Written by Slingshot Insights Contributor Phil Loria
This week's column covers three companies: GW Pharmaceuticals (NASDAQ:NASDAQ:GWPH), Aimmune Therapeutics (NASDAQ:NASDAQ:AIMT), and DBV Technologies (NASDAQ:NASDAQ:DBVT). GW Pharma surprised Wall Street on Monday with positive Phase III data rallying over 120% from $38 per share to over $84. Despite this pop, it is still trading significantly below its 2015 high of $127.80. The question that remains is just how much the March 14th press release went to de-risking the two major Epidiolex programs currently underway. If we see Epidiolex approved for these two indications, GWPH would use this as a basis to file for approval in all indications of pediatric epilepsy, which would give it an estimated global patient population of 10.5 million. While it does have potential catalysts from other products, Epidiolex is its lead candidate, and GWPH will undoubtedly see significant movement in the next year from these developments. If the program is truly on the path to broad approval, significant upside could still exist in the shares today.
Aimmune and DBV Technologies are competing to become the first company with an FDA approved therapy for peanut allergies. There are an estimated 5 million people with peanut allergies in the U.S. and Europe alone who have no way of treating their condition other than avoiding peanuts altogether. Exposure to peanuts causes a potentially fatal reaction, and patients must have access to an epinephrine auto-injector in case of an emergency. Peanut allergies tend to stay with patients throughout life, and the rate of diagnosis has increased over the last few decades. Aimmune and DBV have been the leaders in conducting experiments giving patients immunotherapies (small doses of peanut proteins) in a controlled environment. They both recently released positive data (AIMT Phase II, DBVT Phase IIb) on their products, suggesting that they might desensitize patients to peanut proteins. They also both have plans to initiate additional trials in the area this year. If their products can continue to demonstrate impressive safety and efficacy results, we could see the first FDA approved therapy for peanut allergies hit the market in 2017. It is unclear whether one drug is superior to the other, and this will ultimately decide which direction each company moves in the future.
Option 1: GW Pharma announced impressive top-line data, but is the program fully derisked?
Epilepsy is a neurological disorder affecting 50 million people worldwide, with 10.5 million cases in the juvenile and pediatric populations alone. The disorder is defined by erratic seizures, but there are various distinct forms and its causes are largely misunderstood. Dravet syndrome is a form of epilepsy beginning in infancy that can lead to serious developmental delays and SUDEP (sudden unexplained death in epilepsy). Cognitive impairment begins around age two and stabilizes after age four, and it is estimated that 85% of patients survive to adulthood - although life expectancy is not well understood. Lennox-Gastaut is another severe form of epilepsy that starts in infancy and is defined by the presence of four seizure types: tonic, atonic, atypical absence, and myoclonic. Like Dravet syndrome, Lennox-Gastaut typically leads to developmental delays and is lacking in treatment options. Epidiolex has Orphan Drug designations for both indications, and is Fast Track tagged by the FDA for Dravet.
Patients with epilepsy are currently treated with anticonvulsants such as clobazam, clonazepam, levetiracetam, stiripentol and others. These treatments have serious negative side effects, especially in pediatric patients, including drowsiness, dizziness, and stomach discomfort. Because anticonvulsants can be toxic, they are ineffective in 30% of patients.
Epidiolex is a formation of cannabidiol (CBD) derived from marijuana plants that has demonstrated encouraging safety and efficacy data thus far. In three expanded access studies performed in 2015, Epidiolex led to greater than 40% seizure reduction at week 36 across all patients (n=194), and a seizure reduction of over 50% for Dravet patients (n=40). Only 3% of treatment-resistant patients had to discontinue therapy due to adverse events in the expanded access program published by The Lancet Neurology.
A recent call conducted by Slingshot Insights with a pediatric neurologist and epileptologist from the Oakland Children's Hospital highlighted two key details about Dravet: current treatment options are lacking, and the rate of diagnosis should increase in the future with improvements in genetic testing. The data we have to date tells us that Epidiolex could fill the need for a new treatment option for Dravet, Lennox-Gastaut, and other forms of pediatric epilepsy.
While patients can currently get CBD formulations from marijuana dispensaries, and many families are doing so given the limited treatment options at this time, doctors often express concerns about consistent dosing of CBD. The product from a marijuana dispensary is not regulated and quality controls are not in place the way they would be for an FDA approved drug. Additionally, given the political climate, the possibility exists that CBD suppliers could be shut down or face federal charges, leaving patients without access to the CBD treatment. If Epidiolex receives FDA approval, it will have much more credibility than CBD treatments from dispensaries, and it could replace anticonvulsants as the main treatment for all indications of pediatric epilepsy.
Questions for a pediatric epileptologist with experience treating patients with Dravet syndrome and a deep knowledge of GW Pharma's four ongoing studies of Epidiolex. He or she will have an understanding of current treatment options and the regulatory process.
Given the efficacy strength of the first Phase III trial in Dravet, what is your opinion of success in the other two Phase III trials in Lennox-Gastaut?
What are the key differences in Lennox-Gastaut vs. Dravet, and what degree of confidence and understanding do we have around how CBD works in these different types?
