A glance back to what brought on the fall from 16 to 2 ,and what may be instore.
The benefits in the behavioral components of FXS have led to the development of Zygel for other syndromes with behavioral manifestations. These include ASD and 22q. ASD affects nearly 1 million patients, and can include symptoms such as anxiety, repetitive patterns of behavior, impairment in social communication, and social impairment. There are limited products approved for ASD as of present time. The BRIGHT study is a 14 week trial evaluating Zygel in ASD patients. The trial is a single arm trial that will evaluate the effect of Zygel on several aspects of behavior and anxiety. Results of this trial are expected in the second quarter. Finally, we have 22q, which affects around 81,000 patients in the United States. This disorder results in neuropsychiatric illnesses including anxiety. Presently, there are no approved drugs for the treatment of 22q, which paves the way for Zygel to be a first to market product. The INSPIRE trial is evaluating the use of Zygel for patients with 22q11.2 deletion syndrome, and will look at the neuropsychiatric effect at 14 weeks, similar to the BRIGHT trial. Results of this trial are expected in the third quarter of 2020. So lets look at the market opportunity here. The current WAC price of Epidiolex is around $32,500 annually. We will use a similar price point for our estimates. Using the market opportunities as estimated by Zynerba, we arrive at these conservative annual revenue for Zygel:
FXS (10% market penetration): $210 million annually
ASD (2% market penetration): $585 million annually
22q (10% market penetration): $240 million annually
These estimates do not include any potential revenue from a DEE indication either. As you can see, these potential revenues far exceed the current valuation (market cap of $100 million). So where is the disconnect? Well when Zynerba released their most recent DEE, the stock sold off sharply on what is perceived to be safety concerns. Most people will point to the infection-related adverse events. First, in clinical trials, all adverse events are reported, whether they are related to trial drug or not (runny nose, ingrown toenail, scrapes, etc.). So the absolute rate of adverse events is misleading. Furthermore, what people need to understand is that these patients are medically fragile. Many of these patients have co-morbid conditions such as cerebral palsy, chronic respiratory infections, tracheostomies (breathing tubes), and feeding tubes. Many of these conditions predispose patients to frequent health care visits (risk factor for infection) and infections (breathing tubes). To be honest, it is not surprising these patients had infections, but it is more likely related to their other conditions and not related to treatment with Zygel. All of this concern overshadowed the fact that Zygel resulted in a 44% median reduction in seizures by month 2. Furthermore, only one patient discontinued therapy with Zygel (due to application site reaction).
