risks involved. The vaccine has already demonstrated safety and efficacy in 500,000 patients and is only approved in 10 countries. This gives us a clear path to phase 3 trials and US approval. As far as timeframes are concerned, SciVac expects to gain marketing approval for the vaccine in Latin America this year, while also meeting with the FDA and the BMA before the middle of 2016. The first quarter 2017, the company expects to have phase 3 enrolment complete in the US, and efficacy data for HIV and renal disease sufferers during first quarter 2018.

To put the market potential for these two indications into perspective, anywhere between 34 and 81% of 10 million chronic renal failure sufferers do not respond to Engerix B, and approximately 30% of 3 million HIV sufferers globally also do not respond. SciVac expects to gain approval for both of these indications in the US and Europe before the middle of 2018.

Hepatitis B is not the only liver disease Frost is involved in either. He is also involved in a hepatitis C vaccine company called Cocrystal Pharma, Inc. (COCP). Cocrystal is up 256% since August last year, down from gains of around 300% logged in April. Frost currently owns about 20% of Cocrystal individually through his investment trust, and his healthcare company Opko also has an 8% position – structuring its ownership in a very similar way to how Frost has set up in SciVac. Cocrystal itself went public through an acquisition structured in an almost identical fashion to SciVac, through an acquisition by BioZone Pharmaceuticals, Inc, then trading under the ticker “BZNE” and since renamed Cocrystal.

What’s even more interesting, is that there is speculation that we could see a further deal between Cocrystal and SciVac somewhere down the line. From a pipeline perspective, it seems to make sense, with both companies being involved in the hepatitis vaccination space. Additionally, from an ownership perspective, it looks to make even more sense – with Frost holding a high percentage stake in both.

Conclusion

Over the last couple of years Dr. Phillip Frost has racked up his holdings in the hepatitis vaccine space through two reverse merger public offerings, and one of them is up in the triple digit percentage range since his involvement. He has now cemented his involvement in the second, and with a risk-mitigated path to what looks like a high percentage chance of regulatory approval, we could see similar growth in SciVac. Of course, in development stage biotech, nothing is certain. However, if there is a man to keep an eye on in the space, it’s Frost.

 

**

Disclaimer:

 Market Exclusive Is a financial portal geared to engaging discussion on current financial topics. Market Exclusive is not an investment advisor. Please read our full disclaimer at http://marketexclusive.com/about-us/disclaimer/

Story continues below

Sanofi Edges Ahead in Diabetes Race, Announces Yet Another Regeneron Potential Blockbuster

By
Jennifer Aldershot
-
Sanofi

On July 29, 2015, Sanofi (NYSE:SNY) announced that it had met the primary endpoint in its phase 3 study of LixiLan, a combination treatment targeting diabetes that combines lixisenatide with the company’s current top-selling insulin product Lantus. Just a day later, the company announced that it was entering into an immuno-oncology collaboration with Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) – hot off the heels of the FDA announcement that it was approving the Sanofi/Regeneron PCSK9 inhibitor, Praluent, targeting high cholesterol – an approval that sees the treatment become the first PCSK9 inhibitor to gain approval in the US. Further, on the same day, Sanofi reported its Q2 2015 financials. In other words, it has been a pretty big week for Sanofi, and one that warrants address. So, with this said, let’s look at each of these developments individually, and try to ascertain where they fit into the bigger picture for the company.

So, first, LixiLan. As we said, the treatment is a combination of the company’s current  insulin product Lantus and a glucagon-like peptide 1 receptor agonist (GLP-1 RA) called lixisenatide. GLP-1 is a hormone released after humans eat meals, which suppresses glucagon secretion and stimulates insulin production. As an agonist, GLP-1 RA increases the production of GLP-1 and, as the latest trial results have shown, can work in tandem with a traditional insulin treatment to improve efficacy. The company had to phase 3 trials running, one that trailed the combination therapy in 1170 patients and a second that is ongoing, and studies the treatment in a further 736 patients. The primary endpoint of a statistically superior reduction in average blood glucose over the previous three months, when compared with the two components of the combination therapy used solo, came in as met in the initial 1170 patient trial. The second trial will complete during Q3, 2015. So what are we looking at from a timeframe perspective as far as getting approval and benefiting from any resulting upside market revaluation in Sanofi? Well, the company expects regulatory submission during Q4 this year in the United States and Q1 next year in the EU. Tack about six months on to each of those prospective timeframes, and we will be looking at approval somewhere midyear 2016 in the US and end of year 2016 in Europe. Worth noting are a couple of competing treatments, one of which is Novo Nordisk’s (NYSE:NVO) already European approved GLP-1 in combination with its current insulin treatment Tresiba (making a second attempt at approval after a 2013 rejection by the FDA) and Eli Lilly and Company’s (NYSE:LLY) Trulicity. In short, the next 12 months, this is likely to be a real hot space in biotech.

