Stock Radar with Price Targets

Good luck out there,

Mike

Stock Radar with Price Targets

Good luck out there,

Mike

Stock Radar with Price Targets

Good luck out there,

Mike

In preparation for the meeting, management submitted to the FDA a detailed briefing package that includes various types of analysis on the BREEZE data, including parametric and non-parametric analysis, a responder analysis, and a meta-analysis that included the combined data from all three programs together. Included in the analysis was persistent efficacy data at week 24 from both BREEZE-1 and BREEZE-3. We remind investors that top-line data from BREEZE-3 was reported last October 2011.

Below we highlight the top-line data from all three programs for the 1800mg dose – at least what has been disclosed by management to date:

Management has submitted an abstract to the North American Menopause Society (NAMS) annual meeting to take place this October 2012. We expect the full data from BREEZE-3 will be presented at that time. We note that data from BREEZE-1 and BREEZE-2 was previously presented at the NAMS meeting in October 2010.

…Long Shot At Approval…

Looking at the data above, even using a p-value of less than 0.05, in three phase 3 trials we see that Serada hit 10 of the required 12 primary endpoints, including all endpoints for both frequency and severity at week 4, but missed the frequency endpoint at week 12 in two of the three trials and failed to demonstrate signs of persistent efficacy at week 24 in either BREEZE-1 or BREEZE-3. We have admittedly not seen management’s analysis of the data. And on yesterday’s conference call, management noted that the FDA suggested that Depomed file the application so they can, “run their own analyses to decide whether this is an approvable package or not.”

At this point, we think approval is a long-shot; but we do not profess to know how the FDA will rule on data we haven’t seen using an analysis we haven’t been told about. Nevertheless, Depomed will spend approximately $5 million this year getting the NDA filing ready. This includes the filing fee (~$1.5M), a milestone to license partner PharmaNova (~$1M), external consulting expenses, manufacturing test batches, and other launch preparations.

…What We Expect…We expect that Depomed will file the NDA on Serada in the fourth quarter 2012, sometime after the BREEZE-3 data has been presented at the NAMS meeting in October 2012. At that time, we should have a better sense of the entire NDA package on Serada. We have increased our R&D expense for 2012 by $5 million, and now model R&D for the full year to be $17.8 million. We have updated our cash forecast, and now model that Depomed will exit 2012 with approximately $95 million on the books.

We expect that the U.S. FDA will hold an Advisory Committee meeting on Serada. If the NDA is filed in November 2012, the PDUFA would be scheduled for September 2013. That would potentially put an advisory panel meeting on the drug sometime over the summer of 2013.

NAMS recently put out updated guidance on the use of hormone therapy (HT) in women suffering from hot flashes. The position statement notes that a combination of estrogen plus progestin therapy (EPT) remains the most effective treatment available for menopausal symptoms, including hot flashes and night sweats that can interrupt sleep and impair quality of life. NAMS believes that the majority of women can take EPT safely, for periods up to three to five years, with little risk of heart attack, stroke, blood clots, or breast cancer. For women with pre-existing risk, an alternative therapy may be more desirable.

We expect that these updated guidelines from NAMS will have a negative impact on the overall market potential for Serada, if approved. We see Serada relegated to a second-line therapy for women where HT is either not effective or not desirable. We see the peak sales opportunity for Serada in the U.S. at roughly $100 million.

We expect that Depomed would like to be involved in the promotion of Serada to high-prescribing OB/GYN’s in the U.S. Management noted that there are about 18,000 of these high-prescribing OBGs. We suspect that effective promotion can be accomplished by a small field force of 40 to 60 representatives. The opportunity to partner Serada for promotion to the primary care network presents upside to the story. We expect that Depomed will look to partner for this expansion following a focused commercialization effort in 2014.

Our model includes $0 revenues from Serada in the future, and we expect that it will stay that way until the FDA makes a decision. At $100 million in peak sales, we see Serada worth approximately +$2 per share to our current modeled valuation ($9 price target).

Gralise Remains On Track

Gralise total prescriptions remain on track, and in-line with our model.

We model sales in the first quarter 2012 of $2.0 million based on total prescriptions of roughly 17K. Assuming the trend continues in the second quarter 2012, we now see Gralise sales at around $3.0 million in the second quarter and at $16.5 million for the full year 2012. Gralise remains the key value driver for Depomed in our view. Additional information can be found in our full REPORT from March 2012.

