This morning, InVivo Therapeutics (NVIV) announced significant news relating to the advancement of the company’s biopolymer scaffolding device to treat acute spinal cord injury. Management recently met with the U.S. FDA to discuss the Investigational Device Expemption (IDE) and the planned human clinical study. Talks centered around the inclusion / exclusion criteria, along with defining the starting and stopping points for the trial. This is a first of its kind program, and one that we’ve written about previously as being potentially revolutionary for the treatment of acute spinal cord injury.
…HDE Pathway…
To our surprise, and in our view an enormous positive to InVivo, the FDA plans to regulate the biopolymer scaffolding device under the Humanitarian Use Device / Humanitarian Device Exemption (HUD/HDE) pathway. This dramatically reduces both the cost and time necessary to bring the InVivo’s product to the market. HDE is similar in both form and content to a Pre-Market Approval (PMA) application, but is exempt from the effectiveness requirements of a PMA. An HDE application is not required to contain the results of scientifically valid clinical investigations.
The application, however, must contain sufficient information for FDA to determine that the device does not pose an unreasonable or significant risk of illness or injury, and that the probable benefit to health outweighs the risk of injury or illness from its use.
HUD/HDE allows InVivo to conduct a small – perhaps five to ten patient open-label program – demonstrate probably benefit, and submit the data back to the FDA to potential market approval in a acute or limited population. InVivo can then collect additional data under this limited FDA approval, at a profit, to expand the indication to a wider patient population. Essentially, under the HDE pathway, the PMA trial for a full label in spinal cord injury can be conducted as a post-approval program. HDE also conveys seven years of market exclusivity. So if approved in 2013, InVivo will have a lock on the market until 2020.
Before human clinical studies can begin, the FDA must approved the finalized design of the HDE program. We expect that InVivo and the FDA will be working closely over the next few months to finalize the design of the trial. We believe that the InVivo should be in position to start the HDE trial perhaps in October 2012. Again, we are expecting five to ten patients, open-label, looking at signs of improvement below the level of the spinal cord injury. Data should be available early 2013, which would put InVivo in position to receive HDE approval mid-2013, about 2 years earlier than our previous forecast.
…Hydrogel Up Next…
We are expecting preclinical data from InVivo’s injectable hydrogel in the next few weeks. Following this data, we expect InVivo to meet with the FDA to discuss a path forward for the hydrogel. Ideally, the hydrogel will be regulated as a device by the FDA, allowing InVivo to move into an IDE programs in spinal cord injury and peripheral nerve pain in 2013. This will be followed by larger PMA trials in 2014.
We see an enormous opportunity for the injectable hydrogel. The acute and chronic spinal cord injury market is estimated at $20 to $25 billion in the U.S. alone. For peripheral nerve pain, there are an estimated 3.2 million nerve block injections done in the U.S. each year. It’s an estimated $15 billion market. Existing treatment options are limited and only curb pain for as little as one week. A localized injection using the hydrogel to provide time-released anti-inflammatory therapies like methylprednisolone could provide pain relief for up to twelve months with limited systemic side-effects.
Recommendation
InVivo’s stock is up 5% this morning on announcement. We do not think the market has come to grips with the potential here. Moving the scaffolding forward under HDE is enormous, and the FDA seems clearly supportive of the company’s plans. Hydrogel data is expected soon, and between spinal cord injury and peripheral nerve pain, InVivo is sitting on two potential blockbuster indications.
We reiterate our ‘Outperform‘ rating and $4.50 price target on the shares.
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Tags: Biotech, Fundamentals, InVivo Therapeutics (NVIV.OB), Jason Napodano
Michael Kudrna
