Slingshot Contributor: Phil Loria
Option 1: Analysis of current treatment options for endometriosis and the chances of approval for Elagolix. Does Neurocrine (NBIX) and AbbVie's (ABBV) Elagolix have the potential to become the standard of care?
Most investors don't consider AbbVie a company with significant growth prospects, but anytime an analyst estimates peak sales over $1 billion for a drug, it certainly grabs people's attention. In 2010, Abbott Laboratories (now AbbVie) and Neurocrine agreed to a $575 million deal to develop Elagolix, sending $75 million to Neurocrine upfront and making it eligible for around $500 million in milestones and royalty payments on any future sales. Experts are excited about the potential of the drug, and positive results from its second Phase III trial were released this week. If Elagolix can continue to demonstrate these results, AbbVie will move forward with a New Drug Application (NDA) filing in the U.S. in 2017. The drug has blockbuster potential and could certainly provide revenue growth for both companies starting in 2017. Given the current skepticism in the market and the fact that ABBV hasn't started regulatory filings for Elagolix, some investors believe this potential growth is not already priced into AbbVie or Neurocrine's securities.
Endometriosis is a disorder caused by tissue similar to the lining of the uterus forming colonies or "implants" outside the uterus. It is a leading cause of infertility, and symptoms include pain related to menstruation as well as chronic pelvic pain through the menstrual cycle. Endometriosis can lead to a chronic inflammatory reaction or scar tissue development and affects an estimated 176 million women worldwide. There is no known cure, but it can be treated and managed effectively with oral contraceptives, NSAIDs, opioids, and GnRH agonists. Unfortunately, most of these treatments have serious side effects and are unsustainable for long-term use. There are also surgical interventions to remove lesions and scar tissue, but success rates vary and surgeries often need to be done repeatedly. Elagolix is a formulation of gonadotropin-releasing hormone or GnRH antagonist, and is believed to exert its effect through titrating circulating estrogen levels. Experts believe this mechanism will provide relief from pain without the negative side effects or need for active management of bone loss associated with current treatments.
Our interview will analyze the clinical results to determine if the optimism around Elagolix is warranted. Getting an expert opinion on the validity and relevance of the data will help investors understand the drug's chances of approval in 2017, and how many patients the drug will actually reach. If the expert interview gives confidence in the chances of approval and their sales projections match previous projections, it could lead to significant growth for Neurocrine. It would also add another big revenue drug to AbbVie's portfolio, which would help it maintain the consistent growth it has shown since 2013. Here are a few of the questions I'd like to ask.
Questions for a leading endometriosis expert with the ability to talk about AbbVie's recent Phase III data. Ideally he or she will have experience treating patients and a knowledge of other current treatment options.
How many sufferers are identified and realistically seeking treatment in your practice today, and how do you treat them?
What are the characteristics that make a woman seek treatment? Is there a percent you can break down for us that makes the epidemiological estimate of 176 million endometriosis patients more understandable?
What are the costs of current therapies? Will Elagolix have a higher cost than current therapies?
What are the health impacts from not treating, or just treating with pain killers? Is an inability to become pregnant something this drug could fix?
In the latest global study, the pharma company said that both doses of the treatment - 150 mg and 200 mg - significantly reduced patient scores on menstrual pain (dysmenorrhea) (DYS) and non-menstrual pelvic pain (NMPP) compared with a placebo. What is the clinical relevance of this result?
Is placebo the right comparator in your mind for this trial? It might make sense since no other treatment is approved, but do you think clinicians will be comparing it to other pain killers in reality?
If so, how does this data compare to what you see in these patients?
Based on the success in the PETAL study, do you see any reasons the second Phase III trial, Solstice, may not succeed?
What percentage of current patients seeking treatment will switch to Elagolix if it receives approval in your practice?
What impact on women seeking treatment would an approved therapy have in your opinion? I.e. new patients that currently are not on any prescribed therapy?
Do you think this indication and disease is a substantial unmet medical need or something sort of being created or hyped by a pharma company?
This interview will seek to give investors a better understanding of endometriosis and how much Elagolix may generate sales if it can receive regulatory approval. Clinical relevance and interpretation of Phase III results will also be main points of the discussion.
Option 2: Evaluating recent Phase III data on Flexion's (FLXN) Zilretta and other existing treatment options for knee osteoarthritis. Can the drug receive approval and become the standard of care over nonsteroidal antiinflammatory drugs (NSAIDS), COX II inhibitors, and opioids?
