Q3 Biotech Catalyst Watch: Phase 3 Data Releases (Part 2)

Summary

• 2017’s third quarter holds important data and regulatory releases with significant potential impacts on pharmaceutical share prices.
• In the next few weeks, we will look at PDUFAs investors should have on their radar in Q3. Phase 2 data was covered in my previous article.
• Investors informed on major market events can capitalize on their diligence. This article covers key Phase 3 data releases from ABBV, ACRX, ALNY, NKTR, PRTK, RDHL, SAGE, and TPBH.

The third quarter of 2017 is packed with an abundance of Phase 2, Phase 3, and PDUFA data releases about which diligent pharma investors should know. Some results expected in the third quarter, like those of Alkermes (ALKS) schizophrenia drug ALKS-3831, have already posted results. Over the coming weeks we will round out the overview with regulatory catalysts coming in Q3 (we covered Phase 2 data last week here) with the goal being to help investors develop a succinct summary of the Q3 landscape. Investors should care because these events will influence stock prices heavily and could provide a profitable opportunity.

Let’s take a look at upcoming Phase 3 data releases from 8 pharma companies: AbbVie Inc (NYSE:ABBV), AcelRx Pharmaceuticals Inc (NASDAQ:ACRX), Alnylam Pharmaceuticals, Inc. (NASDAQ: ALNY), Nektar Therapeutics (NASDAQ: NKTR), Paratek Pharmaceuticals Inc (NASDAQ: PRTK), RedHill Biopharma Ltd (NASDAQ: RDHL), SAGE Therapeutics Inc (NASDAQ: SAGE), and Theravance Biopharma Inc (NASDAQ: TBPH).

Phase 3 Data Coming Q3

ABBV: Using Upadacitinib (ABT-494) to Treat Rheumatoid Arthritis

ABBV expects Phase 3 data from its SELECT-BEYOND Phase 3 trial evaluating its JAK1 selective inhibitor Upadacitinib (ABT-494) in rheumatoid arthritis [RA] sometime this summer. Importantly, a second Phase 3 trial for Upadacitinib (SELECT-NEXT) in rheumatoid arthritis posted positive results June 7, 2017. Promisingly, the trial met all of its primary and ranked secondary endpoints with statistical significance in both the 15mg and 30mg dosing groups. Investors should be dialed in to the outcome of this potential standout drug because it could have a big impact on share prices. There are about 1.5 million people in the U.S. with RA, and although there are already a number of effective drugs for the disease (Rituxan, Actemra, Humira, etc), ABT-494 is also in Phase 2 trials for ulcerative colitis, Crohn’s diseases, and atopic dermatitis. This broad effectiveness could make the drug ABBV’s next Humira. More info on the rest of ABBV’s gargantuan pipeline available here.

ACRX: Zalviso for postoperative pain following open abdominal surgery and hip or knee replacement surgery

Phase 3 data for Zalviso should be arriving mid 2017. Although ACRX is much smaller than most of the companies we are discussing (market cap ~$100 million), the post-op pain market for Zalviso could be quite large. Zalviso is already approved in the EU. Approximately 310,000 people had hip surgery in 2010 (more than doubling from 2000) and about 600,000 knee replacements occur annually in the U.S. Furthermore, these numbers are on the rise due to increasing obesity, greater interest in physical activity, and the elderly remaining active longer. Laparotomies address common issues like gallstones, pregnancy, pancreatitis, diverticulitis, many cancers, etc and make up the majority of general surgeries.

Existing treatments for post-op pain include opioids, local anesthetics, nonsteroidal anti inflammatory drugs (think aspirin, naproxen, ibuprofen, etc), and other non-opioid pain relievers like ketamine and acetaminophen. ACRX’s pipeline of 2 drugs both aim to address acute pain without being easily abused like some opioids. Disuvia/ARX-04 addresses moderate-to-severe acute post-op pain and has an NDA/MAA filed in the U.S. and EU respectively (NDA date is 10/12/2017). ACRX deserves investor awareness because the U.S. outcome for Zalviso may have a dramatic outcome on their stock price due to the major pipeline percentage the drug comprises and the large market it would enter.

ALNY: Patisiran for Hereditary ATTR Amyloidosis With Polyneuropathy (hATTR-PN)

ALNY expects Phase 3 data for its APOLLO trial evaluating the treatment of hATTR-PN with patisiran mid 2017. Phase 2 data results were positive and well tolerated in patients. The outcome of this Phase 3 trial is especially important for ALNY for three reasons: its lack of drugs on the market, the seriousness of the disease, and recent setbacks in its other Phase 3 trials.