So, now to the company’s fresh partnership with Regeneron. The announcement highlighted a new collaboration between the two companies that will see them partner up on protein inhibitor REGN2810, currently in phase 1 trials. Sanofi will pay $640 million upfront, with a total of $1 billion invested in combination from the two companies ($750 million of which will come from Sanofi) for discovery through proof of concept studies on alternative monotherapy antibody candidates. Exactly what these candidates will be at the moment is pretty uncertain, as neither have specified in their announcement, but we will likely be looking at antibodies that work in collaboration with the current (and aforementioned) PD-1 inhibitor REGN2810. Conservative forecasts put the immune-oncology space at $10 billion annually over the next five years, and the latest play by Sanofi and Regeneron looks to position the two companies to take advantage of this growth.

Jumping ahead to the company’s current financial position, Sanofi reported €9.4 billion in sales during the second quarter of 2015, a 4.9% increase when accounting for constant exchange rates. The well profiled diabetes area of its current operations was expected to reduce, and did just that, coming in at a 3.8% decline on the quarter, but without this expected decline, total group sales came in at 7.3% higher quarter over quarter.

So, what’s the takeaway here? Well, it looks as though Sanofi is going all in immuno-oncology. As mentioned, the space is set to explode over the next five years, and if the Regeneron partnership bears fruit, both companies will be well-positioned to direct a proportion of the $10 billion sector valuation towards their own balance sheets. From a diabetes perspective, things are a little less clear, but the latest announcement keeps Sanofi in the running of a highly competitive race between itself, Eli and Novo.

More stories from Market Exclusive:

Progenics Pharma Soars, Here’s Why

What Allergan’s “Big Week” Really Means for its Future

Could This Treatment Replace Morphine in the US?

Story continues below

Progenics Pharma Soars, Here’s Why

By
ME Staff
-
Progenics Pharma

An hour before market open in the US on Tuesday, Progenics Pharmaceuticals, Inc. (NASDAQ:PGNX) announced that one of its candidates had received US Food and Drug Administration (“FDA”) breakthrough therapy designation. The company’s market capitalization gained a little over 22% during the first part of the US session, before settling to close around $9.42 – giving back some of the gains but still 4% up on the previous day’s close. We have had a number of key announcements from the Progenics over the last few weeks, and the latest is just one in a series of potential market movers for the company. However, with this said, and now the breakthrough designation is in place, is there likely any further short to medium-term upside potential in the company’s stock, or is it worth waiting a little longer before gaining exposure to a revaluation? To answer, let’s have a look at the treatment in question, and a couple of the previous announcements with regards to how they relate to Progenics’s near term prospects.

So, first, let’s get to the science. The treatment in question is called Azedra. Azedra is a late stage drug candidate in development for the treatment of malignant pheochromocytoma and paraganglioma – which are essentially very rare brain tumors that develop from cells in the sympathetic nervous system. Basically, the human autonomic nervous system is split into two parts – the parasympathetic nervous system and the sympathetic system. The sympathetic nervous system is responsible for what we refer to in the nonscientific world as the fight or flight response, and as you might have guessed, includes the adrenal glands. A malignant pheochromocytoma is a tumor that forms in the sympathetic nervous system but is not attached to adrenal glands. Conversely, a paraganglioma is a tumor that attaches itself to adrenal glands. So, with this out of the way, what is the difference between this and current standard of care treatment? Well, it all comes down to targeting. Azedra is a small molecule (just another term for the type of molecule that makes up most drug treatments) with a radioisotope attached to it. When introduced to the body, it can first be used as an imaging agent as the combination of the small molecule and radioisotope targets both pheochromocytoma and paraganglioma highly specifically, and then once identified, can be channeled to deliver specific and individualized radio treatment to the tumors. Current standard of care is pretty hit and miss, and includes an adrenergic blockade (which has obvious negative side-effects) surgery, which is risky in the sympathetic nervous system, and chemotherapy, which has generally been shown to fail to produce a cure or generate significant remission.

