By March 27, 2013, the United States Food and Drug Administration (FDA) will decide whether to approve A.P. Pharma's (APPA) drug APF530, which treats chemotherapy-induced nausea and vomiting (CINV). This is A.P. Pharma's second attempt to gain FDA approval for APF530. As discussed below, we believe the company has now completed the necessary steps to secure a positive approval decision, an event that may dramatically increase the value of its stock.
A.P. Pharma is a small, 19-employee pharmaceutical company based in Mountain View, CA. It focuses on developing and applying a polymer-based technology, named Biochronomer, for the extended release of drugs. The company's lead drug candidate, APF530, uses Biochronomer technology together with granisetron, an already FDA-approved medicine, for the treatment of CINV. The CINV disorder is quite common and affects nearly 90% of patients on some types of chemotherapy agents, including the frequently used drug cisplatin.
There are two classes of CINV: acute and delayed. Acute CINV occurs within 24 hours of chemotherapy administration, whereas delayed CINV occurs periodically from 24 hours to 5 days after a patient receives chemotherapy. Most CINV patients on medication receive at least one drug that inhibits type-3 serotonin receptors. Such inhibitors include Aloxi, produced by Eisai (ESALY), and two generic drugs, granisetron and ondansetron. These drugs have been successfully used for the treatment of acute CINV. Aloxi is the only drug also approved for treatment of delayed CINV. APF530 would become the second such drug. Unlike Aloxi, which is administered intravenously, APF530 is injected subcutaneously. This mode of delivery, combined with the Biochronomer technology, facilitates improved slow release of granisetron.
Clinical Trial Data and AP Pharma's Response to Its Complete Response Letter Support FDA Approval
Phase III clinical trial data for APF530 were initially released in October 2008. The pivotal phase III trial included 1,341 patients separated into three groups: those receiving APF530 at a low dose (5 milligrams), those receiving APF530 at a high dose (10 milligrams), and those receiving Aloxi at its standard dose. The primary measure of drug efficacy was the Complete Response (CR), defined as an absence of both emetic (i.e. nausea-related) episodes and the use of antiemetic rescue medication after receiving APF530. Additionally, APF530 was evaluated for patient satisfaction and reactions associated with the abdominal subcutaneous injection. Notably, at the high dose, APF530 appeared comparable to Aloxi on all tested parameters.
After submitting these trial results to the FDA, A.P. Pharma received a Complete Response Letter outlining three main issues needing attention before APF530 could be approved. The first issue involved the dosing system, which the FDA contended was overly complicated due to a two-syringe format. This two-syringe format necessitated transfer of material from one syringe to another syringe prior to drug delivery, introducing the possibility for drug contamination or error on the part of medical professionals. A.P. Pharma has since transitioned to a single-syringe system.
The second issue involved the Chemistry, Manufacturing, and Controls section of APF530's application. In addition to flagging (apparently routine) deficiencies at third-party manufacturing facilities, the FDA requested that the company explore whether terminal irradiation of APF530 were feasible. Previously, A.P. Pharma had been ensuring drug sterility at an earlier stage in the production process. The company has since indicated that terminal irradiation is demonstrably feasible and that this process would be part of its resubmitted application for drug approval.
The third issue involved the clinical trials. Most notable was a distinct concern about whether APF530 might affect cardiac repolarization. In June of 2012, the FDA issued a Drug Safety Communication regarding the use of ondansetron, a generic type-3 serotonin receptor inhibitor. The Agency remarked that ondansetron appears to significantly prolong the so-called QT interval, suggesting that ondansetron may place patients at risk of fatal tachyarrhythmia. In December of 2012, the FDA demanded that the highest approved dose of ondansetron be formally withdrawn from the market. Therefore, in light of these concerns, the FDA has been especially cautious about approving another potentially problematic type-3 serotonin receptor inhibitor. At the FDA's request, A.P. Pharma completed an additional 56-patient clinical trial assessing whether APF530 influenced the QT interval in healthy patients. The results of this trial indicate that even at doses five-times as large as the 10-milligram therapeutic dose, APF530 has essentially zero effect on the QT interval. Not only do these results reduce concern regarding QT interval effects and support FDA approval of APF530, they also suggest A.P. Pharma's drug may have a higher efficacy-to-safety ratio than ondansetron, which could ultimately lead to strong market adoption of APF530.
APF530 offers patients a safe and relatively efficacious treatment for CINV. Its efficacy is on par with that of Aloxi, which would likely be its most direct competitor. Furthermore, A.P. Pharma appears to have fully addressed the concerns outlined in the FDA's Complete Response Letter. We anticipate that APF530 will receive FDA approval by March 27th.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Additional disclosure: Beacon VP Investments is a team of analysts. This article was written by Mikalai Malinouski, one of our team members.