Raptor Pharmaceuticals Provides Update On Lead Candidate: RP103

| About: Raptor Pharmaceutical (RPTP)

Upcoming events: 1Q 2012 – NDA submission for DR Cysteamine in the treatment of nephropathic cystinosis.

Raptor Pharmaceutical Corp. (NASDAQ:RPTP) –based in Novato, CA engages primarily in the reformulation and enhancement of existing therapeutics for the treatment of various diseases. Currently, attention is focused on the planned submission of an NDA for of the lead compound, RP103, for the treatment of nephropathic cystinosis, a condition which is characterized by the accumulation of the amino acid cystine within cells. For a detailed background on the company, see previous article here. Recently, RPTP held a pre-NDA meeting with the FDA (press release here), and states their intention to submit an NDA in 1Q 2012. I would anticipate this application to be a 505b2, a reformulation, and thus have a shorter approval timeline. Raptor has obtained orphan drug designation in both the U.S. and Europe, and recent phase 3 data (and subsequent follow-on study data) would support approval. For an overview of the phase 3 data (and subsequent share price drop, see this previous article)

Financially, a recent capital raise bolsters the balance sheet, adding $42.89 MM to Raptor’s coffers and providing the capital necessary for a launch, and removes near-term financial uncertainty. Also, because the target patient population is extremely small for this disease (~500 in the U.S., 2000 worldwide) and well-defined, a launch will not be capital intensive (relatively speaking!). RPTP has also done extensive outreach with the physicians treating this disease and it would appear that Raptor is poised to capture significant market share quickly. One caveat though is pricing. With orphan drug pricing, or in this case ultra orphan drug pricing, Raptor hopes to reap extremely high margins in this small patient population and use the proceeds to achieve profitably and pay for additional clinical trials in their higher risk pipeline. Skeptics may point out that since the phase 3 trial was powered to show non-inferiority, and on average, the daily dose of active ingredient, Cystagon was 82% of the starting dose, that payors may balk. In addition some may argue that simply removing 2 doses (twice daily vs. 4x daily) does not justify premium (e.g., > $80,000 a year price tag).

Bulls point out that the shortcomings for the current standard of care, Cystagon, are indeed significant and that the positive reception from the patient community is evidence of this, even if the primary endpoint of the study was “non-inferiority.” Indeed, the reported low patient compliance supports this argument.

Conclusion and Future Directions: With an NDA filing in 1Q 2012, Raptor looks to be potentially generating revenue by the end of 2012. Given that this is an ultra orphan indication with a well-defined patient population, Raptor should be able to successfully market the drug on their own, as they have stated they are “on a first name basis” with the major cystinosis players. While investors will not know pricing for a while, Raptor believes the advantages its products convey over the current standard of care justify premium pricing (in addition to large market share).

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

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