Inhibitex Rates Buy on FV-100 Phase 2 Data

Dec.15.10 | About: Inhibitex, Inc. (INHX)
Phase 2 FV-100 Data Show Potential

On December 13, 2010, Inhibitex (NASDAQ:INHX) announced results from the company’s Phase II trial studying FV-100 as a treatment for herpes zoster, commonly known as shingles. As a reminder, the company initiated the program in May 2009. The trial was a well-controlled, double-blind, clinical trial evaluating FV-100 against an active control of Glaxo’s (NYSE:GSK) Valtrex (valacyclovir). Roughly 350 patients aged 50 years and older were randomized to one of three treatment arms: 200 mg FV-100 administered once daily; 400 mg FV-100 administered once daily; and 1,000 mg valacyclovir administered three times per day. The primary endpoint of the study was a reduction in herpes zoster associated pain and severity as measured by the Zoster burden of illness (BOI) scale after 30 days of treatment. The trial was 80% powered to detect an approximate 20-25% difference between the FV-100 and Valtrex cohorts. Secondary endpoints included the BOI after 90 days, incidence of post herpetic neuralgia (PHN), mean time to lesion crusting and healing, and use of concomitant pain medications. The results:

For FV-100 200mg QD: The data show a 3% reduction on the BOI-30 primary endpoint and a 4% reduction on the BOI-90 endpoint vs. valacyclovir 1000mg TID. Patients on FV-100 200mg also had a 12% reduce incidence of PHN (17.8% vs. 20.2%) vs. valacyclovir.

For FV-100 400mg QD: The data show a 7% reduction on the BOI-30 primary endpoint and a 14% reduction on the BOI-90 endpoint vs. valacyclovir 1000mg TID. Patients on FV-100 400mg also had a 39% reduce incidence of PHN (12.4% vs. 20.2%) vs. valacyclovir.

The trial missed the primary endpoint of a 20-25% difference between the FV-100 cohorts vs. Valtrex on the BOI-30 scale. In fact, results weren’t even close. But we believe the trial was far from a failure. On the contrary, we are highly encouraged by the following:

1 -
There was continued separation from the FV-100 cohorts and valacyclovir between BOI-30 and BOI-90:
FV-100 200mg QD went from 3% improvement at BOI-30 to 4% improvement at BOI-90.
FV-100 400mg QD went from 7% improvement at BOI-30 to 14% improvement at BOI-90.
This shows the drug is working over time. Additionally, management noted that the average “worst pain” at day 90 was lower for the FV-100 cohorts vs. valacyclovir. The BOI composite endpoint is a measure of both severity and duration. We believe severity clearly trended in FV-100’s favor.

2 - There is clear dose response. The FV-100 400mg arm showed reduced BOI-30 and BOI-90 scores vs. the FV-100 200mg arm. This present the opportunity to test even higher doses in the future. Does response is one of the key things we look for during a phase II proof-of-concept program.

3 - The reduced incidence of PHN is the most clinically meaningful endpoint. PHN is the paramount concern for physicians and patients treating a zoster infection. Onset of PHN brings use of additional pain medications, including opioids, added cost potential complications. We believe a 39% reduced risk of PHN for patients taking FV-100 400mg is enough alone to drive prescription use if approved.

4 - Roughly 20% more patients on valacyclovir used opioids (52% vs. 42%) than on FV-100. We think this is important to note because the BOI-30 and BOI-90 data accounts for pain severity and duration regardless of the use of concomitant pain medications. For FV-100 400mg the BOI-90 showed a 14% reduction vs. valacyclovir despite the fact that 20% more on valacyclovir were also on opioids.
This is something to keep an eye on for the phase III program. Management cannot control opioid use during the trial. If more control patients are using opioids then the pain scores in the control will be tainted (lowered) as a result. Pain may not be the best way to asses FV-100’s utility. We think investors should be focusing on the lower incidence of PHN and the increase opioid use as clear signs that FV-100 is superior to valacyclovir.

5 -
FV-100 offers secondary benefits vs. valacyclovir:
- FV-100 is once daily (QD) dosing vs. valacyclovir three-times daily (TID) dosing. Also, the FV-100 400mg pill is a lot smaller and easier to swallow than the valacyclovir 1000mg pill.
- Enrollment characteristic showed that 10% of the patients randomized to the study had baseline creatinine serum levels less than 50. The Valtrex label requires that these patients with potential renal insufficiency receive a lower dose for safety reasons. FV-100 is primarily cleared by the liver, and thus management does not believe the FDA will require this creatinine level test prior to dosing. This could save the physician time and the patient money in the long run.

