Optimer and investors playing the waiting game

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Data proving that your late-stage un-partnered drug has advantages over the only approved US product for an increasingly prevalent and deadly hospital acquired infection, should be enough to guarantee that not only are partners knocking on your door, but your shares are riding high. Unfortunately for Optimer Pharmaceuticals this dream scenario about its share price is at present just that, a dream.

Back at the beginning of the month the San Diego-based company reported that its antibiotic for the treatment for clostridium difficile infection (CDI), fidaxomicin, had lived up to expectations and was as effective as Vancocin (vancomycin), currently the only marketed oral treatment for C. difficile, and was in fact better at preventing recurrence of infections and equally importantly improved global cure rates (Event - Optimer investors see reasons for optimism over phase III data, January 18, 2010). While the shares initially surged on the day they have since lost almost all of those gains.

Fidaxomicin phase III results
 Fidaxomicin (200mg) twice daily  Vancocin (125mg) four times daily
Clinical Cure  91.7%  90.6%
Recurrence  12.8%  25.3%
Global Cure  79.6%  65.5%

Despite what looks like obvious advantages over Vancocin in these vital measures that could support a superiority claim, and its twice daily dosing versus Vancocin’s strict four times daily schedule, some analysts believe that the reason why the stock has not rocketed is because the drug will only be used as a third or fourth line treatment in early launch.

This could partly be due to the need for doctor education programmes about the drug and the fact that it will take several months for fidaxomicin to get onto hospital formulary lists.

What also currently counts against fidaxomicin is that it takes 48 hours to confirm cases of CDI, meaning that patients that present with sickness and diarrhoea are usually started on a broad spectrum antibiotic such as Vancocin.

This could, however, change in the future with new diagnostic tests that could spot the disease in a number of hours, but these are not expected on the market in the near future.

All about the money

But all is not doom and gloom. Analysts expect the group, which is planning on hiring a 100-person sales team for the US concentrating on hospitals and nursing homes, is expected to take market share from Vancocin and potentially significant market share as time rolls on.

How much will depend not only on the drug’s efficacy, but its pricing. Hints from the company indicate that it will be cheaper than branded Vancocin, but this stalwart of the anti-infectives space is expected to start to face generic competition now that the rules to establish bioequivalence for the product no longer require onerous human trials (ViroPharma can finally look forward after losing Vancocin battle, August 5, 2009). This could also be making investors a little wary of getting too excited about the drug.

But even with a new cheaper entrant, the significant differences in recurrence, global cure and the drug’s faster rate in clearing up diarrhoea could mean that physicians choose it over both Vancocin and its generic versions.

The single life

As such, the lack of news on ex-US partnering rights or an approach from a big pharma company willing to take the group out since the release of the data could also be playing on investors’ minds. With $43m of cash on the balance sheet as of September and a burn rate of about $10m a quarter the group certainly needs a cash injection. If a deal is not forthcoming Optimer will be forced to raise money on the markets this year, something that investors are also mindful of and could be putting a dampener on the shares, which certainly look cheap given fidaxomicin’s potential.

Optimer is expected to file fidaxomicin in both the US and Europe by the summer and if it gets fast track designation in the US it could be on the market by early 2011. But what analysts, who are forecasting peak sales of between $370m-$400m for the drug, and investors clearly want is more positive news ahead of this event.

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