Biotech Values

[rfj1862]

RPRX RMF

Anyone may update this file; feel free to e-mail me for the source file with the formatting. Permission granted to cut, paste, slice, dice, or repost elsewhere.

Warning: opinions ahead. Take it for what it’s worth.

Edits:
*Added information from Dewophile on Lupron for uterine fibroids.
*Added information on near-term catalysts
*Added information from Dunno and Bladerunner on GnRH analogs in development

I would appreciate any additional comments via private message or e-mail…no need to clutter the board.

Company
RPRX is a biopharmaceutical company focused on the development of new drugs to treat hormonal and reproductive system disorders. The company’s name was changed to Repros Therapeutics Inc from Zonagen, Inc, “in order to more appropriately reflect [a] focus on the reproductive and hormonal health technology market.”

RPRX management has been upfront about their desire to sell the company or individual programs. Provided continued positive results in clinical trials, this company will be sold eventually.

From a brokerage report:
Proellex and Androxal represent exactly what we look for as investable assets in biotechnology: they address very large markets, are in drug classes that have demonstrated positive, validated risk-benefit profiles, and are wholly-owned by the company. Additionally, we believe that the areas of male and female reproductive health are poised to be areas of significant growth, relative to other sectors in healthcare, which makes Repros a particularly attractive investment at this time.

Near-term catalysts
January
*Analyst meeting (January 4)

March
*Final results for phase II/III trial of Proellex in uterine fibroids
*Final results for phase II of Proellex in endometriosis
*Final results for phase III of Androxal

Unknown timing
*Financing (0-2 M shares; estimate Jan or Feb 2007)
*Sale/partner Androxal in Europe (estimate Q1-Q2 2007)
*Special protocol assessment (SPA) submission: Proellex in uterine fibroids (estimate end of Q2 2007)
*SPA submission: Proellex in endometriosis (estimate Q2 2007)
*SPA submission: Androxal in testosterone-deficient men (estimate Q3 2007)
*Initiation of phase III trials for Proellex in uterine fibroids and endometriosis (estimate Q3 2007)
*One-year toxicity/carcinogenicity results (estimate Q4 2007)
*Two-year animal toxicity results (estimate Q4 2007)

Products
Proellex
Proellex is an orally administered, selective progesterone receptor modulator (SPRM) in development for the treatment of uterine fibroids and endometriosis. Proellex inhibits the progesterone receptor without inhibiting the production of estrogen activity, which is a marked improvement over the current standard of care for both diseases, Lupron (Lucrin). Long-term use of Lupron causes severe estrogen deficiency that may cause depression, mood swings, abnormal bleeding, and osteoporosis.

Because of its drawbacks, Lupron is indicated for <6 months of treatment. Because of the shortcomings of Lupron, Proellex only has to provide similar efficacy to supplant Lupron from the market. However, as noted below, initial data suggest that Proellex is far superior to Lupron.

Proellex market
*13.6 million women in US with uterine fibroids, approximately one-quarter of whom could benefit from treatment.
*5.5 million women in US with endometriosis, the majority of whom could benefit from treatment
*Sales for asoprisnil (former competitor, pulled from clinical trials) estimated at $600 M for uterine fibroids alone

Phase II/III uterine fibroids trial—design
*Enrolled 150 women with signs/symptoms of uterine fibroids
*Patients receive 0, 12.5, or 25 mg Proellex
*Three-month multicenter study with open-label extension
*Primary end point: bleeding
*Secondary end points: pain, quality of life, and fibroid size
*Safety: endometrial effects and bone loss

Phase II/III uterine fibroids trial—results and qualitative analysis
Perfect results.

1) For the primary end point of uterine bleeding, both the 25 mg and 12.5 mg doses showed incredible results. The P-values were, respectively, .00003 and .000005, which meets the pre-specified threshold for declaring the trial a statistical success with the interim results. I expected this result, but not such low P values.

2) For the secondary end point of QoL, both the 25 mg and 12.5 mg doses showed excellent results, with P values of .0046 and .0029, respectively. Given that QoL measures are often squishy, I did not expect this result. I expected a trend toward improved QoL.

3) Pain scores. Again much better than expected, particularly at the 25-mg dose (P=0.006).

4) Great safety results, which were the key to this trial. Seven placebo patients, six 12.5–mg patients, and three 25-mg patients had thickening. Most importantly, no hyperplasia with atypia was observed in any patient. This result is substantially better than expected.

