3 Upcoming FDA Decisions to Watch Closely

Includes: DCTH, GSK, PLX
by: M. E. Garza

By Patrick Crutcher

With Avanir's recent FDA approval, it's important to note how important the FDA’s Special Protocol Assessment (SPA) program has become for biotech companies. We want to address what an SPA means and some upcoming FDA decisions that investors should have on their watchlist.

To start things off, an SPA is an agreement between the FDA and sponsoring company that an uncompleted Phase III trial's design, clinical endpoints, and statistical analyses are acceptable for support of FDA approval later (assuming data support the efficacy and safety of the product). Essentially the FDA provides official evaluation and written guidance on the design, statistical analyses and size of proposed protocols which could be used to form the basis for an NDA.

This can prevent a lot of headaches for companies, especially considering that the incorrect statistical interpretation of trial results could eventually lead to rejection. Ask Genta how that ended up with Genasense. However, we should be cautious in saying that an SPA does not guarantee approval; since these are private agreements, it is difficult to even know if the company followed them to the letter. By my tally, the FDA has given out 4 CRLS to NDAs whose pivotal trial had an SPA (Encysive Pharmaceuticals (ENCY)/GPC Biotech (GPCB)/ Cell Therapeutics (NASDAQ:CTIC)/ Vivus (NASDAQ:VVUS)).

With all that said, we want to highlight 3 biotech companies with SPAs for their pivotal trials that have upcoming and potential FDA decisions in 2010 and 2011.

First up, we have Human Genome Sciences, Inc. (Nasdaq: HGSI) with their treatment for antibody-positive patients with systemic lupus erythematosus (SLE), Benlysta. They have an FDA advisory meeting on November 16th with a PDUFA date of December 9, 2010. HGSI/GSK ran 2 Phase 3 trials (BLISS-52/BLISS-76) under an SPA. The duration of these trials was 52 weeks for BLISS-52 and 76 weeks for BLISS-76.

We are very optimistic of a favorable decision. Benlysta met its primary endpoint in both Phase 3 clinical studies and improvements in quality-of-life. There is some minor concern about the data given that the trial did miss some secondary endpoints in one trial and efficacy appears to have waned at week 76 vs. week 52. For what it’s worth, there hasn't been any other lupus treatment in 50 years. Many lupus organizations are overwhelmingly supportive of Benlysta, as there is considerable pressure for new treatments for lupus.

We should note that Benlysta is partnered with GlaxoSmithKline (NYSE:GSK) under a co-development and commercialization agreement. Essentially, HGSI and GSK will share equally in Phase 3/4 development costs, sales/marketing expenses, and profits. Analysts' expectations are very high, with some projecting peak annual sales of $3-4 billion, especially considering the potential high price tag it will command. GSK has also been seen as a serious candidate to acquire HGSI, if Benlysta is approved.

Second, we have Protalix BioTherapeutics Inc. (AMEX: PLX) and their treatment for Gaucher’s disease, UPLYSO (taliglucerase alfa). They have a PDUFA date of February 25, 2011. PLX partnered this program with Pfizer (NYSE:PFE) and they are taking aim at Genzyme’s (GENZ) Cerezyme. Their efficacy data appears very good, but it is their safety data which has made UPLYSO very attractive. The primary endpoint (mean reduction in spleen volume after 9 months compared to baseline) was met by both the 60 U/kg dose and in the lower 30 U/kg dose treatment groups (P<0.0001). They also posted statistically significant results in secondary endpoints. Both doses were well tolerated and no serious adverse events were reported. Most adverse events were mild and not drug related. Their immunogenicity data also appear to have a better profile than Cerezyme.

They use a plant cell-based manufacturing process in order to produce UPLYSO. They were slowed down earlier this year when the FDA wanted more CMC data regarding their manufacturing process. The request focused primarily on validation of the manufacturing process at an upgraded manufacturing facility. This process is seen to be vastly less expensive than Genzyme’s, which in turn would allow them to offer UPLYSO at significant discount to Cerezyme, which runs about $200,000/year. Genzyme had sales of $1.2B in 2008. Recently, they have had supply and manufacturing problems that have hindered sales. PLX just recently posted study results from a small 9-month study showing that patients can safely be switched to taliglucerase alfa from imiglucerase (Cerezyme).

PLX already has significant interest in UPLYSO from the Brazilian government, which reportedly signed a deal with PLX and Pfizer worth $730M, allowing it to manufacture and supply UPLYSO to its Gaucher patients over 5 years. Again, approval would validate their ProCellEx technology for the development, expression and manufacture of recombinant proteins. They have significant insider holdings, especially from TEVA CEO, Phillip Frost, who holds roughly 7.6M shares.

Last, we have been bullish on Delcath Systems (NASDAQ: DCTH) the past month or so and continue to reiterate this sentiment. DCTH had a SPA for their pivotal trial and will likely receive a priority review (6 vs. 10 months) once they submit their NDA. DCTH was the talk of the town at ASCO after they presented very compelling data for their PHP system. See our recent update on DCTH (below). Declines in price will present gifts for the wise investor.

Disclosure: Long DCTH, HGSI and PLX

HGSI BLISS-52 top-line data - http://bit.ly/ccwI1X
HGSI BLISS-76 top-line data - http://bit.ly/974RES
PLX top-line data - http://bit.ly/aWtdAu
Recent coverage on DCTH - http://biomedreports.com/2010102658875/update-on-delcath.html