So why the upside momentum from the breakthrough designation? Well, the treatment is currently under evaluation in a pivotal Phase 2b trial, and already has orphan drug and fast-track designation is from the FDA, since it is designed to treat a very rare indication. Breakthrough designation means that Progenics can hold regular meetings with the FDA throughout the drug development in order to gain real-time insight into how best to do things such as trial design, in order to achieve approval. There is also a cross-disciplinary review panel, which again, from an advisory perspective, can increase the likelihood of approval (of course, so long as efficacy is shown). Fast-track designation is very similar, in that it offers more frequent FDA interaction and the potential for rolling review, meaning the FDA will review each stage of the drug’s development rather than wait until it is all complete a review it as a whole.

So, put simply, what does all this mean? Well, the current phase 2 trial is a pivotal trial, meaning that – if it is successful – Progenics may be able to get approval for Azedra without having to conduct the usual phase 3. The trial started in late 2010, but was suspended whilst the company sought additional funding. Reenrollment began again in January this year, and at that point, the company treated 41 patients with 30% of them achieving the primary endpoint. In order to be considered for approval, 25% of the total of 58 evaluable patients must achieve the similar endpoints.

So what sort of timeframes are we looking at? Well, the company expects to complete the main part of the trial before the end of this year, or at least expects to complete enrolment before this year closes out, and so we could be looking at second half 2016 before we get trial end data. However, as things develop, interim data has the potential to move the stock on positive news. So, to answer the initial question, will we see further upside momentum between now and trial completion? In all likelihood, yes. Providing, the drug can maintain its current performance as Progenics seeks to treat the remaining portion of its required subject panel.

Looking for other breakthrough designation approval plays? Check out Dyax Corp. (NASDAQ:DYAX), Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA) and Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN).

More stories from Market Exclusive:

What Allergan’s “Big Week” Really Means for its Future

Could This Treatment Replace Morphine in the US?

What Is the Real Cost of AstraZeneca’s Eye Cancer Flop?

 

Story continues below

What Allergan’s “Big Week” Really Means for its Future

By
Jennifer Aldershot
-
Allergan

This week has been a big week for Allergan (NYSE:AGN). First, we heard that the company was selling its generic drug company to Israel based Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA). The deal, worth a reported $40.5 billion, is the largest ever acquisition by an Israeli company, and comes at a time when many are betting against the biotech space on the pretense we are approaching the end of a five year bubble. Almost as soon as we got the Teva news, however, we got a follow up announcement that Allergan is set to acquire Illinois based Naurex Inc. for a flat $560 million. The two deals are the latest in a string of high profile acquisitions in the biotech space, and Allergan is up more than 6% on the week’s open. With this said, is there further upside potential in the company’s stock, or are the gains we have seen the entire short-term market response, and must we wait for the fruits of the acquisitions before we see any further considerable action. In order to answer, lets take a look at the terms of both deals, and try to ascertain the medium term impact of each on Allergan’s market capitalization.

First, lets look at the Teva deal. As we have mentioned, the deal will see Teva take on the entirety of Allergan’s generic pharmaceuticals business for $40.5 billion. Teva is already the largest generic pharmaceutical company in the world, and the latest acquisition cements its positioning in the space. One of the primary drivers behind the acquisition, it seems, is an increased amount of pressure being put on Teva Chief Executive Erez Vigodman by shareholders to expand the company’s revenue sources, from a diversification perspective. Approximately 48% of the company’s profits currently come from multiple sclerosis drug called Copaxone, and with a number of other multiple sclerosis trials hitting headlines recently in the non-generic world, the necessity for diversification has been pressing issue. Teva ‘s stock is up nearly 20% on the announcement, in part due to this diversification, but also as a result of the cost savings likely to come about as a direct benefit from the acquisition. Not only will Teva be able to reduce operational costs through economies of scale, but also the increased generic portfolio will give it a higher leveraged rate when it comes to negotiating with healthcare organizations and – in particular – US insurance companies. This increase leveraged should improve the company’s bottom line very quickly upon acquisition completion.