I must admit that although I did expect AAPL to go down, but certainly did not expect its price to drop so quickly. As of 4/23 close, it is down 5.5% since close of 4/13 vs S&P 500 which is down 1.3%.

The following daily chart shows AAPL has a indecisive doji pattern on 4/23 and is also near support.

(click to enlarge)

AAPL will report earnings after market close today (4/24). So one of the most anticipated earnings announcement is less that 12 hours away, and the earnings results may determine the direction of AAPL’s next move. Good luck to every bulls and bears

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Stock Radar with Price Targets

Good luck out there,

Mike

…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.

Preclinical Data Shows Intriguing Potential

Over the past six to eight months, Spherix Inc. has been conducting preclinical studies with SPX-106T, the company’s combination of proprietary candidate SPX-106 and D-Tagatose, for the treatment of dyslipidemia and metabolic syndrome.

Recent data presentations show the drug achieved statistically significant reductions in triglycerides and cholesterol when administered in combination with D-Tagatose for 9 weeks to genetically engineered (LDLr -/-) mice prone to dyslipidemia. The data show twice-daily oral dosing significantly reduced triglycerides by 43 mg/dl compared with control animals with a mean triglyceride level of 118 mg/dl (p=0.01). The same therapy significantly reduced total cholesterol by 73 mg/dl from a mean level of 378 mg/dl compared with control animals (p=0.01).

In September 2011, Spherix released additional preclinical data on SPX-106T from the above trial. Results show that SPX-106T achieved statistically significant reductions in VLDL and LDL cholesterol over 9 weeks when administrated to genetically engineered mice prone to dyslipidemia. Treatment of animals using a range of low doses of SPX-106T twice-daily significantly reduced VLDL by 35% (from 127 mg/dl to 82 mg/dl) and LDL by 18% (from 141 to 116 mg/dl) (p=0.05).

In October 2011, Spherix presented a poster at the American Association of Pharmaceutical Scientists (AAPS) National Meeting highlighting key findings where SPX-106T significantly reduced serum cholesterol by 30% (-307 mg/dl; p<0.05), prevented body weight gain (p<0.05), and significantly reduced the amount of subcutaneous, retroperitoneal, and epididymal fat (77%, 90%, 85% reductions, respectively, p<0.01). Safety analysis showed that SPX-106T did not affect the weight of other organs such as the heart and spleen.

In March 2012, management presented data showing that SPX-106T arrested development and reduced atherosclerotic plaque area in mice genetically predisposed to cardiovascular disease. Two groups of apolipoprotein E-deficient mice (control and SPX-106T) were each fed a Western diet (high in fat and carbohydrates) for 8 weeks. In the SPX-106T group, the sucrose portion of the dietary carbohydrates was replaced with D-tagatose and SPX-106 was added at 0.1%. Plaque area was quantified at three locations: the sinus of Valsalva on top of the heart, aortic arch, and thoracic aorta. SPX-106T reduced atherosclerotic plaque areas almost 5-fold in all locations (p<0.05 in thoracic aorta, p≤0.01 in aortic arch and sinus of Valsalva).

…Pre-IND Meeting Requested…

Management has now advanced SPX-106 and SPX-106T to the point where they are ready to being human clinical trials. A pre-IND meeting has been requested with the U.S. FDA. We expect this meeting to take place in the next few months, which should put management in position to file the IND in the third quarter 2012. We expect that the first human testing will begin early 2013. This will most likely be a standard phase 1a pharmacokinetic study of a single-ascending dose. A phase 1b multiple-ascending dose study should follow mid-2013.

If all goes well, Spherix should be in position to start the first phase 2 proof-of-concept program with SPX-106 / SPX-106T in the second half of 2013. We expect management to pursue a niche “orphan” indication first, focusing on genetic subtypes of dyslipidemia and high triglycerides. This provides the quickest and most cost-effective route to market for management.

New Strategy For Growth

The company’s growth strategy revolves around the internal development of pharmaceuticals products. Management has instituted a four-pronged strategy to drive growth:

1. Utilize existing clinical development capabilities to manage and drive drug candidates through development and ultimately approval. This includes a marriage of the development capabilities at Biospherix and the strong science and analysis background at Spherix Consulting.
2. Identify and explore licensing and partnership opportunities for drug candidates.
3. Acquire medically important drug candidates in early to mid-stage clinical development.
4. Commercialize drug candidates, either alone or in partnership, which can maximize stockholder value. This includes the outright sale of a drug candidate.