Safety and tolerability of FV-100 looks generally similar to valacyclovir during the phase II program. The chart below shows the adverse events (AEs) and serious adverse events (SAEs) as well as discontinuations.

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Adverse events in any cohort that exceeded 10% were headache and nausea. Serious adverse events were low and generally not related to drug treatment. Given the similar safety and tolerability profile of FV-100 vs. valacyclovir, we do not believe there is any limitation that would prohibit use if approved. Management has additional safety data of FV-100 800mg QD as well. Given the clear dose response seen in the phase II data above, testing a higher dose for the phase IIb or phase III program may be appropriate.

Next Steps

Management continues to analyze the data from the phase II program. We expect to see the full data at a medical conference during the spring of 2011. The next step for management following completion of the phase II trial would be to schedule an End-of-Phase II meeting with the U.S. FDA around the middle of 2011. This meeting will be key in determining what trial design for the phase III program. Things to look for:

>> Can “Incidence of PHN” be the primary endpoint? We would view this as a significant positive considering the 39% reduction in PHN seen for the FV-100 400mg cohort. A phase III program designed to show reduction in PHN could easily be powered and meet statistical significance based on the phase II results. Also, incidence of PHN is far less subjective and influenced by use of concomitant pain medications and opioid use.

>> Will management test a higher dose of FV-100 or a longer duration? Results from the BOI endpoint were more favorable at day 90 than at day 30.

>> What additional benefits can management design into the phase III program to improve the label? This includes improved compliance for dosing and a lack of screening for renal insufficiency. Also, what type of pharmaco-economic benefit can management show given the lack of this creatinine screen step (an added cost to the patient and insurance provider) and less opioid use? We remind investors that valacyclovir is generic, and will cost far less than branded FV-100. However, with less opioid use, no creatinine screening, and a shorter duration of illness, the cost issue may disappear or even swing to FV-100’s favor.

Seeking A Partner

Inhibitex plans to seek a partner for the Phase III program. We do not expect a partnership to be signed until after the Phase II data has been presented at a medical conference during the spring of 2011. However, following the full data presentation we believe pharmaceutical companies will be very interested in FV-100. This is a potential $500 million opportunity in shingles. Management has commented in the past that they are in talks with potential interested parties, but we caution investors that these talks were probably only in the preliminary stages of interest prior to the data coming out. Now that the data is out we expect talks to heat up. Based on the available data so far, we think FV-100 is an attractive molecule for a larger pharmaceutical company. We see the characteristics as such:

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We expect that Inhibitex and its partner will look to push FV-100 into a pivotal phase III program shortly after a deal is done. Our best guess is that the phase III program will include two concurrent programs, with a total enrollment of around 1000 patients, and take an estimated two years to complete. Inhibitex plans a global program, so a meeting with the EMEA will need to take place in 2011 as well. If all goes well, we could be looking at a new drug application on FV-100 around 2014, with U.S. FDA action in 2015.

Selloff an Over-reaction

The selloff following the release of the Phase II data is a big over-reaction in our view. Yes, the Phase II program failed to show statistical significance on the primary endpoint, which was looking for a 20-25% improvement in pain scores at day 30 using the BOI-AUC. But we remind investors that this was a Phase II program, not Phase III. The 20-25% improvement is not the end-all be-all hurdle for approval. In fact, it was more in an effort to quantify proof-of-concept. If management had established the program to be a non-inferiority program, then these same results would have sent the shares up 20% instead of down 20%. What really matters is completing the program and pushing forward into phase III. Far too often we see investors get caught up with statistical significance in a phase II program when what really matters is generating concept and safety data that can be brought in front of the FDA and potential development partners. We believe that FV-100 works based on the BOI data and the clear lower incidence in PHN. Once management has its end of phase II meeting with the FDA and outlines a plan for the phase III program, we believe the market will begin to look more favorably on these results.

We reiterate our 'Buy' rating and $4 price target on Inhibitex. For additional information, please email SCR at Zacks dot com.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.