By January 23, 2013, the US Food and Drug Administration (FDA) will complete its review of Hyperion Therapeutics' (NASDAQ:HPTX) investigational drug Ravicti for the treatment of urea cycle disorders (UCDs). In this article we discuss scientific literature on UCDs and clinical trial data for Ravicti. Based on our analysis, we believe Ravicti should receive FDA approval.
Hyperion Therapeutics is a biopharmaceutical company developing therapies for UCDs and hepatic encephalopathy (HE). UCDs arise from rare genetic mutations affecting protein transporters in the urea cycle. About 2,000 people in the United States have a UCD. In contrast, HE arises from chronic liver dysfunction and afflicts more than 140,000 Americans. UCDs cause elevated levels of ammonia in the bloodstream, a condition known as hyperammonemia. This accumulated ammonia can lead to irreversible neurological damage or death. Ravicti (glycerol phenylbutyrate) treats both types of disease by neutralizing ammonia.
The existing standard treatment for UCDs is the drug Buphenyl (sodium phenylbutyrate), owned by Valeant Pharmaceuticals International (NYSE:VRX). Like Ravicti, Buphenyl neutralizes ammonia. After administration, both Ravicti and Buphenyl produce phenylacetic acid (PAA), which is the active component responsible for the neutralization. However, Ravicti and Buphenyl are meaningfully different. Buphenyl has an unpleasant smell/taste profile and, for full efficacy, UCD patients on Buphenyl must ingest 40 tablets per day. Patient noncompliance is a recurring and problematic issue. Noncompliance can cause spikes in ammonia levels and often results in an emergency room visit for acute hyperammonemia. Additionally, a full dose of Buphenyl contains more than the recommended daily allowance of sodium, and thus may have negative long-term health consequences. In contrast to Buphenyl, Ravicti is a liquid, has a mild smell/taste profile, and does not contain sodium. Ravicti simplifies dosing, affording greater patient compliance and, therefore, disease control.
We believe Ravicti will receive a positive response from the FDA because Ravicti is as efficacious as Buphenyl and poses relatively innocuous safety concerns. This approval may dramatically increase Hyperion's stock price, especially because Ravicti also awaits approval for HE, a disease afflicting a much larger set of patients.
Ravicti is highly effective at neutralizing ammonia
To date, Hyperion has completed two phase II clinical trials (for adults and children) and one pivotal phase III trial showing that Ravicti successfully treats UCDs. In these trials, patients on Ravicti had an average ammonia level 22% lower than that for patients on Buphenyl. Relative to Buphenyl patients, Ravicti patients also had 40% fewer incidences of acute hyperammonemia and the incidences that did occur were less severe. Furthermore, neuropsychological evaluations highlight improvement among pediatric patients in behavioral regulation (e.g. flexibility, inhibitory control) and cognitive skills (e.g. goal setting, planning, self-monitoring). Overall, clinical trial data strongly suggest Ravicti is non-inferior to and perhaps even more efficacious than Buphenyl.
Ravicti's most prominent safety concerns are minor in nature
When evaluating whether a drug will receive FDA approval, it is useful to consider factors that could conceivably prevent a positive outcome. For Ravicti, these factors include an elevated PAA level in pediatric patients and a rat study showing a drug-related increase in cancer. We cover each of these in turn.
Once a patient ingests Ravicti, the drug is metabolized to yield PAA, the compound that actively eliminates ammonia. Previously, the FDA expressed concern that pediatric patients on the standard dosing schedule for Ravicti may experience unacceptable exposure to PAA, which is known to be toxic at high levels. Although Hyperion's current new drug application was submitted only for adult patients, pediatric patients especially benefit from Ravicti's simple mode of delivery. Off-label use of Ravicti in the pediatric population could occur frequently, so the FDA's concern is understandable.
In response to this guidance from the FDA, Hyperion provided information directly assessing PAA and ammonia levels in pediatric patients. The results show that the PAA concentration in pediatric patients on Ravicti is higher than that in pediatric patients on Buphenyl, but is well below the threshold for toxicity. Additionally, as is the case for adult patients, pediatric patients on Ravicti have a marked reduction in ammonia relative to same-age patients on Buphenyl. In other words, the high level of PAA in pediatric patients on Ravicti is not particularly worrisome, and Ravicti is even more efficacious than Buphenyl at ammonia reduction in this set of patients. If physicians who prescribe Ravicti off-label want to be conservative with respect to PAA exposure, they can monitor their patients' ammonia level and accordingly reduce the drug dose without losing efficacy over Buphenyl.
A second potential safety concern involves Hyperion's rat study for carcinogenicity. In this study, Ravicti appeared to increase the incidence of seven different tumor types. However, an expert panel assembled by Hyperion determined that this rat study was not predictive of human risk. Furthermore, in clinical trials for UCD, there was no incidence of cancer, and there has never been a reported case of cancer due to Buphenyl, whose active product is the same as Ravicti's. If the FDA perceived a lack of clarity on such a carcinogenicity study, it would typically call for further scientific assessment through an advisory committee meeting. However, the FDA has decided not to hold an advisory committee meeting for Ravicti, suggesting that the agency concurs with the aforementioned expert panel's conclusion.
Hyperion's Ravicti offers UCD patients a better drug for preventing hyperammonemia. Its efficacy is at least on par with Buphenyl, the current standard of care. In our opinion, Ravicti's most salient safety concerns are only marginally significant. The efficacy-to-safety ratio for Ravicti is high and the drug should receive approval by its upcoming FDA action date.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within 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.
Additional disclosure: Beacon VP Investments is a team of analysts. This article was written by Zheng Qu and Wenda Ramma, two of our team members.