Cubist Pharmaceuticals' (CBST) over-the-top premium offer to acquire Adolor Corp. (ADLR) for $4.25 per share in cash (it closed Friday at $1.92), and up to an additional $4.50 per share in Contingent Payment Right (CPR), highlights the value of ADLR’s franchise of opioid receptor-targeted therapeutics. These receptor antagonists are designed to reduce the side-effects of opioid use on the gastro-intestinal (GI) system, such as constipation, and can lead to greater patient compliance in taking the opioids for pain relief, thereby enabling both higher patient comfort as well as reduced hospitalization times.
Adolor, which in Latin means “without pain,” has a portfolio of products that aims to do exactly that. Its only commercialized product ENTEREG was approved in May, 2008, to help accelerate upper and lower GI recovery following partial large or small bowel resection surgery with primary anastomosis. Its lead product in development is ADL5945 that has successfully completed phase two trials targeting opioid-induced constipation (OIC), meeting both primary and secondary efficacy endpoints with a highly favorable tolerability profile. While ENTEREG’s target peak sales are a healthy $100 million annually (it reached $8 million sales in the June 2011 quarter), we believe it is the promise of addressing the larger market for the OIC indication that may have motivated CBST’s over-the-top premium offer to buyout ADLR.
The long-term opioid market in the US includes 70 million patients, with about 20% of them being chronic users (use greater than 30 days during the year), of which 50% have constipation side-effects. Assuming that 40%-50% of that market is addressable, and a cost of just $7 per day for OIC treatment, ADLR arrived at a U.S. market opportunity for ADL5945 of over $2 billion. Furthermore, ADLR also has a backup product candidate for the OIC indication, ADL7445 that has completed phase one trials, in case ADL5945 is not successful. Both ADL5945 and ADL7445 have patent protection to 2025.
While the play on ADLR may be over given the high premium being offered by CBST, there are other plays in the opioid space that may be interesting for investors to consider:
Nektar Therapeutics (NKTR) and Astrazeneca Plc (AZN): NKTR is a clinical-stage biotech, with a pipeline of drug candidates targeting oncology, pain, anti-infectives, anti-viral, and immunology. Its pipeline includes NKTR-118 in phase 3 trials for OIC that it is developing in collaboration with AZN, a U.K.-based developer of branded prescription therapeutics. NKTR-118 is widely believed to have a lot of promise, and earlier in August 2011, NKTR-118 achieved statistical significance in a phase 2b trial in chronic OIC, with two doses, 25mg QD and 50mg QD.
Alkermes Plc (ALKS): ALKS, an integrated biotech company, develops injectable and oral products for the treatment of central nervous system (CNS) disorders, addiction, diabetes and autoimmune disorders. Its ALKS 37 drug is being developed targeting OIC, with the company recently announcing on October 3, that it entered phase 2b trials. Earlier, its phase two data for ALKS 37 showed significantly improved GI motility, while simultaneously preserving the analgesic effects of opioid treatment.
Acura Pharmaceuticals (ACUR): ACUR develops pharmaceuticals that effectively relieve pain while also discouraging common methods of opioid abuse, utilizing its proprietary Aversion and Impede technologies. Many of its oxycodone and hydrocodone-based products are being developed under a license, development and commercialization agreement with King Pharmaceuticals Research and Development that is now a part of Pfizer Inc. (PFE), a developer of branded prescription drugs for cardiovascular and metabolic diseases.
Salix Pharmaceuticals (SLXP): SLXP develops branded prescription drugs for the treatment of GI diseases. It markets Relistor®, indicated for the treatment of opioid-induced constipation (OIC) in patients with advanced illness who are receiving palliative care, when response to laxative therapy has not been sufficient. Furthermore, SLXP is currently finalizing phase 3 development of its oral formulation of Relistor® to broaden the use of the drug for treatment of opioid-induced constipation in chronic pain patients, with data expected in late 2011 or early 2012.
Sucampo Pharmaceuticals (SCMP): SCMP develops drugs based on prostones for the treatment of GI, ophthalmic, respiratory, vascular, and CNS diseases and other disorders. Its lead product in development is Amitiza approved for the treatment of chronic constipation in adults and irritable bowel syndrome with constipation in adult women.
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