By Slingshot Contributor Phil Loria
This week I will discuss recent developments with Eli Lilly (NYSE:LLY) and BioDelivery Sciences (BDSI) that have caught the attention of many biotech investors. On Tuesday, Lilly announced that they are changing the endpoints in their Phase III trial (EXPEDITION3) evaluating Solanezumab as a therapy for mild Alzheimer's dementia, prodromal Alzheimer's dementia and preclinical Alzheimer's disease. Originally the trial had co-primary endpoints of cognition and function; it will now use cognition as the single primary endpoint with functional outcomes being used as key secondary endpoints.
This is a surprising move because it goes against regulatory guidance and was done without approval from the FDA. The trial is well underway with final results expected to come in the fourth quarter. Amending primary endpoints this late in a program without advice from regulators is almost unheard of, and it certainly raises a lot of questions about the trial. Although there is no cure for Alzheimer's, there are several approved drugs that are used to help patients with cognition and function. In their last release from a pre-specified secondary analysis of the Phase III trials, the data suggested that (Solanezumab) had an effect that is consistent with slowing progression of disease by modifying the underlying disease progression. Alzheimer's therapies have rarely done well in trials, and any drug that can demonstrate a positive effect on cognition and function, and receive approval, will find its place as a blockbuster in the market. With a positive readout of the EXPEDITION3 data, Solanezumab could be that drug. However, the recent amendments from Lilly raise a lot of questions and conducting an expert interview will help investors address these concerns.
The second topic relates to new guidelines released last Tuesday by The Centers for Disease Control and Prevention (CDC) regarding the overuse of opioid painkillers in the U.S. Although there are no new requirements, the guidelines urge doctors to use physical therapy and non-opioid painkillers as frequently as possible. They also ask doctors to use the lowest dose and monitor patients closely for addictive behavior, suggesting the drug should rarely be prescribed for more than seven days. Opioid sales have been declining over the last few years and some experts expect the new guidelines to continue to take away from the opioid market. The more doctors move away from traditional opiate treatments, the more it opens the door for new safer options to gain market share. BDSI's BELBUCA could put the company in a great position to capitalize on this movement away from opiates like oxycodone.
BELBUCA is being marketed by Endo Pharmaceuticals (ENDP) and just became available in the U.S in February. BDSI is set to receive mid to upper-teen royalties on future sales of BELBUCA in the U.S. and up to $55 million in potential sales milestones. The drug has a Schedule III label and is a film containing an opiate, buprenorphine, that is applied to the lining of the cheek for patients requiring daily long-term opioid treatment. Because their proprietary buccal film technology improves the absorption of buprenorphine, its value proposition is that it may decrease the incidence of certain side effects and the misuse of opioids. In two Phase III studies, BELBUCA demonstrated significant improvement in pain relief with low incidence of opioid-like side effects. Given the recent guidelines from the CDC, we could see the rate of prescription for BELBUCA increase significantly this year, which would be a huge value driver for BDSI.
I would like to interview an expert focusing on BELBUCA and how the drug can benefit from recent CDC guidelines and initiatives from doctors and insurers to curb opioid abuse.
Option 1: Discussing the recent decision by Lilly to change the EXPEDITION3 co-primary endpoints of change in cognition and function to just cognition. How does changing endpoints so late in a program affect Solanezumab's chances of approval?
Alzheimer's Disease is the most common form of dementia (60-80% of cases) causing continuous deterioration of memory and other aspects of cognition. It is a fatal illness and there are an estimated 47 million people worldwide living with dementia; but some experts expect that number to grow to around 130 million by 2050.
Although there is no cure, the FDA has already approved cholinesterase inhibitors (such as Aricept and Exelon) and memantine (Namenda) for the treatment of Alzheimer's cognitive symptoms including confusion, memory loss and problems with reasoning. Solanezumab is a monoclonal antibody that works by binding to amyloid-beta so it can be cleared before it sticks together to form plaques. The Phase II trial used a delayed-start analysis to assess a possible disease-modifying effect of the drug, which, according to Lilly, has not been studied before. The Phase III results expected in Q4 will confirm if Solanezumab actually has these disease-modifying effects that current treatments lack. Solanezumab and approved treatments do not have serious risks in terms of their safety profile, so efficacy will determine who controls the market. If Phase III proves that Solanezumab has a disease-modifying effect it will likely overtake current treatments.
