After Bristol Myers' Bydureon Success, The Next Step Is Sustained Release Insulin

| About: AntriaBio, Inc. (ANTB)


Sustained release drug delivery systems are growing in popularity as patients of various diseases seek to minimize dosage frequency and save on costs especially where needles are involved.

Diabetes is one of the most diagnosed diseases in the world, with approximately 5.1M deaths associated annually.

One of the biggest challenges in managing diabetes is compliance on dosing. Some patients find it difficult to adhere to the daily injections.

Sustained release drug delivery is becoming the answer to the compliance challenge. One sustained release for diabetes is already available in Bydureon, an insulin regulator, but not for insulin itself.

AntriaBio is developing a basal insulin delivery product called AB101, which aims to cut the frequency of dosing from a daily injection to a weekly injection.

Over the years, treatment of diabetes has relied on patient's compliance to the diagnosed insulin dosage. We have heard cases of overdose, while some patients have been reported to skip a couple of doses during treatment. Dosage compliance has been a huge challenge and no wonder companies are now opting for sustained release delivery methods.

Aside from diabetes, sustained release methods are taking hold for treatments of other conditions as well. Among these are advanced prostate cancer, osteoporosis, macular edema, hormone therapy and Uveitis. Some of the companies involved in producing these products include, Eli Lilly (NYSE:LLY), Merck (NYSE:MRK), P&G, Novartis (NYSE:NVS), AstraZeneca (NYSE:AZN), Sanofi-Aventis (NYSE:SNY), Allergan (NYSE:AGN) and Bausch & Lomb. Here's a quick rundown.

Sustained Release Success Across Many Disease Indications

Novartis' once a year injectable sustained release delivery system for the treatment of Osteoporosis is one of the best examples of long-acting formulation products in the market. Reclast is a Zoledronic acid (5mg/100ml) drug administered via intravenous infusion to patients suffering from osteoporosis. The company reported $590M (page 23) worth of sales from Reclast in 2013, its 15th best seller.

Other companies with long-acting formulations for the treatment of Osteoporosis include, Merck, which has a once-a-week orally administered Alendronate sodium (70 mg) tablet/solution trading under the brand name Fosamax. Fosamax was generating annual sales of about $3B until its patent fell off in 2008. In 2013, the products reported $560M (page 42) worth of revenues despite the patent expiring 5 years ago.

Allergan's Ozurdex for macular edema associated with retinal vein occlusion is the first approved drug on the market for the disease, approved in 2009. It is a bioerodable implant and therefore has a price advantage over rival Eylea. Eylea could cost patients up to $24,000 per year, due to the $2,000 price tag on monthly dosage. On the other hand, Ozurdex's estimated cost per year stands at about $1,950 due to the sustained release nature of the treatment.

Ozurdex revenues totaled only $8M in 2012, but based the sequential growth rate of about 8.5%, estimates point to $30M for fiscal year 2013.

These are all clear examples of how long-acting formulations like sustained release systems are gaining traction in the market across many indications. The key to a blockbuster, then, is sustained release for a disease like diabetes. While most diseases do not require daily dosage of medication, diabetes does.

Sustained Release Success for Diabetes

Approximately 27 million Americans suffer from diabetes. According to statistics, at least 382 million people are living with diabetes as of 2013. The figure will grow to approximately 592 million by 2035. In 2013 alone, diabetes caused 5.1 million deaths globally. In the U.S, diabetes accounted for $548 billion worth of expenses in 2013, which is approximately 11% of the total healthcare spending on adults.

Over the years, diabetes patients have managed the disease by way of continuous injection of basal and bolus insulin. While bolus insulin is taken on a need-based situation, basal insulin has to be injected on a daily basis. For patients requiring basal insulin, they have to adhere to the strict dosing schedule. This has for some time proved challenging with cases of patients skipping doses. After all, who would be enthusiastic about injecting themselves every single day with a drug that doesn't induce euphoria?

Based on recent developments in sustained release technology, dosage compliance may become a lot easier than before. As of now, there is no approved sustained release treatment for insulin itself, but there is for adjunct treatments, meaning treatments that are intended to stimulate pancreatic cells to produce insulin.

On that front, there is Bristol-Myers Squibb's (NYSE:BMY) wholly owned subsidiary, Amylin Pharmaceuticals, which has already made giant steps towards solving the problem of compliance with regard to injections for patients with diabetes. The company's Bydureon, though not a substitute for insulin, is a sustained release product injectable once per week and received FDA approval in 2012, after a failed attempt in 2010. It helps pancreas cells secrete insulin on their own.

Note that Amylin Pharmaceuticals' Bydureon received FDA approval in January of 2012. In the same year, Bristol-Myers acquired the company for $31 per share, outbidding several other big Pharma companies.

During 2013, Bydureon had sales of $298M (page 3). Analysts predict that Bydureon sales could reach $1B in the next few years if the drug can overcome the rivalry of Novo Nordisk's (NYSE:NVO) Victoza, another similar treatment, though not sustained release. The battle between Bydureon and Victoza in the diabetes market could be very indicative of any future battle in the main market of sustained release insulin itself. Sales of Victoza in 2013 were nearly $1.1B, but the growth of sales of Bydureon from 2012 to 2013 was much faster, growing from $78M to $298M in a year.

Sustained Release Insulin is Next

As mentioned, the initial success of Bydureon is very important as a possible prelude to sustained release insulin, which would be an even bigger market. The only company actively working on the technology is AntriaBio (ANTB). The product is dubbed AB101, and it is a sustained release basal insulin delivery product. Injectable once-a-week, it is currently in preclinical development, with human trials pending in Russia.