5) No results for the secondary end point of fibroid size.

Phase II endometriosis trial—design
*Enrolled 40 women with endometriosis,
*Patients treated for 6 months with double-blind Proellex at dosages of 12.5, 25, and 50 mg
*Active-controlled with Lupron
*Primary end point: pain
*Secondary end point: bone loss
*Conducted in Eastern Europe. Note that treating physicians (N=22) were randomly allocated to open-label high (n=21) or moderate (n=1) vodka intake

Phase II endometriosis trial—results and qualitative analysis
Perfect results.

1) The 50-mg dose was statistically significantly better than Lucrin in terms of days of pain (P=0.02). Remarkable result, given that there were only 10 patients in each dosing group. Works out to about 4.5 days of pain for Proellex vs 29 days of pain for Lucrin.

2) During those 4.5 days of pain, the 50-mg dose of Proellex provided a statistically significant (P=0.02) improvement in pain severity compared with Lucrin.

3) Proellex provided excellent efficacy for pain-associated distress, with a P-value of 0.001 vs Lucrin for the 50-mg dose. Only one woman reported mild distress in the Proellex group.

4) Safety: as expected there were no significant changes in biomarkers of bone resorption in any of the Proellex groups. Although expected, this is a key result Lucrin causes bone loss, which limits its applicability as a chronic therapy.

5) Most importantly, no endometrial thickening at the 50-mg dose, no significant endometrial thickening at any Proellex dose and no endometrial hyperplasia with atypia at any dose.

Proellex commentary
In short, when taken the data are taken separately or together both trials were incredibly successful. The results of both studies far exceeded my expectations on every end point.

Proellex SWOT
Why do I feel like I'm at work?

Strengths:Outstanding efficacy in two markets with significant unmet need; FDA likely to be very supportive for both indications.
Weaknesses: Potential for endometrial hyperplasia remains the primary concern.
Opportunities: Proellex is probably generating significant interest from potential acquirers already; Applications beyond endometriosis and uterine fibroids
Threats: FDA requirements for phase III uterine fibroid trials (one or two trials?); potential competition (longer-term); RU-486 issues

Androxal
Androxal is a novel, orally-administered small molecule in clinical development for the treatment of testosterone deficiency in men. Unlike treatments that artificially replace testosterone in the body, Androxal restores testosterone by stimulating natural production of testosterone through the upregulation of the pituitary hormones (including FSH). The re-activation of the hypothalamic-pituitary axis results in normal, physiological levels of testosterone that replacement therapies aim for.

The production of FSH may have benefits for infertile men, an area in which few treatment alternatives are effective. Androxal’s unique mechanism of action also avoids many of the side effects associated with testosterone formulations, most notably, the testicular atrophy and/or infertility caused by supra-normal testosterone levels achieved with topical/transdermal and injectable testosterone products. Androxal is also not subject to partner risk and has no abuse potential because it does not produce supranormal testosterone levels.

Androxal market
Testosterone creams, gels, patches, and injections: ~$450 M worldwide, $150 M Europe only. Significant opportunity for market expansion.

Androxal Phase III—design
*Enrolled 200 men with testosterone levels <300 ng/dL
*Patients randomized to treatment with Androxal 12.5 mg, Androxal 25.0 mg, placebo, and open-label Androgel
*6-month treatment period with open-label extension
*Primary efficacy end points: testosterone levels, libido,
*Secondary end point: “distress”

Androxal Phase III—results
In this interim analysis, men treated with 12.5 mg of Androxal experienced an increase in mean testosterone of 210 ng/dl (P<0.0001) over baseline; those treated with 25 mg of Androxal experienced an increase of 241 ng/dl (P<0.0001) over baseline; and those treated with open-label Androgel, administered at any dose, experienced an increase of 167 ng/dl (P=0.0002) over baseline. As expected, men receiving placebo experienced no statistically significant change in mean testosterone.

Note that, according to the protocol, these data are sufficient to formally declare the trial a statistical success for the primary end point.

There was a dose-related trend toward improvement in distress, which is really all I expected at this point. No trend in libido, although Androxal and AndroGel performed similarly for this end point.

Androxal commentary
Data from Phase III study are very good but not perfect.