To help improve the pipeline turnover and efficiency, Spherix is launching a combination drug discovery platform based on dynamic data-driven simulation analysis, or DDDAS. Management is looking at phase 1 and phase 2 assets to roll up in its platform with the goal of treating complex disease where dual or multi-pharmacology may be appropriate. These include cocktail approaches similar to what has been developed for HIV and HCV, or dual-mechanisms of action such as drugs like Vytorin (ezetimibe and simvastatin) for high cholesterol, Janument (metformin and sitagliptin) for diabetes, and Spherix’ own SPX-106T (SPX-106 and D-Tagatose).

The DDDAS program began at the National Science Foundation. DDDAS is now being employed to model complex metabolic disease pathways, testing potential binary therapies in simulations at various combinations, at two points in the pathways, choosing the most effective pair-wise combinations. DDDAS is being used now in animal and human studies planned by Spherix. Management believes that DDDAS yields more accurate analysis and prediction, more precise controls, and more reliable outcomes in drug development. Furthermore, the incorporation of dynamic inputs into an executing simulation helps create application platforms that can more accurately describe real-world complex metabolic diseases.

Recommendation

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Good luck out there and Happy Easter,

Mike

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…Panel Recommends Approval…

Approval remains a wildcard event. But perhaps a good sign that Adasuve might be approved is the backing of the Psychopharmacologic Drugs Advisory Committee, which voted by the narrowest of margins on December 12, 2011, to recommend approval of the drug. The committee voted 9-8-1 that Adasuve should be approved for use as a single dose in 24 hours when used with the FDA proposed Risk Evaluation and Mitigation Strategy (“REMS”). The FDA panel on Adasuve was among one of the strangest I’ve ever watched. Here’s a recap of the voting:

Question: Does the committee conclude that Adasuve (loxapine) inhalation powder has been shown to be effective as a treatment for agitation in patients with schizophrenia or bipolar mania?

The resulting vote was 17-1-0 (yes-no-abstain). This was not surprising given that Alexza ran to well-controlled phase 3 trials with similar enrollment criteria and endpoints used by Eli Lilly when it sought approval of intramuscular (IM) Zyprexa for the same indication. The FDA briefing documents acknowledged the phase 3 trials met statistical significant on the primary endpoint (PEC score) for both the schizophrenia (n=344) and bipolar trials (n=314), with good dose-response. The phase 3 data has been published for peer-review and presented at the 2010 American Psychological Association annual meeting. Here is a link to the poster presentation –> 2010APA/PEC.

I do note that the PDAC stopped short of comparing Adasuve to IM Zyprexa in terms of effectiveness and onset of action. The panel members felt that no direct comparison between the two could be made unless a head-to-head trial was conducted. One of the key attributes of Adasuve is that it has onset of action equal to, if not superior to, intramuscular injections of Zyprexa and Abilify. Alexza or its commercialization partner will be able to market the Adasuve data from the poster above, but will not be able to make any direct comparisons to the IMs on onset.

Question: Does the committee conclude that Adasuve (loxapine) inhalation powder has been shown to be acceptably safe for use as a treatment for agitation in patients with schizophrenia or bipolar mania when used in conjunction with the REMS proposed by the sponsor (Alexza)?

The resulting vote was: 1-17-0. This was not a surprise, as the FDA briefing document was critical of the company’s proposed REMS.

Question: Does the committee conclude that Adasuve (loxapine) inhalation powder has been shown to be acceptably safe for use as a treatment for agitation in patients with schizophrenia or bipolar mania when used in conjunction with the REMS proposed by the FDA?

The resulting vote was: 5-12-1. Game over, right? Well, in my best Lee Corso, “Not-so-fast my friend!” This is where the meeting got interesting. The FDA was concerned with the pulmonary safety of the drug, specifically the drop in FEV1 on the second dose of Adasuve in a 24 hour period. The graph below shows the precipitous drop in FEV1 upon the second dose at hour 10. Note the lack of recovery to baseline FEV1 following the second dose. As a result, the FDA and PDAC felt as though dosing Adasuve twice in a 24 hour period was not acceptably safe.

But what about allowing just one dose? The FDA changed the question noted above – on the fly – to add the following clause:

Question: Does the committee conclude that Adasuve (loxapine) inhalation powder would be acceptably safe for use as a single dose in 24 hours as a treatment for agitation in patients with schizophrenia or bipolar mania when used in conjunction with the REMS proposed by FDA?