So now moving on to the second deal, the $560 million acquisition of Naurex Inc. by Allergan. The acquisition strengthens Allergan’s development pipeline, bringing two potential blockbuster treatments under its umbrella. The first is an intravenous depression treatment that has already proved efficacy in phase 2 trials and is heading into phase 3 before the end of this year, and an oral treatment for the same indication that has demonstrated promising results in early stage testing. Both are demonstrated tolerability, and bring a novel approach to depression treatment by targeting the receptors in the brain responsible for memory, that also contribute to glutamate levels (which, research shows, are out of sync in depression patients). Is a quick side note, it’s worth mentioning that the deal is not set to close before the end of 2015, but its value could rise from an Allergan perspective as there are a number of milestone payments due based on the research sales success of the aforementioned pipeline candidates.

So how should we approach these two deals, and where do we expect Allergan to head going forward? In short, we should look at them as very much part of the same development plan. Allergan has stated that it wants to reduce its debt (somewhere around $44 billion at the moment) to 3.5 times adjusted earnings by the end of this year. The company is also stated that it wanted to abandon the generic industry in order to focus on more targeted developed stage treatments. The Teva deal allows the company to reduce its debt holdings, while also freeing up capital to expand into the development side of things; indeed, Chief Executive Brent Saunders has stated that the company will use around $36 billion in net proceeds from the sale to fund further large acquisitions.

So in other words, Allergan has cashed in on its generic business at what seems to be an excellent price, and aims to use the vast majority of the proceeds to buy up developing stage pipelines. This is a switch in strategy for the company, but one that could prove very profitable in the long-term. With a $36 billion blank cheque, there are a number of attractive pipelines the company could go after, with rumors suggesting that Biogen Inc (NASDAQ:BIIB), Amgen Inc. (NASDAQ:AMGN) and AbbVie Inc. (NYSE:ABBV) as potential targets. Each of these companies has at least one potential blockbuster in its pipeline, and as such, it may be worth picking up and exposure to Allergan before it becomes the biotech incumbents that a $45 billion payday gives it the potential to be.

More stories from Market Exclusive:

Could This Treatment Replace Morphine in the US?

What Is the Real Cost of AstraZeneca’s Eye Cancer Flop?

Phase III Success Makes this Company a Potential Blockbuster Biotech

 

Story continues below

Could This Treatment Replace Morphine in the US?

By
Roger Hannington
-
Cara Therapeutics

When markets opened in the US on Monday morning, Cara Therapeutics Inc (NASDAQ:CARA) traded for a little over $15. Premarket on Thursday, and throughout Thursday’s session, we saw high-volume and a spike to intraday highs just shy of $22 flat. We closed the day around $19, and it looks as though we’re going to get further gains today. All said, after a 30% up spike, we settled on around 25% gains in a little over 24 hours. The gains were rooted in a press release put out by Cara therapeutics premarket on Thursday, offering a taste of its topline results from one of its currently pipeline candidates – CR845. Markets translated the results as overwhelmingly positive, and expect Cara to now take its candidate into a phase III pivotal trial. However, as always, phase II success far from guarantees FDA approval, and further to that, FDA approval far from guarantees marketing success. So, with this said, is the 30% gain warranted? In addition, should we expect further gains based on this latest result, or have short-term speculative biotech traders missed the boat? To answer, let’s take a look at the treatment itself, how it performed in the latest trial, and what we could be looking at from a market potential perspective if the treatment is successful in its planned phase III.

