Agile Therapeutics (AGRX) shares were hammered following the company's Q3 earnings press release that revealed the FDA has raised some concerns regarding Twirla's efficacy and safety. In addition, the FDA is not currently in favor of Agile's planned limitations for use labeling for the company's contraceptive patch, Twirla. This announcement was publicized only two days ahead of Twirla's FDA Advisory Committee "AdCom" on October 30th. This information didn't inject any confidence the AdCom committee was going to vote in support of an FDA approval, or that the FDA will approve. Admittedly, I wasn't certain about Twirla's chances in the AdCom and was expecting a mixed vote. Much to my surprise, the AdCom overwhelming voted to support Twirla's approval. Once the stock was unhalted, the share price skyrocketed over $2.00 per share and has settled above $1.00 per share. Despite the positive vote from the AdCom, the reaction to the news leaves AGRX investors making a tough decision to buy, sell, or hold ahead of the FDA's decision.
I intend to review Agile's press release, Twirla's AdCom briefing documents, and provide my views in order to point out some of the key information and language for investors. Finally, I provide my plan for my AGRX position heading into PDUFA date on November 16th.
Agile's Twirla Update
In the company's Q3 earnings press release, the company reveals its interpretation of the AdCom documents.
"In advance of the Advisory Committee meeting, the FDA issued its briefing document in which it expresses a number of concerns regarding Twirla's approvability, including, but not limited to, concerns related to Twirla's efficacy when balanced against its safety. The FDA also did not appear to agree with the company's proposal to include a limitation of use based on patient weight and BMI in the product label."
This statement obviously caused panic amongst investors and dumped the chum bucket for shorts to flock the ticker. Admittedly, I was close to unloading a major portion of my position. Twirla's prospects for approval appeared to be bleak, and another CRL would be devastating for the company and the share price.
AdCom Briefing Documents
Following Twirla's press release, I decided to go read the AdCom briefing documents for myself. After reading the entire document, I noticed a few key issues that had worried about Agile's chances in the AdCom meeting. One of these issues was in regard to Twirla's effectiveness. Twirla's PI in Study 23 was 5.83, which the FDA considers as "unacceptable from an efficacy perspective for a new CHC product." In addition, the FDA stated, "We do not find support for marked differences between the study design for AG200-15 and other recently conducted hormonal contraceptive studies. The FDA does not agree that the overall high PI can be definitively attributed to study differences." Moreover, the FDA pointed out that "even women who were not obese had an unacceptable PI." As a result, the FDA does not consider that the "trial differences noted by the Applicant clearly explain the suboptimal effectiveness results. Furthermore, even in the non-obese subjects, the upper bound of the 95% CI exceeds 5.
Perhaps the most concerning point from the FDA is the fact that "all approved hormonal contraceptives to date have an upper bound of the 95% CI for the overall PI ≤5.0."
In addition to effectiveness, the FDA has some issues regarding Twirla's patient compliance and dosage. According to the briefing document, the FDA doesn't see an improvement in patient compliance, nor do they agree that Twirla is considered a "low-dose" product.
In summary, the FDA stated it "does not believe that the data show a safety advantage over available CHC products, and questions whether the observed effectiveness for a product intended to prevent pregnancy outweighs its risks in the context of available therapy."
Reading these points above, one should understand why the market ripped AGRX down to $0.35 a share. The likelihood of approval seemed slim-to-none at this point, but I was willing to see what the AdCom members had to say before folding.
My Views on the AdCom
When watching the AdCom webcast, I paid close attention to the general messages coming from Agile, the FDA, and committed members. If I summarized each parties message/position, I would say:
Agile - Twirla is effective for women who have a BMI <30.
FDA - Twirla's Pearl Index is too high (over 5).
AdCom - There aren't enough contraceptive options on the market today.
Obviously, the conversation and debate went well beyond these concepts but each party consistently reverted back to these ideas when expressing their concerns. Luckily for Agile, the FDA's Pearl Index argument appeared to grow old with the AdCom members who pointed out numerous issues with the Pearl Index, and how some of the market's current products are not cutting it. One talking point of note was the idea that women will pick their contraception and will continue to stay on their contraceptive if it fits their lifestyle and their ability to control. Not every woman wants a vaginal implant, device, ring, or swallow pills every day and could discontinue using the contraceptive if they see it as a burden or unhealthy. I believe the AdCom viewed Twirla as another option and seemed to support the company's proposal of limited usage labeling. As a result, the AdCom voted 14-1 with 1 abstention in favor of approval. Unfortunately, the FDA does not need to follow the AdCom's vote in their approval decision, however, history shows the FDA typically sides with the AdCom.
My Views on Approval
As a result of the AdCom vote, I am much more confident Twirla will be approved. Despite the FDA's concerns about the Pearl Index, the FDA didn't mention it as an issue in Twirla's previous CRL. So it would be surprising for the FDA to deny Twirla on safety and efficacy when it wasn't a major issue in the past. Of course, the FDA has its prerogative and can now find an issue with the Twirla's safety and efficacy. Consequently, I wouldn't recommend going "all-in" solely on the AdCom vote.
What's My Plan? I'm going to hold off on a buy before the PDUFA. I am hesitant to commit to a larger position this close to the PDUFA date due to the high-level uncertainty around Twirla's approve. However, I am going to hold strong while we wait for the FDA's decision in anticipation of a large spike in the share price following a potential approval. If the FDA sends Agile another CRL, I will liquidate my position upon a press release. In the long-term, I intend to hold a small position for at least five years as Twirla hits peak sales. I have a safe average and I am willing to deal with potential secondary offerings in the coming years.
Reminder: The FDA does not have to follow the AdCom's vote, so there is still a risk the FDA rejects Twirla for the third time
Disclosure: I am/we are long AGRX. 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.
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