Upcoming catalyst for Aerie Pharmaceuticals (odds: 70%)

Aerie Pharmaceuticals (NASDAQ: AERI) is developing a new class of once-daily eye drop for the treatment of glaucoma. Results of two Phase III trials, known as Rocket 1 and Rocket 2, are expected in 2015Q2 and mid-2015. If approved, the drug will represent the first new mechanisms of action for lowering intraocular pressure (IOP) in over 20 years.

Glaucoma is one of the largest segments in the global ophthalmic market. According to IMS, glaucoma market exceeded $4.5 billion in the U.S., Europe and Japan in aggregate. Xalatan (latanoprost), the best-selling glaucoma drug, together with Xalacom (latanoprost/timolol), generated peak annual sales of $1.75 billion in 2010.

There are four classes of glaucoma drugs:

Classes Drugs Market share
prostaglandin analogues latanoprost, travoprost, bimatoprost 51%
beta blockers timolol, carteolol, levobunolol, betaxolol 15%
alpha agonists brimonidine, apraclonidine, epinephrine 10%
carbonic anhydrase inhibitors acetazolamide, dorzolamide, brinzolamide 8%

Aerie’s Rhopressa (AR-13324) inhibits Rho Kinase (ROCK) and norepinephrine transporter (NET), which are both novel targets for glaucoma.

In 1997, scientists at Yoshitomi Pharmaceutical found a ROCK inhibitor called Y-27632 inhibits smooth-muscle contraction[1]. Thus, ROCK inhibitors can lower IOP by blocking trabecular meshwork cell contraction.

NET is responsible for the reuptake of extracellular norepinephrine, a neurotransmitter released by neurons. Inhibiting NET prolongs the activation of target cells, which reduces the production of eye fluid.

In the Phase IIb trial, Rhopressa 0.01%, Rhopressa 0.02%, and latanoprost demonstrated mean IOP reductions of 5.5, 5.7, and 6.8 mmHg[2]. The IOP-lowering effect of Rhopressa was 1.1-1.3 mmHg less than that of latanoprost and did not show non-inferiority.

In the Phase III trials, Aerie took timolol instead of latanoprost as the active comparator. According to historical data[3], the IOP-lowering effect of timolol was similarly 1.2 mmHg less than that of latanoprost. I believe Rhopressa has a great chance to show non-inferiority to timolol.

The main adverse event was transient hyperemia, or eye redness, which was observed in 18%, 24% and 11% of patients in Rhopressa 0.01%, Rhopressa 0.02%, and latanoprost, respectively. It is no doubt a spot for Rhopressa, but we needn’t worry too much. Both bimatoprost and travoprost reported high rate of eye redness.

In 2014, Japan approved Kowa’s twice-daily ROCK inhibitor, Glanatec (ripasudil 0.4 %), for the treatment of glaucoma when other drugs are not effective or cannot be administered. The drug seems not better than Rhopressa because eye redness was observed in 96% of patients.

Although Rhopressa appears a little inferior to latanoprost, the drug offers a new once-daily option with novel mechanism of action. Moreover, Rhopressa plus latanoprost has shown to be superior to latanoprost in a Phase IIb trial.

[1] Nature. 1997, 389(6654), 990-994.
[2] Ophthalmology. 2015, 122(2), 302-307.
[3] Eur J Ophthalmol. 2000, 10(2), 95-104.

Advertisements

Upcoming catalyst for Celladon Corporation (odds: 80%)

Celladon Corporation (NASDAQ: CLDN) expects to announce topline results from the Phase IIb trial (CUPID 2) of gene therapy MYDICAR in patients with systolic heart failure in April 2015. Many investors asked me to write about the trial. Here is my due diligence.

Celladon’s lead product candidate, MYDICAR, uses gene therapy to target SERCA2a. SERCA2a is a Ca2+-ATPase that becomes deficient in patients with heart failure. Although SERCA2a was validated as a target for heart failure in the 1990s, no company has been successful in targeting SERCA2a using traditional methods.

MYDICAR utilizes AAV1 (adeno-associated viral 1) vectors to deliver SERCA2a gene. Celladon expects a single intracoronary infusion of MYDICAR to reduce heart failure-related hospitalizations.

