By Patrick Crutcher
With 2010 winding down, we wanted to highlight some potential catalysts that could offer nice investment opportunities to end the year on a high note.
There are several companies presenting Phase 2 data that could help them finish 2010 strong with momentum into the new year. The companies below all anticipate reporting results before the end of 2010 and have other catalysts in early 2011. We are optimistic that these companies have good chances at posting positive results.
Investors over at Inhibitex Inc. (INHX) are still anxiously awaiting results from their Phase 2 trial using FV-100 for the treatment of shingles. Investors should know that the trial is evaluating FV-100 against an active control arm in Glaxo’s Valtrex. VALTREX® had total U.S. sales of about $500 million (for the shingles indication). FV-100 has the potential to offer several advantages over existing treatments. FV-100 uses once-daily dosing, as opposed to multiple doses daily for for other treatments (Valtrex, acyclovir & famciclovir). The primary endpoint is a reduction in herpes zoster associated pain and severity as measured by the Zoster Burden of Illness scale after 30 days. Based on preclinical data, FV-100 has been shown to have significantly faster onset of antiviral activity than currently options, at much lower dosing levels. The trial is testing whether Inhibitex’s FV-100 can reduce the incidence, severity, and duration of shingles-related symptoms, including lesions, acute pain, and post herpetic neuralgia (PHN) relative to Valtrex.
With the potential to have no signs of renal impairment (a potential side effect from Valtrex), better dosing schedule and reduction in PHN, FV-100 could easily become the new standard of care for the treatment of shingles. And according to Zack's analyst, Jason Napodano, "Therefore, even if the phase II data above only proves that FV-100 is on-par in terms of efficacy to Valtrex, Inhibitex has a significant market opportunity by offering once-daily dosing and improved safety performance in patients with renal insufficiency." INHX has made it clear that they want to partner this drug and positive data should certainly attract potential suitors.
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They also will be releasing the results from their Phase 1 study of their hepatitis-C virus (HCV) treatment, INX-189, sometime in the 1st or 2nd quarter of 2011. The HCV market has a growing number of competitor, but INX-189's potential as a second-generation approach (nucleotide, as opposed to nucleoside) should make the results even more interesting. It appears that INX-189 is the most potent nucleotide polymerase inhibitor in clinical development, with PK data supporting a once-daily therapy. This certainly has potential to attract broader interest (big pharma), especially if the data supports their hypothesis. We think investors should be following INHX closely and we are bullish on their 2011 outlook.
We also like the recent momentum in shares of Corcept Therapeutics, Inc. (CORT), where investors are anxiously anticipating results from their Phase 3 study of Corlux, for the treatment of Cushing’s Syndrome. On December 6th, they updated the status of the trial on their ClinicalTrials.gov page, so investors are hoping that results are not too far behind. This is an open-label study, hence the company does have some idea how the trials are coming along and any potential safety issues (none have been reported thus far).
Why are the results important? We have said this time and again, companies with drugs approved in orphan indications can charge a significant premium. Corcept will have seven years of marketing exclusivity from the date of drug approval and they fully own the licensing rights to CORLUX. One analyst speculated that they may have a patient population of about 10,000 and could potentially charge up to $100,000 per year. There are no FDA approved treatments for Cushing’s syndrome, which is a hormonal disorder caused by prolonged exposure to high levels of cortisol. Cortcept hopes to submit an NDA for CORLUX in Cushing’s Syndrome some time in the first quarter of 2011. Corcept has no debt and roughly $36 million in cash. Corcept research and clinical development activity is focused on antagonizing or blocking the GR-II receptor for cortisol, a hormone implicated in a broad range of psychiatric and metabolic diseases.
Lexicon Pharmaceuticals Inc. (LXRX) shares gained today on anticipation of several upcoming clinical trials results. Investors are expecting data from data from a Phase 2 trial of LX2931 in rheumatoid arthritis whose results are anticipated by the end of the year. During today’s presentation at Canaccord Genuity’s Cardiovascular, Diabetes & Obesity Conference, CEO Dr. Arthur Sands noted that they are the cusp of Phase 2 results. Positve data out of this trial could add significant value, in terms of a potential partnership and future use in other autoimmune diseases.
They also expect to announce Phase 2a data for LX1032 sometime in 1Q 2011, in carcinoid syndrome, which has fast-track designation in the US and orphan status in the EU. Also, Lexicon hopes that results from the LX4211 bio-equivalency study should be completed in first quarter 2011 with focus on GLP-1 levels. Lexicon hopes that their recent positive data with LX4211 for diabetes can help them land a lucrative partnership in 2011. You can also see LXRX as a potential aquisition target in 2011, if additional data on their pipeline over the next few months is positive. Their pipelines is going after large market indications like diabetes and rheumatoid arthritis and touching upon the niche indications with carcinoid syndrome and IBS. Lexicon’s has $230 million in cash (as of Sept. 30, 2010) and seems well funded until management can nail down a licensing deal on some of their compounds.
Shares of Cytokinetics, Inc. (CYTK) have been very active the past few days following the announcement of results from its Phase 2a clinical trial of CK-2017357 in patients with amyotrophic lateral sclerosis (ALS). This data is scheduled to be presented as part of the clinical trials session at the 21st International Symposium on ALS/MND, to be held December 11-13, 2010 in Orlando, Florida. They will be presenting on Sunday, December 12th at 5:15 p.m. EST. The primary objective of this trial is to evaluate the pharmacodynamic effects of CK-2017357 on measures of skeletal muscle function or fatigability in patients with ALS. Cytokinetics also has an ongoing Phase 2a trial of CK-2017357 in patients with symptoms of claudication associated with peripheral artery disease. During the 2nd interim review of the data in ALS, they saw potentially positive efficacy across multiple assessments of patient function and skeletal muscle performance.
Canaccord Genuity maintains a "Buy" on Cytokinetics with a $6 price target. They have a very nice balance sheet ($77M in cash as of Sept. 30, 2010), partly because of their major partnership with Amgen for the potential treatment of heart failure using CK-1827452 (omecamtiv mecarbil). They anticipate Amgen (AMGN) will begin the Phase 2a trials for this drug to begin sometime in 2011. Amgen paid them $50 million in upfront payments for the exclusive worldwide license to omecamtiv mecarbil in 2009. Amgen is also paying for the development costs associated with this drug. With this substantial backing, Cytokinetics is setting up very nicely to push it’s midstage pipeline further in 2011.
Disclosure: Long INHX, CYTK