Currently, ALNY has 3 drugs in Phase 2 or 3 development (patisiran, fitusiran, and inclisiran), but none on the market. Additionally, hATTR-PN represents an unmet medical need for about 10,000 people worldwide. ATTR amyloidosis is a debilitating and frequently fatal progressive disease caused by tissue deposition of transthyretin (TTR). The only approved treatment options for early stage hATTR-PN are liver transplantation and tafamidis (not approved everywhere) and patient life expectancy is only 5-15 years after symptom onset. These two options carry inherent risks, meaning a safe drug capable of meaningfully improving afflicted patients quality of life could fill a major hole in the market. ALNY’s lack of commercialized products and the severity of the disease, coupled with the 2016 termination of their Phase 3 hereditary ATTR amyloidosis with cardiomyopathy (hATTR-CM) drug revusiran last year (several patients died during the trial) mean the stakes could not be much higher for ALNY’s patisiran outcome.

NKTR: Using Inhaled Amikacin Solution (NKTR-061) to Treat Gram Negative Pneumonia

Phase 3 data for NKTR’s INHALE-1 trial evaluating NKTR-061 for the treatment of gram negative pneumonia should arrive in the third quarter. Phase 2 data showed patients received more than 1,000 times greater lung exposure to the antibiotic amikacin when used in conjunction with NKTR-061 compared to a similar IV treatment. The idea with NKTR-061 is to increase the penetrative power of the antibiotic amikacin for people with gram negative pneumonia. Whether or not this increased exposure will actually result in a worthwhile treatment remains the biggest question surrounding NKTR-061.

There are three groups of pneumonia stemming from the various sources of bacteria: gram negative, gram positive, and atypical. Although the incidence of different pneumoniae varies widely around the world and year to year, gram positive is the most common, gram negative is less common (rough estimates around 20%), and atypical is not usually frequent. Around 1 million people in the U.S. get pneumonia of some kind each year. Typically, azithromycin is used as the first line of pneumonia treatment because it covers most of the gram positive and some atypical/gram negative subgroups, but inhaled amikacin could become the second line of defense for those who don’t respond well to initial treatments.

In terms of other drugs in development, NKTR has a fairly extensive pipeline with two drugs approved in the EU (ADYNOVI and Onzeald) and around a dozen other trials for 10 drug candidates at varying stages. NKTR has partnered with large companies for most of its drug development (Bayer is the NKTR-061 partner), reducing both their risk and upside for each project. Because of the prevalence of pneumonia, NKTR-061’s potential impact on NKTR’s share price deserves your attention.

PRTK: Oral Omadacycline to Treat Acute Bacterial Skin and Skin Structure Infections (ABSSSI)

PRTK estimates Phase 3 oral omadacycline data for the treatment of ABSSSI will arrive mid July based on company estimates. Omadacycline is the first in a new class of antibiotics (amethylcyclines) related to tetracyclines aimed at addressing a similarly broad spectrum of diseases with the benefit of being new enough to avoid biologic resistances (tetracycline is almost 70 years old).

Past data on omadacycline is promising; a 2016 PRTK Phase 3 study for both oral and IV omadacycline in ABSSSI met all of its primary and secondary endpoints with clinical success rates in excess of 80%. These results were slightly better than those of the drug against which omadacycline was compared, linezolid. Furthermore, PRTK’s Phase 3 OPTIC (Omadacycline for Pneumonia Treatment In the Community) posted positive top-line results April 2017. In addition to its lead candidate omadacycline, PRTK is working with Allergan on an acne drug called sarecycline.

For those curious about the target of their upcoming trial, ABSSSI is a serious group of skin infectious diseases resulting in more than 9 million office visits and 600,000 hospitalizations in the U.S. annually. For hospitalizations the average cost per stay is about $7,000 and they are currently treated with a variety of antibiotics. Although these antibiotics are effective, their increasing biologic resistances could provide a profitable way for PRTK to help patients with ABSSSI. Earlier this year, Slingshot conducted a series of interviews with Subject Matter Experts on Omadacycline that you can check out here.

