Inhibitex has found that beating a rival in a head-to-head trial is not always enough to satisfy investors. The company lost a quarter of its value earlier this week when it reported that FV-100, its antiviral to treat shingles, outperformed market leader valacyclovir in a phase II trial but failed to meet a rather ambitious primary endpoint.
While the fall may have been driven partly by profit-taking after shares doubled in price to $3 over three months, there was undoubtedly disappointment that FV-100 failed to perform 25% better than valacyclovir in reducing shingles-related pain, the primary endpoint. The mixed results and their consequences – investors pushed shares down to $2.19 Tuesday - may complicate the Georgia group’s plans to raise funds or license the candidate, which some observers reckon will have to take place next year.
Executives are playing it close to the vest about their plans for the therapy. For one, it is only topline data, more detailed results may contain revelations about where it measures up best against valacyclovir which will inform the design of pivotal trials. A different primary endpoint or a non-inferiority design might prove out the trends detected in phase II; executives said in a call with investors that is too soon to discuss such issues.
Meanwhile many analysts and investors see greater potential in Inhibitex's other pipeline candidate, hepatitis C virus (HCV) treatment INX-189, now in phase I safety trials. Still, FV-100 for now is the company’s most valuable asset. Roth Capital Partners estimate sales by a future partner of $332m in 2016, with $37m in royalties accruing to Inhibitex.
The company had on hand $9.1m in cash as of September 30, meaning fundraising or licensing of its unpartnered products may need to take place sometime in mid-2011, according to analysts from Zacks Equity Research.
It already has a shelf registration to sell up to $100m worth of shares. More positive data would have given Inhibitex more flexibility going into a decision to partner or tap the equity market. Positive data from a phase Ib safety trial for INX-189, expected in the first quarter, might give the shares a little more life should the equity market be its choice.
Shingles is a condition caused by the herpes zoster virus, which causes chickenpox. It goes latent in the nervous system and can reactivate years after the initial infection, causing a painful rash and neurological pain, and most often affects older adults. Neurological pain can persist for months or years in the form of post-herpetic neuralgia (PHN).
The market leader in treating shingles is valacyclovir, marketed under the brand name Valtrex by GlaxoSmithKline, which sold $2.2bn in 2008 before losing patent protection in 2009. Therefore, as a competitor to a generic with a longstanding track record, FV-100 will need to show a clear clinical advantage to be embraced by physicians and receive insurer coverage; this probably explains the ambitious 25% superiority target in the phase II study. Inhibitex executives are also hoping that in addition to efficacy, once-a-day dosing, as opposed to three times a day for valacyclovir, will give it that edge.
As with most anti-shingles products on the market, valacyclovir is a herpes polymerase inhibitor. FV-100 would be the first nucleoside analogue to treat shingles.
Not quite good enough
The phase II trial in 350 patients tested FV-100 at 200 and 400mg against valacyclovir at 3g daily. Investigators found that a 3% reduction in the burden of shingles related pain at 30 days and 4% at 90 days for patients taking the 200mg dose when compared to valacyclovir, with the numbers 7% and 14% for patients who took the 400mg dose. Of the patients taking FV-100, 12% at the 400mg dose and 18% at the 200mg dose developed PHN, compared with 20% of the valacyclovir patients.
The size of the trial meant that statistical significance would only be achieved at 25% improvement. However, in a call with investors, Inhibitex executives said the numerical superiority shows it has potential to outperform valacyclovir.
“They were a little optimistic on phase II,” said Jason Napodano, a Zacks analyst who has a buy rating on the company and a $4 price target. “Their drug wasn’t as powerful as they thought it would be. But it’s still more powerful than the market leader.”
Noting the dose response, Inhibitex executives said FV-100 had been tested safely at an 800mg dosage. However, it would not say anything about future dosage or trial design, nor if they will proceed into phase III without a partner.
No matter how investors viewed them, the company is probably right to take some hope in the phase II data. The dilemma for executives is whether the data are good enough to risk share dilution; the dilemma for potential partners is whether they are good enough to take the plunge.