So, first, let’s address the science. As part of the latest trials, Cara tested CR845 inpatients suffering from uremic pruritus – a chronic itch condition associated with sufferers of end-stage renal disease. The condition manifests itself as a skin condition, and does not associate itself with any particular gender, age, ethnicity or root cause of renal failure – presenting Cara with a relatively wide subject base in its trial. The treatment is what we might call an alternative take on current opioid analgesics such as morphine and oxycodone. These aforementioned have a mechanism of action that allows them to activate fresh opioid receptors in the central nervous system, essentially tricking the brain into overlooking pain signals from a particular area of the body. CR845, on the other hand, is a periphery treatment – in that it binds to opioid receptors at a specific target, but does not enter the central nervous system. For this reason, it does not affect the brain in the same way that traditional opioid analgesics do, which translates to a similar efficacy with a huge reduction in adverse effects. In the US, opioid analgesic abuse has reached epidemic levels, and Cara therapeutics believes periphery opioid analgesics such as CR845 can overcome this epidemic. Sounds interesting, right? Essentially, you can think of it as nonaddictive morphine.

So how did it perform in trials? Well, as we said in the introduction, we only have a taste of the topline results so far. However, this is enough to suggest a phase 3 pivotal could well be just round the corner. In the double-blind, randomized, placebo-controlled trial we saw a 54% greater reduction in worst itch sores for patients treated with CR845 than those receiving placebo – in other words, primary endpoint met. From a secondary endpoint perspective, the company allocated what’s called a Skindex score to patients receiving the treatment, which is essentially a baseline measure of improvement in dermatological conditions. In the trial, those treated with the drug experienced a 71% greater reduction in average total Skindex score over a two-week treatment period than those receiving placebo (for reference, a reduction is positive when it comes to Skindex). Finally, CR845 came out safe, well tolerated and did not demonstrate any serious adverse events. The only real side-effects were transient numbness (essentially numbness at point of injection) and a little bit of dizziness. Most importantly, there were no central nervous system associated side-effects, which had been the scourge of central acting opioid analgesics in the past.

So what is the market potential? This is a first in class treatment, meaning that we have very little to compare it to when it comes to price point. However, from a volume perspective, if Cara Therapeutics can achieve approval for CR845 it would be able to price the drug relatively cheaply and still generate significant revenues from its delivery. There are approximately 400,000 people in the US that suffer from renal disease, with about 50% of these experiencing uremic pruritus. On a global scale, we are looking at 2.2 million renal disease sufferers with, once again, about a 50% incidence rate of uremic pruritus.

So what’s the takeaway here? Well, Cara expects to initiate a phase III trial early next year, and if results mimic those with seen in the recent phase II, this treatment has the potential to be a real blockbuster for the company. The gains look valid, therefore, but from a big picture perspective, they look to be just a drop in the ocean of what could potentially be a game changing treatment. As mentioned, opioid analgesic addiction is a real problem in the US and globally, and if Cara can demonstrate efficacy and marketability for CR845 we could see the treatment start to replace morphine in a wide range of indications. In other words, longer-term, this could be a real winner. Cara is not quite in the league of its pharma mega cap counterparts such as Pfizer Inc. (NYSE:PFE) and GlaxoSmithKline plc (ADR) (NYSE:GSK), but a winner like this has the potential to elevate it a step closer.

More stories from Market Exclusive:

What Is the Real Cost of AstraZeneca’s Eye Cancer Flop?

Phase III Success Makes this Company a Potential Blockbuster Biotech

Here’s What Markets are Asking About DBV’s Follow Up

Story continues below

What Is the Real Cost of AstraZeneca’s Eye Cancer Flop?