RDHL: RHB-104 for Crohn’s disease treatment

Redhill Biopharma expects to provide investors with its interim MAP US trial efficacy data for its Phase 3 Crohn’s drug, RHB-104, sometime in the third quarter. A preplanned safety data review on 12/13/2016 received unanimous approval from the independent Data and Safety monitoring board [DSMB] to continue the trial without modifications. RHB-104 is a combination of three antibiotics in one capsule targeting the bacterium mycobacterium avium paratuberculosis, which they believe could be the cause of the chronic gastrointestinal inflammation associated with Crohn’s.

For those unaware, Crohn’s is a chronic inflammatory bowel disease affecting the digestive tract and afflicting about 780,000 people in the U.S. RHB-104’s method of action is somewhat controversial because antibiotics like flagyl effectively address mycobacterium, but not Crohn’s, which could suggest they are not caused by the same thing. On the contrary, RHB-104’s Phase 2 data was positive, so only time will tell. This room for debate could result in more dramatic share price moves once data releases. RHB-104 might be a potentially massive drug for RDHL because they believe the patient could eventually come off their medication, unlike current standards of care such as ABBV’s Humira. Additionally, the drug could have broad applications for other diseases as it just completed a successful Phase 2a trial for Multiple Sclerosis.

Aside from RHB-104, Redhill has a diverse pipeline of 7 drug candidates and two drugs already on the market. The commercial drugs are Donnatal, which is used in IBS and enterocolitis, and EnteraGam, a medical food for those with chronic diarrhea.

SAGE: Brexanolone (SAGE-547) for the Treatment of Super-Refractory Status Epilepticus [SRSE]

Phase 3 data for SAGE-547 in the treatment of SRSE arrives Q3. This data deserves your time for several reasons. Firstly, SRSE represents a serious unmet medical need. SRSE is a rare neurological condition characterized by an acute, prolonged seizure. Current treatment of SRSE involves placing patients in a medically induced coma while using antiepileptic drugs. Doctors later attempt to wean patients off the anesthetics used to initiate the coma see if the seizure has resolved. SRSE has high morbidity rates with 10-20% of patients dying within 30 days of coma induction. The FDA granted SAGE-547 orphan and fast track drug status in 2014, elucidating the lack of available treatment options. SAGE-547 is used in conjunction with anesthetics while patients are being weaned out of their medically induced coma. Phase 2a data showed 77% of patients were successfully weaned off their anesthetics and did not have a recurrence in the 24 hours post treatment while SAGE-547 was used. Promising news for those with SRSE and potential investors.

Secondly, SAGE-547 demands attention because it is SAGE’s most advanced pipeline product. In addition to SRSE, 547 is in Phase 3 trials for postpartum depression, which could further increase market penetration pending trial results. Getting a drug like SAGE-547 through Phase 3 would greatly increase investor confidence in their ability to bring a drug to market. Investors should be dialed into SAGE; Brexanolone could be the first drug of its kind, address multiple diseases, and meet serious medical shortcomings for SRSE.

TBPH: Revefenacin for Chronic Obstructive Pulmonary disease [COPD]

Mid trial safety data for COPD treatment via Revefenacin is expected mid 2017. TBPH developed Revefenacin in conjunction with Mylan (MYL). Phase 2 and Phase 2b studies demonstrated clinically significant improvements in lung function in COPD patients. COPD progressively makes it harder to breathe over time and induces coughing fits. The most common cause of COPD is smoking, and over 12 million Americans have the disease. The National Institute of Health [NIH] estimates 12 million more Americans may have undiagnosed COPD. 120,000 people die each year from the disease, and although there are currently treatments to address the symptoms, a best in class drug from TBPH would be a major boon for the company and for those stuck with COPD.

Regarding their other projects, TBPH has a large, diverse pipeline researching treatments for a swath of infectious diseases, respiratory issues, gastrointestinal problems, and cardiovascular concerns. More specific info on other ongoing TBPH trials is available here.

Conclusion

2017’s third quarter holds a plethora of important trial results and regulatory news. Here we touched on 8 companies (ABBV, ACRX, ALNY, NKTR, PRTK, RDHL, SAGE, and TPBH) releasing Phase 3 data in the third quarter. Although this list is not fully comprehensive, it should serve as a good starting point for investors looking to stay up to date on current events and make more informed investments. In the coming weeks we will be expanding our coverage by looking at the Q3 regulatory news worth your time. If you are interested in Phase 2 data coming this quarter, I covered that similarly here. If there are any other companies releasing Phase 3 data this quarter you think we should know about, I would love to hear about them in the comments!

Editor's Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.

Analyst’s 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.