Event - Optimer investors see reasons for optimism over phase III data

Analysis

With data from its eagerly awaited phase III trial of lead product, fidaxomicin, expected by the end of February and many expecting these results to mirror those from an earlier successful pivotal study, Optimer Pharmaceuticals has seen its shares rise a healthy 17% since the start of the year.

Part of this rise has been prompted by the behaviour of Michael Chang, Optimer's chief executive, and his wife Tessie Che, chief operating officer, who spent over $360,000 of their own money earlier this month buying shares in the open market, sparking a wave of copycat interest from institutional investors. While the couple have not had the best track record in predicting when the stock is going to rise many believe that the numerous catalysts that the data should trigger means that they could be onto a winner this time.

Product Name Difimicin (OPT-80)
Company Optimer Pharmaceuticals
Product NPV $565m (as of 15 Jan 10)
Mkt Cap $438m (as of 15 Jan 10)
% of Mkt Cap 129%
Event Summary Phase III data
Expected Decision  by end February 2010
Could also impact Vancocin (ViroPharma)

Growing market

Fidaxomicin, also known as difimicin or OPT-80, is being developed for the increasingly hard-to-treat hospital acquired clostridium difficile infections (CDI) and investors are hoping that as well as being positive the data will trigger a longed for ex-US licensing deal.

A deal had been promised and expected by the end of last year, alongside the clinical data, the lack of which caused Optimer's shares to slide 20% in the last quarter of 2009, giving the shares a relatively lower base from which to climb in the last few weeks.

Expectations are now high for the drug, but it is hoped that the results for the latest trial will replicate the outcome of the first trial, where fidaxomicin produced a statistically superior global cure rate above the only approved CDI product on the market, Vancocin (EP Vantage Interview - Optimer heads into 2009 on a high note, December 5, 2008).

The improvement was so great the group added a new secondary endpoint of global cure rates in this current trial and if the results are positive it could play well with the FDA’s tougher stance on non-inferiority claims when approving antibiotics.

The Optimer drug also showed in the first trial much lower infection reoccurrence rates compared with Vancocin. Regulators will most probably also appreciate the fact that the drug is a very narrow spectrum antibiotic, given that cases of CDI are often caused by the use of broad spectrum drugs, the use of which has also been linked with growing antibiotic resistance.

Unique selling points

The other advantage the drug has is its twice-daily dosing schedule, which does not have to be taken at a specific time, unlike Vancocin which has to be taken four times a day at regular intervals to maximise its effectiveness.

In terms of future revenues for fidaxomicin, analysts are currently predicting sales of $176m by 2014, alongside royalties of $21m in that year should Optimer secure a partner outside the US.

A licensing deal off the back of the results would also ease some of Optimer’s cash concerns. The group reported cash of $43m in the last quarter and while burn rates are bound to come down thanks to the ending of clinical trials, money will be needed if the group is to successfully commercialise the drug in the US. 

Future steps

Speaking at the JP Morgan healthcare conference last week Mr Chang said he expected to file an NDA for fidaxomicin in late summer and that the group would begin hiring a 100-strong sales force to market the drug to high volume US hospitals. A European filing is expected early in the second half of this year and a launch in both regions could follow in the second half of 2011.

Mr Chang also said that now Optimer’s two lead products had effectively finished trials, there was scope to start looking for new products to strengthen the pipeline. “We are looking to actively in-license some late stage anti-infective products, not necessarily anti-bacterial, they could be anti-fungal, as long as there is a hospital focus.”

So with the results of the phase III trial largely expected to be positive, and other upcoming triggers for the stock looming, including a European filing for the group’s other late stage product, prulifloxacin, now called Pruvel, in infectious diarrhoea, expected in the first half of the year, shares in Optimer may have further gains in them.

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