By
ME Staff
-
Astrazeneca

On July 22, 2015, we learned that AstraZeneca’s (NYSE:AZN) oncology candidate selumetinib had disappointed in a recent phase III trial. The news hit markets overnight on Tuesday, and as a result, pre-session trading put pressure on AstraZeneca’s stock, and we are now trading above 2% down from the levels we were looking at pre-announcement. The value of the treatment itself is obviously a setback for the company, but it is a wider perception of AstraZeneca’s current standing and outlook that markets will take heading forward. Just last year, CEO Pascal Soriot walked away from a $120 billion takeover from rival incumbent Pfizer (NYSE:PFE), pledging that he would raise revenues by 75% between then and 2024 – targets that, at the time, analysts suggested as leaving the company very little room for error over the succeeding decade. AstraZeneca is currently trading about 20% lower than it was when the takeover was on the table, and about 30% lower than the premium price at which Pfizer was willing to pick up outstanding shares as part of the deal. It goes without saying, therefore, that the latest announcement puts considerable pressure on Soriot from a shareholder perspective. However, the question is, is the selumetinib absorbable in terms of staying on progress for a 75% ten-year revenue expansion, or has it derailed this prospect? To answer, let’s take a look at the treatment, how it fared in the recent phase III, the revenues AstraZeneca stands to miss out on as a result of the failure, and finally, whether or not it can claw back any of these revenues on alternate indications for the treatment.

First, let’s address the science. Selumetinib blocks an enzyme called MAPK kinase, which is an integral part of the MAPK pathway – a chain of proteins that communicates and processes input from a range of growth factors in a cell. In cancerous patients, this communication can activate a mutation in a gene called BRAF, and can lead to further mutations and proliferation of cancer cells. By blocking the MEK1 and MEK2 subtypes of the MAPK kinase gene, selumetinib (hypothetically) can be put to use treating a range of cancers – and in this instance – uveal melanoma, a cancer that causes tumor cells to grow in ocular tissue and has an incidence rate of about 2000 in the US annually. The company did not report specific figures as far as trial data is concerned, but instead chose to simply announce that the phase 3 study of selumetinib in combination with dacarbazine (an older, standard of care treatment) failed to reach its primary endpoint of progression free survival. The results also showed an unreported adverse event profile compared with the aforementioned standard of care. It’s worth mentioning that markets reacted particularly negatively to the release, as mid stage data suggested blockbuster results and had AstraZeneca investors poised for a quick approval.

So what sort of revenues were we looking at four AstraZeneca if the company succeeded in phase III and achieved approval? Well, as mentioned, the incidence rate for this treatment is relatively small. However, the cost for current treatment options is high. The two standard of care treatments are either radiation therapy or surgery to remove the eye altogether. Since we are looking at treatment rather than removal, it is reasonable to compare the former with selumetinib rather than the latter. The two types of radiation therapy available are what are called brachytherapy and proton beam therapy, which according to a National Cancer Institute study that compared the treatment on a base case incremental cost effective ratio with a enucleation (complete removal), come in at $77,500 and $106,100 respectively. While it is unrealistic to suggest that AstraZeneca could have achieved high percentage saturation within 3 to 5 years, low double-digit market share is not unreasonable. At a conservative cost of $50,000 per treatment, selumetinib could very easily have become a mid double-digit million dollar candidate for the company.

All this aside, AstraZeneca continues to develop the treatment for a number of different indications, including thyroid cancer and non-small cell lung cancer. With these further indications, analysts put 2020 sales at a little over $305 million. This, of course, is assuming we don’t get a turnaround in fortunes as we have seen with the ocular indication.

So what’s the takeaway here? Using some rough calculations, it looks as though the recent failure stands to cost AstraZeneca at least $40 or $50 million in forsaken revenues – approximately 18% of its total forecast for selumetinib revenues in 2020. However, it’s not by any stretch of the imagination a fatal blow for the company’s projections. With a number of larger incidence rate target cancer treatments in the pipeline, including AZD9291, Lynparza and MEDI4736 – all of which could be billion-dollar blockbusters if approved – the company is still on track for its 75%, decade long revenue increase. Long term on track, yes, but temporarily derailed – undoubtedly.

More stories from Market Exclusive:

Phase III Success Makes this Company a Potential Blockbuster Biotech

Here’s What Markets are Asking About DBV’s Follow Up

IPO Watch: Novartis Majority Held GenSight; Hit or Miss?

