Inspire Pharmaceuticals started the new year in the worst possible fashion. Shares in the North Carolina group lost more than half their value and sunk to a two-year low of $3.47 on Monday after announcing a pivotal trial of its lead pipeline candidate, cystic fibrosis (CF) treatment denufosol, failed to beat placebo on any primary or secondary measures.
The failure of denufosol is just the latest in a worryingly long list of clinical setbacks that Inspire has suffered in the last couple of years and is prompting the company into a major reassessment of its strategic direction. The expected loss of denufosol from the pipeline is also a significant setback for the CF field in desperate need of disease-modifying therapies (Therapeutic Focus – Cystic fibrosis market looking for breath of fresh air, December 14, 2009).
Writing on the wall
Although Inspire have yet to make a formal decision on denufosol’s future, the outlook does not look good.
Results from Tiger-2, a 48-week trial involving 466 CF patients, showed that denufosol failed to meet its primary endpoint in generating a significant improvement in FEV1 (forced expiratory volume in one second); a 40ml improvement with denufosol compared to 32ml for placebo.
In addition, denufosol failed to demonstrate any improvements on three secondary endpoints and all analysis of patient demographics and sub-groups also failed to throw up any encouraging signals towards efficacy.
The results are particularly disappointing given positive results announced six months ago from Tiger-1, a 24-week trial of similar design. Inspire’s chief medical officer, Charles Johnson, did however reveal on the company’s conference call that the 24-week point in Tiger-2 failed to show a treatment benefit, suggesting that the chances of success after 48 weeks must have been much lower than some had hoped.
Inspire has said it will provide an update on denufosol’s future with its annual results in mid-February; the lack of any share rebound so far suggests investors now hold little faith in the product.
Inspire’s dramatic share price decline, which saw $400m wiped off the company’s market capitalisation in one day, was understandable given previously high expectations for denufosol (sometimes referred to as INS37217 Respiratory).
Analysts had pencilled in a product launch for 2012 with sales to reach $293m by 2016, valuing denufosol at $567m, according to EvaluatePharma’s NPV Analyzer. Inspire’s current market capitalisation of $299m is now largely in keeping with the combined value of its marketed ophthalmology products, AzaSite and Restasis, at $244m.
The problem for Inspire and perhaps a factor in the extent of investor disappointment is that denufosol joins a growing list of significant pipeline setbacks; the first three months of 2010 saw a phase III failure of dry eye treatment Prolacria (Inspire will be shedding tears on Prolacria failure, January 25, 2010) while attempts to extend AzaSite’s use to blepharitis hit a roadblock with a phase II failure (Inspire price buffeted again with negative trial data, March 15, 2010). However the company has recently announced the start of another phase II trial in this setting so the potential to expand AzaSite’s franchise remains on the cards.
Inspire’s chief executive, Adrian Adams, admitted on Monday’s conference call that its corporate update in February may include details of a change of strategic direction. For now, the company says it remains focused on its ophthalmology business.
The company’s ophthalmology franchise already brings in decent revenues, $92m in 2009, and its cash balance is very healthy at $99m as of September 30, 2010. Inspire currently sells AzaSite as a treatment for bacterial conjunctivitis, with sales of $35m in 2009 projected to reach $118m by 2016, assuming success can finally be achieved in the blepharitis indication.
In addition the company receives royalties from Allergan on two eye drugs: Restasis for dry eye and Elestat for allergic conjunctivitis; revenues from these products were $57m in 2009.
As such, the company could use its cash reserves to bolster its ophthalmology franchise to become a bigger player in a competitive market but with decent growth prospects, as witnessed by Novartis’ $52bn acquisition of Alcon.
Setback for CF market
The expected loss of denufosol from the pipeline of new therapies with the potential to treat the underlying causes of CF is also a major disappointment for sufferers of this life-threatening disease. Currently-approved treatments only alleviate symptoms of the condition.
CF is caused by a genetic mutation that disrupts the cystic fibrosis transmembrane regulator (CFTR) protein, an ion channel. A defect in this ion channel leads to poorly hydrated lungs and severely impaired mucociliary clearance.
Denufosol targets the ion channel defect in CF, increasing airway hydration and chloride secretion and inhibiting sodium absorption, as well upping the beat frequency of the ciliary in the lungs.
Attention now turns to other late-stage candidates in the CF pipeline. Vertex Pharmaceuticals’ VX-770 (Kalydeco) and Genzyme/PTC Therapeutics’ Ataluren are undergoing phase III trials, although both these products are only likely to treat a small subset of CF patients. VX-770, for example, is targeted at patients who have a G551D mutation in the gene that causes cystic fibrosis, which affects just 5% of CF patients.
Phase III data on VX-770 are due in the first half of 2011, while results for Ataluren should be available in 2012.
The hope therefore must be that these candidates succeed where denufosol has failed, otherwise the wait for genuine treatment options for CF may be a very long one indeed.
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