Founded in 1988, Avanir Pharmaceuticals, Inc. (NASDAQ:AVNR) focuses on the acquisition, development, and commercialization of novel products that target central nervous system disorders. With lean operations and a steady commitment to their flagship drug, Avanir successfully received FDA approval in 2010 for NUEDEXTA, a combined dextromethorphan/quinidine treatment for pseudobulbar affect (PBA). Furthermore, Avanir has a history of engaging in lucrative partnerships, most notably negotiating a drug royalty agreement for its docosonal 10% cream with marketing partner GlaxoSmithKline Consumer Healthcare, which is sold as Abreva® in the United States and Canada as the only over-the-counter cold sore treatment approved by the FDA (expired April, 2014). Based on this recent history and a pipeline with seven leads in Phase I/II trials (including a potential game-changing alternative for Alzheimer's, Parkinson's, and autism patients in AVP-923), the company is well-poised to have a series of successful drug ventures in the coming years. Further validating this outlook, it was recently announced on December 2, 2014 that Avanir would be acquired for approximately $3.5B by Otsuka Pharmaceutical Co., Ltd. (OTCPK:OTSKY), who shares a focus on central nervous system disorders.
Prior to the acquisition announcement, with a looming November 26th PDUFA date for their drug-device combination AVP-825 (for treating acute migraines), the company announced preliminary feedback from the FDA concluding that approval of AVP-825 may be unlikely due to insufficient human factor validation data. Industry analysis varied on a spectrum, from optimism over an efficacious drug with an amendable device application, to pessimism that suggested the full FDA review could reveal additional concerns about the drug's Phase III trial. The FDA's Complete Response Letter (CRL), issued on November 26th, sided with the more optimistic outlook. After reviewing the published scientific evidence, we believe that AVP-825 has a sufficient safety and efficacy profile and that the FDA's inquiry over human factor testing is a relatively minor hurdle that will be overcome once the human-device interface is optimized.
Migraine is a common headache with severe pain on one or both sides of the head. It frequently co-occurs with other symptoms, including nausea, vomiting, visual disturbance, and sensitivity to light. Evidence suggests that a large portion of the US population (17-23%) experiences at least one migraine across a three-month period. While definitive mechanisms remain unclear, migraines are thought to be caused by abnormal brain activity that can be triggered by a range of stimuli (e.g. caffeine withdrawal, changes in hormone level, sleep patterns, alcohol consumption, stress, etc.). Migraines contribute to ~12 million outpatient medical visits per year in the US, of which ~50% result in prescription of anti-migraine drugs. About 80% of migraine prescriptions are tryptamine-based drugs, of which ~50% are sumatriptan (an agonist of the 5-HT/serotonin neurotransmitter; Imitrex®, GSK). Despite the high prevalence and prescription rate for migraine, recent studies suggest that ~66% of frequent migraine sufferers are dissatisfied with current treatments.
There are different options for sumatriptan delivery that are currently available, with pros and cons for each (ref1, ref2). Oral tablet is the most commonly used delivery method and the easiest to administer. However, the absorption is frequently delayed or inconsistent due to migraine-associated gastrointestinal (GI) symptoms. [H4] Subcutaneous (SC) administration shows the fastest and highest efficacy, but it is associated with high incidence of adverse effects (AES) and patients are frequently reluctant to use the form of SC injection. Lastly, liquid nasal spray has been developed to take advantage of fast absorption through nasal cavity, while eliciting fewer AEs than SC injection. However, suboptimal drug deposition in the non-ciliated anterior part of the nose causes less efficient drug absorption. AVP-825 is a drug-device combination in which low-dose sumatriptan powder (22mg) is delivered through breath-powered intranasal delivery system (developed by OptiNose). AVP-825 delivers the drug more efficiently to the superior posterior part of the nose versus the liquid spray, according to data gathered by Gamma camera imaging. The company's pharmacokinetic (PK) study on oral, SC, nasal spray, and the AVP-825 breath-powered intranasal administration of sumatriptan also provides empirical support to the known/claimed differences in safety and efficacy profiles for different delivery methods.
The company has performed a well-controlled randomized, double-blinded study of AVP-825 comparing to placebo device with lactose powder on 212 migraine patients, dubbed the TARGET Study. In this study, the participants were asked to self-report a headache severity score scaled from 0 to 3 (with 0 being no pain and 3 being severe pain) at multiple time points up to 2 hours, at 24 hours, and at 48 hours post-dose. Other metrics including functional disability score and presence of migraine-associated symptoms were also recorded.
The primary endpoint was headache relief (defined as headache severity score change from 2/3 to 0/1) at 2 hours post-dose. The results showed significantly higher number of patients with headache relief under AVP-825 compared to placebo device at 2 hours post-dose (70% vs. 45%, p=0.002). The difference in headache relief between AVP-825 and placebo is significant as early as 30 minutes post-dose. The long-term headache relief is also significantly different between AVP-825 and placebo (44.4% vs. 24%, p=0.002 at 24 hours; 23.3% vs. 20.2%, p=0.01 at 48 hours post-dose). Various measures, including number of pain-free patients, use of rescue medication after 2 hour assessment, number of total migraine-free patients (i.e. no associated symptoms), functional disability scores, have shown significant improvements by AVP-825 compared to placebo. While use of AVP-825 has shown improvements in migraine-associated symptoms (e.g. nausea, photophobia, phonophobia) compared to placebo, though the differences have not shown to be statistically significant.
With regards to the safety profile, there have been no serious AEs reported in the TARGET study, including so-termed "triptan effects" (i.e. atypical sensations), or chest/jaw/neck tightness. The most commonly reported AEs include abnormal product taste (22% vs. 4%) and nasal discomfort (13% vs. 2%). No clinically significant changes were noted in lab values, vital signs, or ECGs.
In summary, AVP-825 has superior efficacy and onset to the existing nasal liquid spray and oral tablets. The pharmacokinetic study suggests that the breath-powered intranasal delivery in AVP-825 approaches a similar profile to SC delivery, without the patient discomfort or anxiety over administration. The safety profile is excellent without associated triptan effects, which have been experienced in oral and SC administration. AVP-825 also appears to have fewer AEs than comparable drug-device combinations that were recently approved, such as Sumavel DosePro (needle-free SC injection of sumatriptan) and Zecuity (sumatriptan skin patch). The FDA's CRL was relatively optimistic and consistent with their preliminary feedback, citing the necessity of a new human factors validation study upon the improvement of AVP-825's device component. The CRL did not report any additional clinical or non-clinical safety or efficacy concerns, and did not issue a request for additional clinical trials. Avanir reports that they are working closely with the FDA to further understand concerns prior to repeating the human factors study, with the goal of responding to the CRL within the first 6 months of 2015. Based on the scientific and pharmacokinetic data, we believe AVP-825 has a favorable efficacy/safety profile and will ultimately receive FDA approval upon improvements to the usability of the device. As per the official press release, the acquisition by Otsuka will allow Avanir to continue operating under its current structure as an independent subsidiary of Otsuka America, Inc., with the transaction to be completed within the first quarter of 2015. We expect that the approval of AVP-825 will benefit Otsuka's stock price in the near term.
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Additional disclosure: Beacon VP Investments is a team of analysts. This article was written by Jacques Guyette and Hyun Ji Noh on behalf of Beacon VP Investments.