Story continues below

Phase III Success Makes this Company a Potential Blockbuster Biotech

By
ME Staff
-
Exelixis

It’s been a big week in biotech. First we had the announcement that DBV Technologies (NASDAQ:DBVT) was all set for a follow-up financing round in which it expects to raise more than $240 million to fund phase III of its peanut allergy treatment. Then we heard that Tekmira Pharmaceuticals Corp (NASDAQ:TKMR) is set to change its name to Arbutus Biopharma Corporation under the ticker “ABUS” to fall in line with a new focus on Hepatitis B. Now, as markets kick off for a fresh day in the US, we have got yet another piece of big news out of the biotech space, namely that oncology junior Exelixis, Inc. (NASDAQ:EXEL) has finally achieved some level of success with its renal cell carcinoma candidate cabozantinib. Those of you following this company will remember the treatment’s phase III failure in a prostate cancer indication last September, and the ensuing turmoil that surrounded Exelixis as a result. Within hours of the failure announcement, the company’s market capitalization halved, and Exelixis slashed 70% of its workforce before the beginning of 2015.

Sellers at that time can be forgiven for wanting to get out of what looked like a Jr biotech in real trouble – something that, if held onto for an extended period of time – can wipe out an exposure. However, for the more risk tolerant participants that held on to their Exelixis allocation, there is finally some reprieve. On July 20, 2015, the company announced that – in a trial that compared cabozantinib to everolimus (current SoC) – the treatment reduced the risk of disease progression or death by 42% across a sample size of 658 patients with metastatic renal cell carcinoma (kidney cancer that has spread beyond the kidneys). Reduction of progression or death risk was the primary endpoint, meaning the trial passed with flying colors. At time of writing, Exelixis is up more than 50%, and looks likely to close out today even higher.

So why all the action? Well, the recent announcement has brought the company to trade at fresh yearly highs, breaking resistance from mid-2014 of around $4.5, and with what looks like it could be a fast-track route to approval there will likely be further upside revaluation throughout the latter half of 2015 and as we head into the beginning of next year.

So let’s take a quick look at the treatment and the science from which it derives its method of action. Cabozantinib is what is called a tyrosine-kinase inhibitor (“TKI”) – which, as its name suggests, is an agent that inhibits tyrosine kinases. These are the enzymes that are responsible for protein activation that can lead to proliferation in cells, and therefore, can be responsible for metastasis, growth and reproduction of cancerous cells. By inhibiting tyrosine kinases, Exelixis hypothesizes that cabozantinib can reduce tumor size and – in turn – effectively treat cancer across a variety of indications.

So what sort of timeline are we looking at before we will likely see any approval? Well, the drug is one of a number of the FDA’s fast-track designations, meaning that, assuming the NDA filing takes place before the end of this year, we could be looking at an approval during the first quarter of 2016. The treatment is currently approved for a medullary thyroid cancer indication, however, there are only between 200 and 300 patients suffering from this indication in the US. If we get approval for the kidney cancer indication, this number will increase to nearly 20,000 potential patients. Therefore, it goes without saying, that this indication can be a potential blockbuster for the company. There is also a kidney cancer indication trial ongoing, with results expected 2017, and a combination trial using cobimetinib, another of the company’s pipeline candidates, and Zelboraf, an already approved treatment currently being marketed and manufactured by Roche (OTCMKTS:RHHBY). This, combination treatment could receive approval as early as November this year.

So, what’s the takeaway here? Well, that there is real potential in this stock. The company took a beating late last year, and its shares have been trading at what now look to be a deep discount ever since. Investors that got in at the base of this discount are already looking at a decent upside return, but the potential for further return exists. With approvals looking likely at both the end of this year and at the beginning of next, as well as phase III trial results expected during early 2017 for a second indication, now looks like a great time to get an exposure to any potential upside revaluation in this company going forward.

More stories from Market Exclusive:

Here’s What Markets are Asking About DBV’s Follow Up

IPO Watch: Novartis Majority Held GenSight; Hit or Miss?

