Theratechnologies defies doubts and gets OK from FDA adcom
This week it was Theratechnologies’ turn to ride the FDA advisory committee rollercoaster, and its executives alighted jubilant rather than nauseous. The adcom gave a unanimous vote in favour of Egrifta to treat HIV associated lipodystrophy, leaving only a July 27 PDUFA date standing in the way of its launch.
The vote was preceded by a wild two days for the Canadian company on the Toronto stock exchange, where FDA staff briefing documents perceived as taking a negative view of Egrifta resulted in a 52% share price plunge on Tuesday followed by a 39% recovery on Wednesday. With shares suspended Thursday during the adcom meeting, the company appears poised to recover the rest of the lost value and then some today.
After closing at C$2.90 on Wednesday, shares in Theratechnologies were trading at C$4.94 in early trade Friday.
Battling the bulge
Egrifta, known generically as tesamorelin acetate, is a daily growth hormone factor analogue injection targeting the complex HIV-associated lipodystrophy characterised by loss of fat in the face, limbs and buttocks, accumulation of adipose fat around the abdominal organs, blood dyslipidaemia and vascular inflammation. It is not clear whether the virus or the treatments cause the dyslipidaemia, but researchers are concerned it could contribute to cardiovascular and metabolic conditions as well as noncompliance with antiretroviral treatments.
With as many as 800,000 HIV patients developing symptoms of associated lipodystrophy, according to FDA estimates, it is not a small market.
A Theratechnologies-supported phase III trial of Egrifta published in the March Journal of Acquired Immune Deficiency Syndromes found that Egrifta therapy resulted in a significant reduction in visceral adipose tissue, increases in insulin-like growth factor-1 (IGF-1) above normal levels, improvements in patient rating of belly appearance distress and physician rating of belly profile, and other positive body measurement and composition measures (Event - Theratechnologies hopes adcom will stimulate growth in more than one way, May 12, 2010).
The crossover-designed trial also found that patients taken off Egrifta gained back much of the weight, suggesting that it will be a long-term drug, raising a safety concern as elevated IGF-1 has been associated with cancer risk. Ominously, the FDA review also pointed to a statistically significant increase in diabetes cases among patients taking Egrifta as a safety concern that could offset any cardiovascular gains.
Despite the concerns, panellists voted 16-0 to recommend Egrifta’s approval, suggesting it has a favourable risk/benefit profile. As usual, whilst a panel vote is a positive sign, it is no guarantee that the FDA will approve the drug.
Theratechnologies licensed US rights to Merck KGaA in 2008 for $22m upfront, an equity investment of $8m and $185m in milestones and royalties (Merck KGaA finds value in Theratechnologies, October 29, 2008). It is forecast to earn Merck $45m in 2016, according to consensus data from EvaluatePharma. Canaccord, which follows Theratechnologies, puts 2016 royalties at $62m, a rather overly optimistic forecast compared to the Merck estimates.
That rather impressive royalties estimate also explains why the drug has a net present value of $237m, representing more than 100% of the company’s market capitalisation of $171m. Consequently, analysts have put target prices of anywhere from C$5 to C$6.75, suggesting there is room for the shares to climb should FDA approval be granted.