The product is administered by subcutaneous injection and it targets both type 1 and type 2 diabetes. The company designed the formulation to slowly and uniformly release insulin for a period of one week without an adverse initial burst of insulin.

AB101 has a place in the market

AntriaBio is developing AB101 with the North American market in mind where basal insulin accounts for nearly 50% of the total insulin usage.

In general, some of the biggest companies in the industry dominate the basal insulin market. Sanofi and Aventis collaborated to develop the best selling product, Lantus. This is Sanofi's best seller at €5.715Bin 2013 (page 22), or $7.9B. Novo Nordisk's basal insulin Levemir had annual sales in excess of $1.5B last year. Note that these basal insulin products are injected once daily, and Bydureon is not designed to be taken together with insulin itself.

AB101 is still in preclinical development but has begun setting up human trials in Russia (page 18) under the guidance of a Russian CRO, with results expected by the end of 2014. Preclinically, the product has been tested on mice, and the results have been positive.

According to the company's preclinical trial results, the product exhibited a minimal initial delivery burst immediately after injection, estimated at less than 1% of the weekly dose. The rest of the days illustrated sustained continuous insulin release over the intended seven-day interval.

The clinical trial plan is as follows: A phase I study is scheduled to take place during the second half of 2014, and will include 10-20 patients. Phase II will take place in Q2 of 2015, and will include 20-50 patients while phase III clinical trials are planned for Q3, 2016, and will be carried for a period of 18 months including 1000 type 1 and type 2 diabetes patients per study.

While many companies end up behind schedule, the insulin market is huge and therefore quick enrollment for these studies is likely. Based on this schedule, we are probably looking at least at a three-year wait before AB101 goes to the market.

History, Cash, and Financing

AntriaBio was formed in October 2012 as the result of the chapter 11 bankruptcy filing of PR Pharmaceuticals back in November 2008 (page 3). PR, a private firm, was developing the once-a-week sustained release bolus insulin injection at the time, but the thralls of the financial collapse left it unable to continue development. AntriaBio entered the scene in 2012 in a deal to acquire all remaining assets of PR for $500K, plus a contingent $44M to PR in stages should the following events occur within five years of October 2012, which would be October 2017:

  1. $2M at the start of phase 2b,
  2. $2M if a partnership with a commercial pharmaceutical company is made
  3. $5M at the start of phase 3,
  4. $10M at FDA approval,
  5. $25M if annual sales of AB101 top $500M.

The implications of these rather large numbers are first, that PR believes that commercialization by 2017 is possible. Second, that the plan is clearly to either go with a partner or to be acquired, as Amylin was for its diabetes sustained release technology. Otherwise, Antria would have a hard time coming up with $15M on its own. Third, that the company believes it can attract a partner or takeover before phase 3 begins.

Antria estimates that it will need $30M (page 18) to get through phase 2, which it plans to raise this year. At that point, if phase 2 succeeds, it will probably look to be acquired.

The big question is, how dilutive will a $30M raise be? That entirely depends on how management structures the financings, and if they will be primarily through private direct offerings to accredited investors or primarily through public offerings. Financing has already begun on this front, and so far it has been through private placements. On April 1, Antria reported that it had issued over 28M units to 82 accredited investors, each unit consisting of one share plus one 3 year warrant at $0.39. Gross proceeds were $7.3M. If all goes to plan, there should be three more of those this year, which would get the company through phase 2.

On the one hand, the company is succeeding in attracting private placements. On the other hand, the question is the warrants, which effectively are now at $2.34 following a 1:6 reverse stock split.

Considering the above, in most cases a wait-and-see approach would make sense for a company like AntriaBio that has some financing ahead of it. However, in this case, we are dealing with one of the largest proven markets in health care, bolus insulin, and things could begin developing quickly, especially given the fact that other sustained release medications, including one sustained release diabetes medication, have already succeeded. Investors interested should be prepared for either outcome.

Management Overview

For a company so new to the scene, a quick management overview and notable history is warranted. The two of note are its CEO and CSO. Antria's Chairman and CEO, Nevan Elam, is most known for running the pulmonary business unit of Nektar Therapeutics (NASDAQ:NKTR) until Novartis acquired it in 2008 for $115M. Its CSO, Dr. Sankaram Matripragada, was director of research and development at Guidant from 2003 to 2004, which was then purchased by Boston Scientific (NYSE:BSX) with the help of Abbott (NYSE:ABT) for $27.2B in January 2006.


One sustained release drug for diabetes, Bydureon, is already selling well, and sales are growing fast. But Bydureon is not a substitute for insulin itself, so the next step is sustained release insulin. The only company working on it is AntriaBio.

While the risks with AntriaBio are considerable and similar to most trial stage biotechs, keep in mind that Antria is not testing an experimental drug with untested markets, but rather a new way to deliver a blockbuster. This makes it comparatively less speculative than a trial stage biotech testing entirely new molecule drugs. The first thing to watch now is the human trials in Russia. Also keep an eye on Bydureon sales compared to Victoza, which is not sustained release. If Bydureon outstrips Victosa over the next year or two, it would be a very good omen for future AB101 sales if and when it is approved. Also, a Bristol Myer's-like acquisition could happen for AntriaBio as it did for Amylin upon approval of AB101.

If Antria 's AB101 generates just half of what Bydureon reported in terms of revenue for the first six months after one year of receiving approval, then Antria's stock could put on quite a show.

Disclosure: I am long ANTB. 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.

Editor's Note: This article covers a stock trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.

Editor's Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.