However, Lilly's decision this week to change co-primary endpoints just months before final data collection leaves some questions to be answered. Investors are wondering why a company would make such a huge decision on a blockbuster candidate this late in the program. Lilly claims the decision is related to new scientific evidence proving that cognitive decline precedes and predicts functional decline in Alzheimer's patients. I hope to interview one of the authors of the 2015 paper "Cognitive and Functional Decline and Their Relationship in Patients with Mild Alzheimer's Dementia," to get a better understanding of the situation. He or she will be familiar with these two endpoints and should help investors understand what argument Lilly is using to support their decision. Here are some questions I'd like to ask.
Questions for one of the authors of the 2015 paper "Cognitive and Functional Decline and Their Relationship in Patients with Mild Alzheimer's Dementia." He or she will have a broad understanding of Alzheimer's and the current scientific understanding of these two endpoints.
- Please discuss the findings of this study looking at cognitive and functional progression during the 18-month study.
- In light of this study, how much better understood is the course of disease in Alzheimer's?
- Why do you think the FDA was reluctant to embrace this study design change? Do you think it was due to a lack of robustness in the data or more a clinical trial integrity issue?
- Do other Alzheimer's trials have supporting evidence of what was seen in this study? Has that analysis been published anywhere?
- Based on the changes to EXPEDITION3, how does that impact your view of Solanezumab's chances for success?
- Do you think this might result in a positive trial, but not approval? How engaged is the FDA on this shifting science?
Changing co-primary endpoints to a single one focused on cognition is a huge decision this late in a program. This interview will try to give investors a better understanding of the implications of Lilly's decision to submit amendments to the Solanezumab trial. Talking with one of the authors of a recent paper on the relationship between the two measures should help clear up the argument and data Lilly used to make this decision.
Option 2: Discussing the potential of BDSI's recently commercialized BELBUCA. Is the efficacy strong enough for it to compete with other opioids? Is the market actually demanding and open to a schedule 3 painkiller?
As discussed earlier, BELBUCA is a buccal film containing a class III opiate (buprenorphine) that is inserted into a patient's cheek for the management of severe pain requiring long-term opioid treatment. The drug has demonstrated strong and durable efficacy with rates of adverse events comparable to placebo. Because it comes in seven strengths and uses a film delivery method, experts expect the drug to have lower rates of misuse and incidence of certain side effects.
Due to their high potential for abuse and the prevalence of negative side effects, opioid sales have been declining. With the CDC guidelines recently released and the plan put forth by the Obama administration last year, this trend should continue in 2016.
BDSI is currently trading around $2.75 a share, down from its 52-week high of $15.50. This huge decline is likely due to the widespread sell-off in biotech and pessimism from investors who are wary of BELBUCA entering a crowded market. Although opioid pain relievers are a flooded market, BELBUCA's unique delivery method and characteristics put BDSI in an interesting position to benefit from the CDC guidelines. Their stock may be down on the year, but success with BELBUCA could send BDSI way above its 52-week high in 2016. I'd like to interview an expert in pain management to see if BELBUCA's sales can really benefit from these new guidelines. Here are some questions I would ask.
Questions for an expert with significant experience in pain management. He or she must be aware of the label, data and profile for BELBUCA.
- How significant a concern is opioid dependence in your practice on a day-to-day basis vs. the significant media/political headlines we see on the topic?
- Can you please describe your impression of the BELBUCA label? We can get into details, but specifically the efficacy and how it compares to your current options.
- How do you see insurers viewing BELBUCA versus cheap generic opioids?
- Can you please describe how you see BELBUCA's profile vs. ER Opioids when it comes to abuse and risk of developing addiction? From a practical/ clinical perspective vs. theoretical?
- What percent of your patients do you see prescribing BELBUCA to, if initial patient experience is in line with the expectations you described?
- Will the recent guidelines from the CDC encourage you to alter your prescribing habits? What percentage of your current patients would you consider switching from existing therapies to BELBUCA?
- Do you think the changes in the CDC guidelines will drive lawsuits against doctors that do not follow them? Do you think that doctors will follow the guidelines for fear of lawsuits very quickly?
With the countless headlines surrounding addiction and abuse of opioids over the last few years, this conversation will analyze the importance of BELBUCA. The discussion will focus on the efficacy of BELBUCA compared to other opioids and if the market will actually demand a schedule 3 painkiller. This information should help investors create more accurate valuations of BDSI going forward.
You Choose the Stock: Interactive Voting
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Readers of Seeking Alpha that would like to access the winning call may do so free of charge with the coupon code that will be listed on the project page. 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 am/we are long BDSI.
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.