Analyst report dated December 9, 1997 from BancAmerica ROBERTSON STEPHENS
CANCER PROGRAM, VIRACEPT STRENGTH HIGHLIGHTED AT ANALYST MEETING
*Cancer program, recently re-acquired from Roche, notably AG3340, better than expected.
*AG3340 early clinical data are very encouraging; Phase II to start in Q1:98; NDA scheduled for F2000.
*By all measurements, in our view, Viracept continues to gain in HIV-protease inhibitor market.
KEY POINTS:
1. Re-acquired cancer program looks promising. At a last-minute analyst meeting scheduled at Agouron (during the ASH conference in San Diego), management presented details of the two cancer compounds, AG3340 (an MMP inhibitor) and AG2034 ( a GART inhibitor), that were re-acquired last week from Roche. While the termination of Thymitaq was disappointing, expectations were low. However, the compounds under development, especially AG3340, have excellent early-stage data and could lead to an NDA filing in F2000, which is approximately the same time frame as Thymitaq. Furthermore, Agouron now owns worldwide rights to these compounds, preserving long-term value. In addition, the company has already received interest from potential new corporate partners, although it is unlikely to form a new collaboration until the end of 1998. Manufacturing is one area that Agouron will have to assume in the cancer project. However, Roche will provide ample supply for Phase II trials, allowing AGPH time to establish production/commercial capacity.
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2. AG3340 has excellent oral absorption, Phase II/Pivotal trial to begin in Q1:98. In what could be a unique twice-a-day (or even once-a-day) pill, AG3340 has been tested in several preclinical cancer models and five doses (5, 10, 25, 50 and 100 milligrams per day) in patients with various solid tumors. As a selective MMP inhibitor, AG3340 appears more potent as a tumorstatic (i.e., stops tumors from growing) agent than British Biotech s (BBIoy $17 1/2) Marimastat. Exposures equivalent to those effective in preclinical models are easily achieved in humans in very low concentrations/doses. In addition, exposure levels being explored cover the spectrum of cnacers. In addition to the doses mentioned above, the company is adding cohorts of drug at teh 1 and 2 milligram levels, further supporting the drug s potency. Phase II randomized, controlled and blinded studies in combination with other chemotherapy agents wil begin in Q1:98, in non small cell lung cancer and hormone refractory prostate cancer, that could turn into pivotal trials. Other disease potential include glioma, breast and colon cancer.
3. Second Compound, AG2034, Still Early But Interesting. AG2034 is a GART inhibitor that is selectively cytotoxic to p53 negative cells, which make up 50% of all tumors and 70% of colon cancers. Phase I dose escalation trials are under way, now seven times the initial dose, with a one hour infusion fiven every three weeks.
4. Viracept Topping the Domestic HIV-Protease Inhibitor Market. Some details included in yesterdays presentation are:
a) After a possible slowdown, PI market is growing rapidly, form 181,000 total prescriptions in July, to 182,100 in August, to 184,000 in September to 196,800 in October. November data are due next week, but anecdotal signs are for further growth from October.
b) Viracept now has the dominant dollar share of the HIV PI market, and should continue to widen its lead over number two, Merck's (MRK $104-3/4) Crixivan.
c) In surveys done by AGPH (at ICAAC, IDSA), physicians plan to increase use of Viracept by 90% over the next year, compared with about 35% for Crixivan, 30% for Invirase and 25% or so for Norvir.
d) Approximately 80% of new Viracept patients are naive to PIs, versus 37% in May. This means that newer patients should have better durability of response (i.e., less resistance) than initial Viracept users.
e) BID data look great and should reach statistical equivalence to TID sometime in 1998, when an ANDA is expected to be filed.
f) First-quarter European approval is expected to drive additional sales growth.
g) The company is taking several tactival initiatives to widen sales growth/shares.
h) Agouron is in the early stages of developing new anti-HIV drugs ( e.g., integrase blockers)
INVESTMENT IMPACT: Positive. Continue to believe last week's stock decline was excessive; looks very cheap, in our view. Cancer program is more than initially expected after Roche walked from program. Agouron continues to make solid inroads and market share gains in the HIV-protease inhibitor market.
ACTION NOW: Agouron is rated BUY.
COMING EVENTS: Expected upcoming events for Agouron include (1) filing of IND for AG3340; (2) Phase I data form AG2034 (GART inhibitor) expected in 2H:97; (3) continuation of Phase IV program for Viracept, including results form ongoing double protease inhibitor trials expected late 1997 and early 1998; (4) additional corporate collaborations; (5) other geographic approvals for Viracept. |
