Event - Accentia seeking clarity

Analysis

On the face of it Accentia Biopharmaceuticals appears to have all the key ingredient required for a biotech company to take itself to the next level – a healthy-looking late-stage pipeline predominantly based on already marketed compounds, targeted at unmet medical needs, with little competition on the horizon.

However, with shares currently trading at $2.50, around their lowest level since flotation at $7.00 in October 2005, the market is still clearly sceptical. The company will therefore be hoping that pivotal trial results for key products due over the next few months will prove the doubters wrong and help it realise its substantial potential.

Crunch time

First up and most critical to the biotech is the un-blinding of phase III trial data for lead product, SinuNase, an anti-fungal treatment for chronic sinusitis, for which there is no FDA-approved drug on the market.

According to EvaluatePharma’s Calendar of Events, this data is due to be published in March, which the company expects will trigger a number of regulatory filings by the end of 2008.
 

Calendar of Events: SinuNase
Event Status Associations Event Type Event Start Date End Date
In-Play (22%) SinuNase (Accentia Biopharmaceuticals) Phase III Trial Results Phase III Trial Results on SinuNase for Chronic Sinusitis 01/03/2008 31/03/2008
Starts in 86 days SinuNase (Accentia Biopharmaceuticals) US Product Filing Expect US Filing for SinuNase for Chronic Sinusitis 01/06/2008 30/09/2008
Starts in 86 days SinuNase (Accentia Biopharmaceuticals) EU Product Filing Expect EU Filing for SinuNase for Chronic Sinusitis 01/06/2008 30/09/2008


SinuNase is based on amphotericin B, an anti-fungal medication on the market since 1995, used as an intravenous formulation to treat a variety of systemic fungal infections, with Gilead’s AmBisome the branded reference product.

The unique selling points for SinuNase are its delivery, a self-administered intranasal formulation, and its use for the treatment of chronic sinusitis, based on research conducted by the Mayo Clinic into the role of airborne fungi in this disease. Current drugs, such as antibiotics and corticosteroids, mostly focus on treating the symptoms of sinusitis, not the underlying cause.

Accentia have in-licensed all rights and patents from the Mayo Clinic relating to SinuNase, for which they will pay out royalties.

Potential

With an estimated 14% of the US population reporting chronic sinusitis every year, or 60 million sufferers in the US and Europe combined, the market opportunity is significant when set alongside an estimated annual cost per patient of $1,800.

Consensus forecast sales for SinuNase in 2012 sit at $456m resulting in a net present value to the company of $908m, according to EvaluatePharma’s NPV Analyzer. When compared with the company’s enterprise value of $169m the potential upside to current market valuation is clear, assuming positive clinical data and smooth passage to FDA approval.

Near term catalysts

A number of catalysts surround the development of SinuNase over the next nine months, including phase III data from the first trial, potential licensing deals and regulatory filings in both the US and Europe and confirmatory phase III data from a second trial, to be initiated by mid-2008.

Further triggers include an FDA decision for AllerNase in rhinitis, phase III results for BiovaxID, a novel cancer vaccine for NHL and the initiation of phase III trials for Revimmune in multiple sclerosis.
 

Calendar of Events: Accentia Biopharmaceuticals (next 3 months - excluding SinuNase)
Event Status Associations Event Type Event Start Date End Date
In-Play (36%) AllerNase (Accentia Biopharmaceuticals) US Product Approval (PDUFA) FDA Decision Date (PDUFA) on sNDA for AllerNase for Rhinitis 01/01/2008 30/06/2008
Starts in 25 days BiovaxID (Accentia Biopharmaceuticals) Phase III Trial Results Phase III Trial Results on BiovaxID for Non-Hodgkin's Lymphoma 01/04/2008 30/04/2008
Starts in 86 days Revimmune (Accentia Biopharmaceuticals) Phase III Trial Initiation Phase III Trial Initiation of Revimmune for Multiple Sclerosis 01/06/2008 01/09/2008


But all of that may prove irrelevant if the data announced later this month fails to demonstrate significant efficacy for SinuNase versus placebo. Interim blinded data presented so far suggests a positive outcome and safety concerns, a major hurdle for most current products submitted for FDA approval, should be minimal considering the widespread use of the active ingredient over the last 12 years.

Cash is burning

The need for positive trial data for SinuNase, with the resulting potential to strike lucrative licensing deals, is all the more critical with the company’s cash reserves sitting at a threadbare $6m, debt of $65m and a current annual cash burn rate of $60m. The group raised $8.7m in a private placement in January, clearly just to tide it over rather than support and drive ongoing pipeline development.

As such, there is a lot riding on SinuNase to come up with the goods, restore battered confidence and most importantly persuade new investors or potential partners to stump up much needed cash.

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