What these data suggest is that Androxal may be approvable ex-US: European regulatory authorities have indicated that restoration of testosterone levels to normal is an acceptable single end point. Market in Europe is ~$150 million; Global (ex-US) perhaps $300 million.

Eventual approval in the US remains open to question, but given that there are several testosterone-replacement therapies with serious drawbacks, the FDA may consider Androxal, in clinical context, as a safer alternative.

Three months may not be enough time to see statistically significant changes in the soft end points of libido and distress, so the US story here remains open.

According to the company, “With these encouraging results in hand, we will seek to identify a licensing partner for Androxal in Europe.” This statement suggests that dilution when (and now if) it comes will be substantially smaller than it might otherwise be.

Androxal is of secondary importance in RPRX's portfolio. In short, these results are nice but not critical. I would like to see Androxal leveraged to get the Proellex programs done with minimal dilution.

Androxal SWOT
Strengths: Outstanding efficacy for primary end point; significant safety advantages over existing therapies.
Weaknesses: Has not shown efficacy for libido, and only a trend toward efficacy for distress (note: similar results were seen with AndroGel)
Opportunities: Partnership ex-US may reduce/eliminate need for cash
Threats: FDA requirements for approval.

Competitors
Proellex
Uterine fibroids
Primarily surgical (hysterectomy, selective myomectomy). Both procedures have obvious implications for reproductive-age women.

Lupron has an indication for 3 months of treatment to shrink fibroids.

Endometriosis
GnRH analogs (Lucrin), progestins, oral contraceptive pills, androgens, and aromatase inhibitors. After a trial of an oral contraceptive, GnRH analogs are standard of care.

Lupron has obvious drawbacks, including need for injection, and of course all the problems that come with down-regulation of estrogen. GnRH analogs are indicated only for short-term use.

Two additional GnRH analogs are under development by AEZS and SPPI. Neither represent a significant competitive threat.

Danazol (synthetic androgen) can also be used but it has a bunch of nasty side effects, and there are also surgical procedures that can correct endometriosis. According to Dewophile, danazol is no longer used in the clinic.

Asoprisnil was in the pipeline, but was terminated because of an excess of procedures related to endometrial thickening. Notably TAP made a business decision to terminate this trial even though the DSMB disagreed, so some day this one might come back.

Physician perspective on competitors: http://tinyurl.com/ybnff3

Androxal
Primarily testosterone gels/creams (AndroGel, Testim), which have a bunch of very serious limitations, including testicular atrophy, partner risk, abuse potential, and an issue with worsening of secondary hypogonadism. There is also the option of administration of exogenous testosterone with all of its attendant problems.

In addition, Clomid could be used, but its cis isomer has estrogenic effects and an extremely long half-life. Note that Androxal is just the trans isomer, which does not have these effects.

In short, the limitations of current products for testosterone deficiency can be summed up as: do you want a hairy girlfriend and shrunken testicles, or would you prefer to schedule a fitting for a manssiere?

See the following link for physician perspective: http://tinyurl.com/ybnff3

Financial
Company has approximately $8.3 million; burn rate ~$3 million per quarter with 3 active clinical trials; ex-clinical trials burn rate ~$700,000 per quarter

Coverage and targets
ThinkEquity: $18
Punk Ziegel: $25
Rfj1862: $93.48 and a nice loft in Tribeca in a pet-friendly building with private outdoor space and an elevator. Thanks!

Potential acquirers
Note that the company is upfront about wanting to sell either the entire company or individual programs.

Analysis based on current portfolios, not pipeline gaps (in which case any number of big pharmaceutical companies may be interested). Also assumes sale of both programs to the same entity.

High probability
Bayer (markets testosterone replacements, estrogen replacements, contraceptives)

Medium probability
Barr Laboratories (markets contraceptives)
Organon (markets contraceptives)
Pfizer Inc (markets contraceptives and an erectile dysfunction product)

Links
Presentation: http://tinyurl.com/yznoyy
Insider activity: http://tinyurl.com/yeoe2d
Website: http://www.reprosrx.com
Why Proellex is different from mifepristone (RU-486): http://tinyurl.com/ychr56
Risks and rewards (pre-December results): http://tinyurl.com/yfs7vz
Predictions for December results: http://tinyurl.com/yh2bu7
Another pre-result take on RPRX (from a physician’s perspective): http://tinyurl.com/yce5qa

Now, to whom should I send the invoice?