Evotec(evt.de) this afternoon announced that its lead drug EVT201 (a partial GABA agonist) reported positive results in its Phase II proof of concept (POC) study to treat patients with chronic primary insomnia (timing in line with our expectations). The two doses of the drug investigated met both co-primary endpoints of Wake After Sleep Onset (WASO) and Total Sleep Time (TST), as well as several key secondary endpoints. Both doses were also shown to be safe and well tolerated with no serious adverse events. A second Phase II study to treat 135 elderly patients with chronic insomnia is expected to readout in Q4:07/Q1:08.
2. â– In the pre-specified intention-to-treat analysis of the study, both EVT201 doses (1.5 & 2.5mg) successfully met both co-primary endpoints with a high degree of statistical significance: WASO (p<0.001) and TST (p<0.001). Furthermore, WASO during the second half of the night was also significantly (p<0.001) reduced, showing that EVT201 efficaciously maintains sleep throughout the night. Both doses of the drug also met several key secondary endpoints: latency to persistent sleep (p<0.001) and subjectively assessed quality of sleep (p<0.001). EVT201 showed no effect on subjectively assessed residual next day sedation and only a small decremental effect on the digital symbol substitution test (DSST) assessed at nine hours post dosing. Furthermore, the data showed that EVT 201 did not impair slow wave sleep unlike many benzodiazepine full agonists. The analysis of other secondary endpoints is still ongoing.
3. â– Our view: In our opinion, on the basis of these results EVT201 could potentially have a competitive profile to effectively compete with the current drugs on the market to treat insomnia. The Phase II POC data shows that the drug is effective in both inducing and maintaining sleep, while also avoiding significant next day hangover effects in patients. Evotec aims to seek a suitable licensing partner for the drug in 2008.
4. ■Valuation: We rate Evotec Outperform with a target price of €5. Following the divestment of the tools & technology element of the business (in Dec 06), we believe Evotec now offers investors a profitable, cash generative services business, a healthy cash balance (ca €66m in cash and cash equiv. as of 31 Mar 07) and a credible and growing pipeline. In our view, the company’s current stock price factors in little value for the pipeline and we believe investors will reappraise this view post EVT201’s positive Phase II results.
research team
CS Biotechnology, Biopharmaceuticals & EMEA Generics Team
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