Up-listing Could Prove Pivotal for Pieris

Story continues below

Here’s What Markets are Asking About DBV’s Follow Up

By
ME Staff
-
NASDAQ

In October last year, DBV Technologies (NASDAQ:DBVT) hit the markets with a pretty disappointing IPO, closing out at an average of around $21 per share versus its pre-IPO target of a little over $23 a share. However, over the last eight or nine months, the company has really found its stride, and we are now trading around $42 a share – 85% up on its IPO pricing and a nice return for those that got in last October. Just this week, we learnt that the company is taking advantage of its current rosy market situation, and launching a follow-up share offering to fund – among other things – a phase 3 program for its lead candidate – Viaskin. The question now facing potential contributors to this follow-up offering is simple. With hindsight, a $21 a share offering presented a discounted opportunity to gain exposure to what would turn out to be one of the hottest development stage biotech’s of the last six months. However, with the stock now up nearly 85%, is an entry at this price still a discount on a long-term valuation? If the answer is yes, then the follow-up is worth taking part in. If no, it is best left alone until we actually see some progress from the trial that the company is looking to fund. So, with this said, let’s have a look at the offering itself, and attempt to come down on either side of the question.

So, first, let’s take a look at the drug the company is looking to fund. As we have said, the candidate is called Viaskin, and currently has two primary indications – peanut allergy and cow’s milk protein allergy (CMPA) in children. In both incidences, the treatment uses a patch that contains an allergen protein in its original antigenic state. When exposed to the skin, the allergen is exposed to the allergen protein over an extended period of time. This extended exposure translates to activation of regulatory T cells, which not only treat allergies during exposure, but also (due to the nature of the human immune system) for a period once exposure ceases. Because the allergen is delivered to what are called Langerhans cells, they avoid the bloodstream and – in turn – avoid systemic allergic reactions, something that can vastly improve the safety profile of the treatment and give it an advantage over current standard of care.

So where are we with trials? The vast majority of the funds will go towards advancing the former of these two indications – the peanut indication – into phase 3 trials. With this in mind, let’s focus on the peanut indication for the purposes of judging the company’s current position in the market.

In September last year, we learnt the topline results for a phase IIb trial of 221 peanut allergic subjects across four treatment arms (three variable and increasing dosage levels and one placebo). At the beginning of this year, we heard a full study report during the 2015 AAAAI Annual Meeting in Houston, Texas. The trial showed efficacy, with 50% reaching primary endpoints compared to 25% on the highest dose level across all responders, and further, 53% exhibiting efficacy versus 19% in the child focused arm of the trial, designed to study children ages six to 11. Further, and just as importantly, safety was confirmed, with no treatment-related adverse events reported.

Things look promising so far, so what are the terms of the offering? Well, the company is offering 3.6 million shares in the form of 7.2 million American depositary shares (ADS), with each ADS representing one half of one ordinary share. Estimated net proceeds come in at around $230 million, slated to a public offering price of $34 per ADS. As we have said, the vast majority of the proceeds will go towards the phase 3 trial, and it is this trial that could be the primary driver behind any upside revaluation in DBV stop going forward.

So what are the risks? Well, as usual, there is the risk of non completion of the trial. Some of this is mitigated by the upcoming financing round, but if we fail to see the efficacy seen in the phase IIb, progress could falter. We also have to consider competition, and potential market size/saturation. Interestingly, in this instance, not from a direct comparable treatment, but from current standard of care – EpiPen, manufactured by generic drug incumbent  Mylan NV (NASDAQ:MYL) in conjunction with King Pharmaceuticals, which since a recent takeover is now an arm of Pfizer Inc.(NYSE:PFE). Sales of the EpiPen reached $1 billion for the first time early this year. Obviously the EpiPen controls the market at present, and unlike the treatment offered by DBV is a responsive treatment rather than preventative, but with a current market cap of $1.5 billion, it is easy to see how an approval for the peanut indication, followed by a small grab of market share (low double digit percentage) could turn Viaskin into a hit for DBV. Further, this is only one indication – the potential going forward is even bigger.

So, with all this said, where do we stand on the follow-up offering? Well, simply put, it looks attractive. Yes, DBV is 85% up on its IPO price, but as we head into phase III trials, all and any news releases have the potential to drive volatility. Get on the right side of this volatility, and we could see another similar upside revaluation during the next 12 months.

More stories from Market Exclusive:

Story continues below
1...14,62414,62514,626...14,630Page 14,625 of 14,630

EDITOR PICKS

POPULAR POSTS

POPULAR CATEGORY

© Market Exclusive 2019