The resulting vote was: 11-5-2. Again, this is essentially the same question as above, only limiting Adasuve to one dose in a 24 hour period. Alexza wanted to make Adasuve available to patients and physicians as needed if one dose was insufficient to reduce the episode of acute agitation. But is that really necessary?

It is important to note that the primary efficacy data for both phase 3 trials, in which that panel voted positively on by a majority of 17-1 in the first question above, was after only one dose. The clear majority of patients only require one dose, and the data backs that up. Therefore, I do not see that narrowing the dosing schedule to once per 24 hour period as restrictive or limiting to sales.

And now the key question…

Question: Does the committee conclude that Adasuve (loxapine) inhalation powder should be approved for use as a single dose in 24 hours when used with the FDA recommended REMS, for the treatment for agitation in patients with schizophrenia or bipolar mania.

The resulting vote was: 9-8-1. PDAC has noted to recommend approval to the U.S. FDA. I note that the majority of panel members that voted against approval felt it is necessary for Alexza to conduct a pre-approval observation study. This is something that the panel discussed but did not vote on during the meeting. Alexza has suggested it will conduct the study post-approval. In my opinion, here’s the risk, and the reason why the FDA may issue a complete response letter.

The proposed study will seek to enroll 1400 adult male and female patients with diagnosed schizophrenia or bipolar disorder who require treatment for agitation (voluntarily or involuntarily). The study will be a multi-center, prospective observational study conducted in medical or psychiatric emergency settings in the U.S., at approximately 50 sites. Sites will be selected and qualified primarily based on their estimated number of eligible patients. It is anticipated that the enrollment period will be 18 to 24 months and that the duration of patient participation will be up to 24 hours.

…With An Enhanced REMS…

Should the FDA choose to take the advice of the PDAC on the PDUFA date of May 4, 2012, Adasuve will be approved under the REMS outlined by the FDA. The FDA’s REMS goes beyond the one proposed by Alexza. Below is a slide highlighting Alexza’s proposed REMS, and the enhancements made by the U.S. FDA. I note the three month delay in the original PDUFA goal was because updating the REMS per the FDA’s guidance was designated as a major amendment.

The FDA suggested taking the REMS outlined by Alexza and has made the following enhancements:

1) The healthcare facility has immediate access to advanced airway management abilities. The healthcare facility would need to ensure that:

a. Short acting beta-agonist bronchodilator is available in metered dose inhaler (MDI) and nebulizer forms to treat early bronchospasm.

b. There is immediate access to advanced airway management abilities (i.e. intubation and ventilators) to treat bronchospasm that is missed and progresses.

2) The healthcare facility will establish or has policies, procedures, and/or order sets in place for appropriately screening patients and monitoring patients post-administration; including orders to:

a. Screen patients by performing a physical exam including assessment for active respiratory disease and by taking a medical history from the patient including current treatment for pulmonary disease (i.e. asthma, COPD).

b. Observe patients after each treatment for a specified amount of time. (The duration of monitoring is unclear, given that the effects on spirometry varied following the first and second dose).

c. Monitor patient’s vital signs and physical examination including chest auscultation as well as monitoring for signs and symptoms of respiratory distress every 15 minutes for the first hour and every 30 minutes thereafter.

3) The healthcare facility ensures that prescribers, pharmacists, and staff who will be prescribing / administering the loxapine inhalation powder are trained on the safe use (including proper patient selection, risk of bronchospasm, administration technique, monitoring required, and treatment of bronchospasm.) Training materials would be made available by the sponsor, and the certified healthcare facility would need to keep records of the training.

The FDA also suggests adding a Prescriber Certification, meaning that centers (ER departments or emergency psych wards) would not be allowed to prescribe Adasuve until they were effectively qualified as meeting the above criteria.

The FDA may also seek to include monitoring requirements and audit facilities to make sure that centers were complying fully with the prosed REMS.

Finally, the FDA has proposed a patient registry to enroll patients before receiving Adasuve. This is in an attempt to better characterize the risk in the intended patient population.

…Adasuve Commercial Potential…

With respect to the opportunity in acute agitation, I believe there is meaningful commercial potential for Adasuve. Episodes of acute agitation occur often in the 2.5 million schizophrenia and 6.0 million bipolar disorder patients in the U.S. Management estimates that 90% of these patients will experience an episode of acute agitation during their lifetime. Typically these episodes occur at a frequency of 10 to 12 per year.

click to enlarge