Flexion is lesser known to investors, and currently has no approved products in its portfolio. Zilretta is its lead candidate, and despite failing its Phase IIb trial, Flexion believes it "has the potential to make a real difference for the many millions of patients with symptomatic knee OA". It just released successful Phase III results, and the market responded optimistically with shares up 31% pre-market. No patients discontinued the trial or showed serious drug-related adverse events, meaning Zilretta is unlikely to have the black box warning for serious or fatal side effects that comes with current oral OA treatments (non-steroidal anti-inflammatory drugs (NSAIDS), COX II inhibitors, and opioids). Doctors like to avoid prescribing habit-forming opioids when they can, and Zilretta could capitalize on its superior safety profile if it demonstrates the efficacy data needed for approval. Flexion intends to file its NDA with the FDA in the second half of 2016. Zilretta looks poised to become a real value driver for the company and the first approved drug in its portfolio, but some real questions surround its approval.
OA is the most common form of arthritis in the knee and its effect is described as a degenerative "wear-and-tear". The condition causes the protective space between bones in the knee to deteriorate and symptoms include swelling and pain of the knee joint. Before the Phase III readout, Flexion failed its Phase IIb study and the market responded with a huge sell-off of its shares.
Considering Zilretta failed its Phase IIb trial and faces a cheap generic and entrenched larger companies in the OA space, investors are wary of Flexion. There are also still questions to be answered regarding the Phase III data recently released, specifically the fact that Zilretta was numerically superior at weeks 2 through 12 on the daily pain rating scale and still did not achieve statistical significance in that measure. With respect to commercialization, the cost of the active comparator, immediate-release triamcinolone acetonide (TCA), being so low is a major concern. The question our interview will try to answer is if Zilretta can overcome all these obstacles and not only get to market, but also drive Flexion to profitability.
An expert will break down the results of both trials and give us a better understanding of Zilretta's overall efficacy and chances of being approved. This should give investors the information needed to understand if Zilretta can compete with generic TCA, and guide its future expectations of Flexion's value. Here are a few questions I would like to ask.
Questions for a leading knee osteoarthritis expert with significant experience treating patients. He or she will have the ability to talk about Flexion's recent Phase III data in detail, and have knowledge of current treatment options.
Primary endpoint at week 12 against placebo achieved p value of <0.0001; statistically significant and clinically meaningful pain relief demonstrated at weeks 1 through 16. Can you discuss the clinical relevance of the results and the validity of this endpoint?
Flexion claims Zilretta minimizes systemic exposure and helps patients avoid the serious side effects common to oral therapies such as nonsteroidal anti-inflammatory drugs (NSAIDS), COX II inhibitors and opioids, which all have black box warnings for serious, sometimes fatal, side effects. Do you agree that Zilretta minimizes these effects?
Zilretta missed a secondary goal of significantly improving patient scores on a daily pain rating scale compared with triamcinolone acetonide, according to Flexion. What is the clinical relevance of this result? Does this result hurt the chances of Zilretta becoming approved? What about becoming standard of care?
Given the current data, what chances does Zilretta have of being approved by the FDA? Does the failed Phase IIb trial stand in the way?
How does Zilretta compare to current treatment options, in particular generic TCA? What percentage of new patients do you think will be prescribed Zilretta assuming it receives approval? What percentage of existing patients will switch to Zilretta?
Is medication rotation common in this patient population? Do you think at the very least Zilretta has the chance to become a medication that is part of the rotation?
The goal of this conversation is to assess Flexion's recent Phase III data and chances of regulatory approval in anticipation of 2016 NDA filing. The interview should help investors understand the market potential for Zilretta and future growth prospects for Flexion.
You Choose the Stock: Interactive Voting
Seeking Alpha readers can vote by commenting below which project they would like us to post on Slingshot Insights next week.
After the voting period ends, Slingshot Insights will interview a Subject Matter Expert, then post a transcript and recording of the conversation on our website.
- Vote now in the comments below/direct messages to me within the voting period to express your interest. Seeking Alpha readers can also join and add questions on Option 1: NBIX/ABBV here or Option 2: FLXN here and get expert insights to enhance your investment diligence.
This column is designed to be engaging for a wide variety of biotech investors. Not every company might be of interest to everyone, so stay tuned for next week's match-up!
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.