The Cross-Border Biotech Blog

Biotechnology, Health and Business in Canada, the United States and Worldwide

Valuation and other biotech mysteries – Part 4: Strategy and structure for Phase 3 clinical trials

[Ed. This is the fourth part in Wayne's series. You can access the whole thing by clicking here. Please leave comments or questions on the blog and Wayne will address them in future posts in this series.]

Very few independent Canadian biotech companies have successfully completed the development of a novel drug – so my first comment is congratulations to Theratechnologies. Now, let’s study what they did so we can learn how to assess other companies attempting the same feat. To repeat, my approach is to start at the end – regulatory approval – and study the pathway to that endpoint.

The FDA approval states that EGRIFTA™ (tesamorelin for injection) is indicated for the reduction of excess abdominal fat in HIV-infected patients with lipodystrophy. This approval is based primarily on proof of safety and efficacy from the Phase 3 trials. In order to determine their Phase 3 clinical strategy, Theratechnologies ran Phase 2 trials for a variety of indications, including COPD, sleep disorders, HIV-lipodystrophy, hip fractures, type 2 diabetes and flu vaccinations. They chose HIV-lipodystrophy as the best entry point for the commercialization of tesamorelin and may have considered the following factors in choosing this strategy.

  • Relative strength of the Phase 2 data for the various indications
  • Probability of success in Phase 3
  • Ability to recruit patients for the Phase 3 trials
  • Easily defined and measured clinical endpoints
  • Market potential for each indication
  • Interest of potential commercial partners for each indication

These are typical strategy and structure questions which help assess the risks and rewards about any pending or ongoing Phase 3 clinical trial program. We will look at quantifying potential rewards and more complete assessment of risks later in the series.

Here is a list of some clinical and regulatory events which occurred during the Phase 3 trials and subsequent regulatory review of tesamorelin (pulled from various AIFs in about 20 minutes).

Year

Month

Event

2004

June

Announced Phase 3 clinical strategy

2005

March

FDA approval to start first Phase 3 trial
 

June

First patient enrolled in first Phase 3 trial

2006

March

Patient enrolment completed in first Phase 3 trial
 

August

SPA for second Phase 3 trial
 

October

Last patient in first trial completed 3 months of treatment
 

December

Positive 3-month data from first Phase 3 trial

2007

January

Started patient enrolment in second Phase 3 trial
 

May

52-week treatment completed in last patient in first Phase 1 trial
 

September

Completed enrolment in second Phase 3 trial
 

October

Positive 52-week data from first Phase 3 trial

2008

April

26-week treatment completed in last patient in second Phase 3 trial
 

June

Positive 26-week data from second Phase 3 trial
 

October

EMD Serono licensed U.S. rights to tesamorelin
 

December

Positive 52-week data from second Phase 3 trial

2009

May

Filed New Drug Application (NDA)
 

November

Announced that the FDA will schedule an advisory committee meeting

2010

January

Announced that FDA will reschedule advisory committee meeting due to administrative delay at FDA
 

May 25

Briefing documents for advisory committee released
 

May 27

Advisory committee meeting; 16 – 0 vote in favour of recommending FDA approve tesamorelin
 

November

EGRIFTA (tesamorelin for injection) approved by the FDA for the treatment of HIV-lipodystrophy

By looking at this list, we can create a general list of Phase 3 questions. It is unlikely that any company will answer all or even most of these questions, so other sources such as analyst reports are useful.

  • How many Phase 3 clinical trials will be needed?
  • How many patients will have to be enrolled in these trials?
  • Will the trials be run concurrently or consecutively?
  • How long do you expect patient enrolment to take?
  • What is the timing of the interim analyses at which an independent board will assess continuance of the trials?
  • How long do you have to treat and follow the final patient before you can compile the final data?
  • What delay do you expect from the time top-line final data is released until an NDA (or BLA) can be filed?
  • Will the NDA be subject to accelerated or standard review timelines?
  • What will the cost of these clinical trials be, exclusive of ongoing corporate expenses?

The most complete outline of the clinical trial structure is contained in the Investigators Brochure and Clinical Trial Protocol but these are confidential company documents. The best current disclosure on trial structure is usually found at http://clinicaltrials.gov. This searchable database can be used to find the structure of a specific clinical trial, all clinical trials for specific medical conditions, the drugs being tested in those trials (competition information) and much more.

For the biotech investor, run a historic price chart for TSX:TH, plot all of the events in the table above and see what effect, if any, there was on the share price. If you did this for several companies that took products through Phase 3, whether successful or not, you may be able to spot some trends on what events you think impact share prices. Remember that share prices will also be impacted by other factors including company financings, announcements from competitors, sector trends and global financial events.

2 responses to “Valuation and other biotech mysteries – Part 4: Strategy and structure for Phase 3 clinical trials

  1. Viren Konde June 12, 2011 at 11:21 pm

    Hi,
    I enjoyed reading your very informative blog. I can not wait to read more on valuations in the up-coming posts. Thank you!
    -Viren Konde

  2. Pingback: Valuation and other biotech mysteries – Part 5: More strategy and structure for Phase 3 clinical trials « The Cross-Border Biotech Blog

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Follow

Get every new post delivered to your Inbox.

Join 129 other followers