Catalysts aplenty for LifeCycle Pharma

News

LifeCycle Pharma’s announcement today of encouraging phase II data for LCP-AtorFen has given the stock a much needed 7% fillip to DKr27, although positive news needs to continue flowing from the Danish specialty pharma company if they are to recover to the 12-month high of DKr61.

LifeCycle has so far delivered on its promises in 2008 with the US launch of Fenoglide (LCP-FenoChol) by its partner Sciele Pharma in February and positive phase II data for potentially its most valuable product LCP-Tacro in March. Investors will be hoping the company maintains this track record in what appears to be a catalyst-packed rest of year.

Water solubility

LifeCycle, one of 22 new companies recently added to EvaluatePharma’s coverage, does exactly what it says on the tin, through the application of its MeltDose technology to existing drugs to increase the release and absorption of active ingredients, mainly by improving water-solubility, thereby improving efficacy and reducing side effects.

The market “life” of a product can therefore be extended with the added incentive that candidates can move from pre-clinical studies to FDA approval within five years, versus 8-11 years for traditional drug development. Importantly, the company was recently granted a key US patent for MeltDose to 2022 and states it has not been and is not currently involved in any litigation over their technology platform.

Cardiovascular franchise – seeking partners

Significant validation of LifeCycle’s technology came with FDA approval last year for Fenoglide, a low-dose formulation of Abbott Laboratories’ cholesterol-lowering agent TriCor (fenofibrate). Fenoglide 40mg tablet is the lowest dose of fenofibrate available on the US market.

Analyst consensus forecasts from EvaluatePharma expect LifeCycle’s marketing partner Sciele Pharma to generate sales of $38m by 2012, resulting in royalties and milestones to the Danish company accumulating to an NPV of $37m.

As LifeCycle’s current strategy is to seek marketing partners for all its cardiovascular products, the signing of these deals provide clear binary events to trigger share price growth.

Following today’s positive clinical data, next on offer to potential partners is LCP-AtorFen, a fixed-dose combination of cholesterol-lowering agents atorvastatin and fenofibrate. Phase II data for the once-daily pill showed positive safety and efficacy results against atorvastatin (Lipitor) and fenofibrate (TriCor) used separately.

The company expects to initiate phase III trials in the second half of the year, whilst seeking a partner to complete the trials and then commercialise the product.

Another important catalyst within the cardiovascular franchise is an expected ANDA filing in mid-2008 by partner Sandoz (Novartis) for LCP-Feno, designed as a straight generic version of TriCor. Abbott would then have 45 days in which to file for patent infringement, to induce the automatic 30-month stay, delaying potential launch until 2011. As the product is valued at $68m, making it LifeCycle’s second most important candidate, regulatory developments will be watched closely.

Immunosupression franchise – going it alone

By far the biggest product in LifeCycle’s pipeline is LCP-Tacro, a once-daily formulation of tacrolimus, currently marketed as Prograf in twice-daily form for organ transplantation by Astellas Pharma.

LCP-Tacro’s current NPV sits at $708m, representing 85% of the company’s total product NPV of $843m, and dwarfs its market capitalisation of $295m.

Positive phase II results in kidney transplant patients versus Prograf were reported in March, which followed encouraging interim phase II data in liver transplant patients in January. LifeCycle therefore intends to initiate phase III trials in the second half of the year, another catalyst for investors.

So far the company has clearly stated it intends to develop its own hospital-based specialist sales force for its transplantation products. However, further positive clinical trial data from the likes of LCP-Tacro could attract offers from partners which the group may find hard to turn down.

Lundbeck’s loss

LifeCycle started life as a spin-out from Lundbeck in June 2002, going public in November 2006. Whilst Lundbeck retains about a 5% interest in LifeCycle, it could certainly do with products like LCP-Tacro to bolster its thin pipeline, which will not replace key product sales lost to generic competition in 2012 (see EP Vantage story April 30: Lundbeck turns to Wyeth veteran to kick-start turnaround).

Adding LifeCycle’s total product NPV of $843m would provide a 15% boost to Lundbeck’s total product NPV of $5651m, 99% of which is derived from already marketed products.

Not that investors in LifeCycle will care much for the travails of Lundbeck if the small specialty company can continue to deliver on its pipeline and partnering promises over the next 12 months.

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