In the 39-patient Phase IIa trial, the hazard ratio at 12 months for high-dose MYDICAR (1×10^13 DRP) vs. placebo was 0.12 representing a risk reduction of 88%. Benefit has been confirmed at three years with a risk reduction of 82%. In April 2014, the FDA granted Breakthrough Therapy designation to MYDICAR. This is the first gene therapy product granted this designation.

Celladon completed enrollment of the 250-patient Phase IIb trial in February 2014. In the Phase IIb trial, patients received high-dose MYDICAR. The new trial (NCT01643330) expanded enrollment to older patients (76-80) and patients with mild symptoms (NYHA Class II).

Trials CUPID 1 (Phase I/IIa) CUPID 2 (Phase IIb)
N 12+39 250
Doses 1.4×10^11 to 1×10^13 DRP 1×10^13 DRP
Ages 18-75 18-80
NYHA Classes Class III/IV Class II/III/IV

These changes may complicate the Phase IIb results, but Celladon still have great chance to success. The company expects to detect an at least 45% risk reduction (hazard ratio of 0.55). This is a really easy goal for MYDICAR. In the Phase IIa trial, even low-dose MYDICAR achieved a risk reduction of 60%.

Moreover, Celladon has obtained an SPA from the FDA that the primary efficacy endpoint of time to recurrent events would be acceptable for a pivotal trial of MYDICAR. According to Celladon’s SEC filings, the FDA may not require additional efficacy trials if the results from the Phase IIb trail satisfy FDA’s requirement.

There are over 280,000 heart failure-related deaths annually in the U.S. Approximately 40% of patients are AAV1 neutralizing antibody negative and therefore eligible for MYDICAR. Needless to say, MYDICAR has blockbuster potential.

In October 2014, Celladon entered into a agreement with Lonza to build a new facility for the manufacture of MYDICAR. The detailed design for the facility is expected to be completed by April 2015. In September 2014, Celladon appointed Scott Garrett, the former Senior Marketing Director of Gilead Sciences, as Vice President, Commercial Planning. These actions suggest Celladon executives are feeling fairly confident.

I don’t worry about insiders selling. Several executives at Pharmacyclics (NASDAQ: PCYC) sold their shares at $120-140 in 2014H2, now $257 per share. Celladon’s fate entirely hangs on the success of MYDICAR. Just wait for the Phase IIb data.

Upcoming catalyst for MEI Pharma (odds: 90%)

MEI Pharma (NASDAQ:MEIP) will report topline data from the Phase II trial (MEI-003) of pracinostat plus azacitidine in first-line myelodysplastic syndrome (MDS) in March 2015. I strongly believe the results will be positive.

Pracinostat (SB939) is a HDAC inhibitor discoved by S*Bio. MEI Pharma acquired the compound for $75.7 million in Augest 2012. The FDA has approved three HDAC inhibitors, known as Zolinza (vorinostat), Istodax (romidepsin) and Beleodaq (belinostat), for the treatment of PTCL. MEI Pharma is testing pracinostat in three Phase II trails: (1) first-line MDS (MEI-003); (2) AML (MEI-004); (3) 2nd-line MDS (MEI-005).

In the earlier pilot Phase II trial, pracinostat plus azacitidine showed an ORR of 89% (8/9) including 78% patients who achieved CR/CRi. Historical ORR for Vidaza (azacitidine) in MDS is only 16%[1]. These data led to a new Phase II trial (MEI-003) evaluating pracinostat plus azacitidine vs. placebo plus azacitidine with a primary endpoint of CR.

I believe pracinostat plus azacitidine will demonstrate a huge improvement over azacitidine alone. Forthermore, interim analysis from the MEI-005 trial revealed an ORR of 3/28 in patients who have previously failed azacitidine or decitabine alone. This data in refractory MDS further proves pracinostat’s impressive clinical efficacy.

Approximately 13,000 patients in the U.S. are diagnosed with MDS each year. Cowen and Company analyst Nicholas Bishop expects pracinostat to generate sales of $500 million or more in MDS. According to TipRanks, the average price target for MEIP is $12.83.

[1] Oncologist. 2005, 10(3), 176-182.