NBIX :Additional Details Of Indiplon FDA Action Letters
2006-06-16 02:26 (New York)
Piper Jaffray & Co.
Hot Comment
(NBIX - $19.37)
Market Perform Volatility: Low
Health Care
Additional Details Of Indiplon FDA Action Letters
Thomas Wei, Senior Research Analyst
212 284-9305, thomas.a.wei@pjc.com
Gur A. Roshwalb, M.D., Research Analyst
212-284-9314, gur.a.roshwalb@pjc.com
KEY POINTS:
* FDA Questions IR Safety And MR Efficacy. NBIX released its first commentary
around the recent FDA action letters for indiplon. For the short-acting 5
and 10 mg capsules, it appears that the FDA has requested a re-examination
of pooled elderly safety data, as well as a more vaguely described request
for a re-analysis of other efficacy and safety data. We understand from
management that the elderly safety data were not separately culled out into
an analysis for the FDA. For the 15 mg long-acting tablets, management
indicated that the FDA questioned the sufficiency of objective efficacy
data. NBIX believes that the FDA has not closely reviewed data from a two-
night 15 mg study presented at the recent APA meeting. In that study,
objective sleep endpoints were measured, and the 15 mg dose demonstrated a
statistically significant 11 minute improvement in wake after sleep onset
and a 27 minute improvement in total sleep time. However, even though this
study may answer some of the FDA's tablet questions, the company signaled
that new clinical studies are likely to be requested. We understand that
other re-analyses of data may be necessary on adverse events with the tablet
formulation, in particular to separate side effects seen at lower doses vs.
higher doses.
* Next Steps For Indiplon. NBIX has requested a meeting with the FDA, which is
typically scheduled within 30 days of the request, to discuss what further
analyses or trials may be required for approval. We currently project a 2008
launch for indiplon, but have limited visibility on the company's ability to
beat or miss this target.
* Maintain Market Perform Rating. At the margin, the update in the press
release appears to signal a better situation than investors had feared.
First, instead of fears of core safety issues with the 15 mg study that
would require large safety trials of long duration, the press release
suggests that the core deficiency in the tablet filing is efficacy, which
may be addressable through smaller, shorter studies. Second, the commentary
around the short-acting formulation interestingly suggests that the FDA is
considering labeling language for an indication for middle-of-the-night
dosing, which would potentially differentiate the indiplon capsules from
other insomnia drugs. However, while NBIX has attempted to describe its
interpretation of the key issues with the indiplon filings, we are concerned
that there could be multiple other issues raised in the action letters into
which we have limited visibility. We maintain our Market Perform rating and
continue to stay on the sidelines until we have further clarity on the exact
timeline and prospects for approval.
PRICE TARGET AND JUSTIFICATION:
Our $22 price target is based on 35x 2010 EPS, discounted at 35%.
RISKS TO ACHIEVEMENT OF TARGET PRICE:
Risks include but are not limited to: 1) regulatory uncertainty on indiplon
FDA issues; 2) delays in indiplon launch, and 3) lower-than-expected sales of
indiplon.
Related Companies:
NBIX: 19.37 |