The company's press release described an imbalance in SAE rates between the treatment arm and placebo arm of 10-3. What do you make of this rate? What are the types of SAEs that wouldn't concern you? What number of SAEs overall might you have anticipated in a trial of roughly 120 patients without CBD being involved?
Do you think this treatment will remain limited to Lennox-Gastaut and Dravet syndrome patients if approved? Are there other refractory epilepsy patients you think could be targeted off label? How big are these groups?
Based on the data presented from an AE standpoint, do you think Epidiolex can ultimately become a broader standalone epilepsy treatment?
What sort of window remains for other Dravet compounds such as ZX-008 being developed by Zogenix? Is there still a need in this population and a chance to differentiate on side effects?
If time remains, a short discussion on the ZX-008 program would be helpful. How good is the early data, the side effect profile, and what market opportunity exists after the latest Epidiolex data?
Frequently as a company shows progress on its key programs, the value of its assets are not fully reflected in its share price. If the press release on March 14th truly de-risks the CBD program broadly, significant upside remains in the stock. Having an expert walk investors through the remaining risks, opportunity and competitive landscape will result in the ability to buy and hold the stock here with rational conviction.
Option 2: Analyzing Aimmune's AR101 compared to DBV Technologies' Viaskin Peanut. What does recent data say about their safety and efficacy? Which drug is more likely to receive approval and become standard of care?
Although there are varying levels of sensitivity, people with peanut allergies can experience difficulty breathing and circulating blood when exposed to the protein. It is one of the most prevalent food allergies and can lead to death in serious cases. There are no current treatments, and patients must avoid exposure to peanuts at all costs. If a patient is exposed to peanut protein, they must have an epinephrine auto-injector (such as EpiPen) on hand to prevent a potentially fatal reaction.
Aimmune and DBV Technologies are both developing therapies that desensitize patients with peanut allergies to a level believed to significantly exceed what is usually encountered in an incidental exposure. Both drugs are immunotherapies that work by continuously weakening the body's response to the allergen, but AR101 is administered orally and Viaskin is applied to the patient through a patch. In its readout of ARC002 Phase II data earlier this week, Aimmune emphasized that "all patients who completed 12 weeks of low-dose maintenance therapy were desensitized to levels of peanut protein beyond the 250-300 mg typically found in one peanut kernel." DBV had similarly positive data from their Phase II CoFAR6 trial and Phase IIb OLFUS-VIPES trials released this week. Viaskin met the primary outcome measure of percent of patients desensitized to peanut protein during an oral food challenge at week 52. Neither AR101 nor Viaskin demonstrated concerning side effects during their trials, meaning they could speed through the approval process if data can be replicated in Phase III.
There are, however, some questions surrounding AR101 and Viaskin. The design of the trials surrounding both drugs makes it hard to compare them to each other, and an expert opinion would help investors know if the safety and efficacy results are as positive as they seem. Additionally, both drugs have demonstrated similar results so far, and it is not clear if either has an advantage in efficacy or safety. In order to better understand the recent data and the chances of approval for both AR101 and Viaskin, I would like to interview an allergist with knowledge of both treatments. The interview should also help investors understand if either drug has an advantage in becoming standard of care. Here are a few questions I'd like to ask.
Questions for an allergist with significant experience treating patients with peanut allergies who has a deep understanding of the candidates from AIMT and DBVT. He or she will be familiar with the regulatory process and the active trials from both companies.
What do you do currently to help your patients with peanut allergies? What rescue therapies are used when patients are exposed to peanuts?
AIMT recently released positive data from its Phase II ARC002 trial, and DBVT released encouraging Phase IIb results from OLFUS-VIPES. Can you discuss the differences in how these trials were designed?
Can you discuss the differences in mechanism of action for AR101 and Viaskin?
Can you talk about any differences in dosing between the two drugs and how this could affect the number of doctors who prescribe each medication? Would you be more likely to prescribe an oral medication over a patch and vice versa?
Given the current data, what are the differences in efficacy and safety between AR101 and Viaskin? Does either drug have an advantage in efficacy? Does either have an advantage in safety?
How do these differences in safety and efficacy change your expectations on how many doctors will be prescribing each drug?
Do you have long-term safety concerns with using an immunological approach to treatment?
Given the current data on both drugs, are they likely to reach FDA approval? Does either drug have a better chance of being approved by the FDA than the other?
Assuming they both get approved, what percentage of existing patients will be prescribed AR101 and Viaskin respectively? What percentage of new patients will be prescribed AR101 and Viaskin respectively? What percentage of your patients are comfortable avoiding peanuts and carrying a rescue option, rather than proactively treating it?
Is either drug better fit for a particular patient subset, i.e. pediatric vs. adult patients?
How does the projected cost of AR101 compare to the projected cost of Viaskin? At what point does price become the deciding factor in choosing AR101 or Viaskin?
This interview will help investors understand the safety and efficacy of AR101 and Viaskin through a detailed analysis of their recent data readouts. Chances of approval and relative benefits of the drugs will be discussed as they race to become the first FDA approved treatments for peanut allergies.
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: GWPH here or Option 2: AIMT vs. DBVT here and get expert insights to enhance your investment diligence.
Readers of Seeking Alpha that would like to access the winning call may do so free of charge with the coupon code which 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!
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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.