Trabodenoson, A New Treatment For Glaucoma

| About: Rocket Pharmaceuticals, (RCKT)
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Summary

Inotek is a high-risk catalyst play, as its main drug has a good chance of approval.

Trabodenoson phase I/II trial was positive in reducing intra-ocular pressure.

Trabodenoson phase 3 results due at the end of this month.

Investment Thesis

Inotek Pharmaceuticals is due to release their phase 3 results regarding trabodenoson, their main drug candidate, that will push the stock up to $15-$20 or down to $5/share. I believe the phase 3 data will be positive, based on previous trial results.

Company Overview

Inotek Pharmaceuticals (ITEK) is a biopharmaceutical company focused on the treatment of glaucoma, an eye disease. The company, which has a market cap of $180 Million, has developed trabodenoson, its lead candidate to treat glaucoma.

A Brief Overview of Company Financials

The recent 10-Q filing filed in November 2016, the company closed a underwriting public offering of $52 Million in August 2016, in which the company received $48 Million. At the end of September 2016, Inotek has reported $137.6 million of cash and cash equivalents and short-term investments, which is sufficient enough to run operations until mid-2018. However, the cost of their expense will increase as trabodenoson moves further in development. For instance, Inotek has spent $22.5 million from Jan 2016 to the end of Sep 2016 in research and development compared that to same time frame of last year, which was $6.6 million. Currently, Inotek has no source of revenue and their only ability to generate revenue depends on the success of trabodenoson.

Disease Background of Glaucoma

Glaucoma is associated with optic neuropathy that will lead to vision loss and eventually blindness. There are two types of glaucoma; open-angle and closed-angle, open-angle glaucoma is the more common of the two. There are numerous causes of glaucoma with the end result being an increase in intraocular pressure (IOP) and retinal cell death which will eventually lead to blindness. It is expected that by 2020, 3.36 million people in the United States will have glaucoma.

Current Drug Treatments

There are numerous drug classes to treat glaucoma:

  1. Prostaglandin analogs - Latanoprost (Xalatan), Travaprost (Travatan Z), Bimatoprost (Lumigan), Tafluprost (Zioptan) - These drugs work by reducing IOP by increasing the outflow of aqueous fluid in the eye.
  2. Alpha2-adrenergic agonists - Brimonidine (Alphagan) - works by decreasing the production of aqueous fluid in the eye and increase outflow of the aqueous fluid.
  3. Beta Blockers - Timolol (Timoptic, Betimol, Istalol), Levobunolol (Betagan), Carteolol (Ocupress), Betaxolol (Betoptic-S) - works by decreasing the production of aqueous fluid.
  4. Carbonic anhydrase inhibitors - Brinzolamide (Azopt) , Dorzolamide (Trusopt) - works by decreasing the production of aqueous fluid

There are other drugs available in these classes to treat glaucoma but were not mentioned due to them being rarely prescribed.

Trabodenoson

Trabodenoson, a selective A1 adenosine mimetic, is in a new class of drugs, to treat open angle glaucoma. It works on the trabecular meshwork by increasing outflow of the aqueous fluid inside the eye

Clinical Trials

Study:

A Dose-Escalation Study to Evaluate the Safety, Tolerability, Pharmacokinetics, and Efficacy of 2 and 4 Weeks of Twice-Daily Ocular Trabodenoson in Adults with Ocular Hypertension or Primary Open-Angle Glaucoma

Study Design:

The study was conducted in 2 parts comprising 3 stages, with Part 1 consisting of Stages 1 and 2 and Part 2 consisting of Stage 3, with a total of 144 people

  • Stage 1: The subjects were randomized in 1:1:1 ratio to receive trabodenoson 50mcg, 100mcg or placebo
  • Stage 2: The subjects were randomized in 2:1 ratio to receive trabodenoson 200mcg or placebo
  • Stage 3: The subjects were randomized in 1:1 ratio to receive trabodenoson 500mcg or placebo

Results:

  • Safety: No clinically meaningful adverse effects occurred
  • Efficacy: The trabodenoson 500mcg group showed a statistically significant drop in IOP compared to placebo (p-value = 0.0163)

Based on the phase I/II results, Inotek is currently undergoing a phase 3 trial, 12 week duration with an enrollment of 355 subjects, with results due at the end of December 2016.

The participants will receive trabodenoson 1000mcg daily, trabodenoson 2000mcg daily, trabodenoson 1500mcg twice a day, timolol 0.5% twice a day, or placebo twice a day.

It is important to note, that the statistical analysis will be compared to the placebo group and not the timolol group.

The Risks

The primary short-term risk foreseeable is trabodenoson fails to be more effective than placebo, which would make this stock price, as well as the company a complete zero. Trabodenoson is the only drug in Inotek pipeline, which means its future relies on the outcome of the phase 3 trial.

Furthermore, the company ran only one phase I/II trial comparing it to placebo and then advanced it to phase 3, without ever doing a true phase II trial. It also ran a phase II trial with latanoprost but never released its data, which seems odd. I suspect that the result showed no difference between the two groups and is the reason why the company did not release that particular dataset.

In the event that its phase 3 trial results are successful, it will have then need to apply for a NDA, and then face an uphill battle in marketing the drug, in a space where a majority of the FDA approved glaucoma drugs are generic.

Conclusion

I believe the phase 3 results expected in the end of December 2016 to be statistically significant compared to placebo based on the phase I/II trial. Although, the trial was short in duration, the FDA deemed it sufficient enough for it to run a phase 3 trial against a placebo. The phase 3 trial is using a higher dose then in the phase I/II trial and comparing it to placebo and it is why I am leaning towards a positive result. However, it does seems fishy that the company did not release the data from it phase II trial comparing the combination treatment of trabodenoson and latanoprost compared to timolol and latanoprost. I hold no position currently but will take a position in the stock if it falls below $6.05 before data release.

Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in ITEK over the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.