Stock upgraded to S5
QLT PhotoTherapeutics CHRISTINE CHARETTE (QLT - TSE; QLTI - NASDAQ) (416)359-6190 November 18, 1999 Toronto, Ontario
Visudyne Recommended for Approval;
Stock upgraded to S5
EVENT: The Ophthalmic Drugs Subcommittee of the Dermatologic and Ophthalmic Drugs Advisory Committee recommended approving Visudyne for the treatment of "predominantly classic" AMD.
IMPACT: Positive. There was no discussion regarding "pure" versus "predominantly" classic AMD. The drug was recommended for the approval that was being sought. Given the doubts over the last few weeks that this outcome would be achieved, we expect the stock will react positively to the news. We are upgrading the stock from an S4 to an S5.
DETAILS AND ANALYSIS: Although no formal questions specifically dealing with approval was posed to the advisory panel, members who did express an opinion recommended that Visudyne receive approval for "predominantly classic" AMD.
The FDA had prepared six questions for the panel, most of which dealt with labeling issues or post-approval studies. It was therefore obvious from the outset that the FDA had already formed an opinion that the product should be approved and was seeking guidance from the committee members on relatively minor issues.
Regarding the first question "How can the subgroups for which Visudyne demonstrated a visual acuity benefit be best described", panel members where unanimous in their answer: "predominantly classic".
The last question was a general "additional recommendations/comments?" Panel members took the opportunity to express their opinion regarding whether or not the drug should be approved. Those that did express their view recommend the drug be approved for "predominantly classic" AMD.
Issues always arise during advisory committee meetings, as the data is looked at by the most critical of eyes, but as far as advisory committee meetings go, this one was benign. As previously agreed with the FDA, QLT sought Visudyne approval based on a one-year interim analysis of the two-year TAP trial. The one repeated request from committee members during the day was for two-year data in order to ensure that the treatment benefit did not reverse itself after the first year and that safety holds up.
For those following the company closely, this question generated the most interesting and revealing comment of the day. The two-year data from the TAP trial has not yet been analyzed, since the last patients went through their two-year point at the end of September and it takes quite some time before data can be processed. However, like in all trials, the Visudyne data and safety monitoring board, which is made up of independent clinicians, does see data on a regular basis in order to make sure nothing untoward is happening to patients. In response to panel questions regarding the possibility of the loss of treatment benefit or the possibility of untoward visual effects during the second year of treatment, a member of the data safety and monitoring board replied that nothing in the 15,18, 21 or 24 months of data they have seen so far would support this. His comment was that the data did not demonstrate any evidence of loss of effectiveness and no increase in toxicity. This bodes well for the two-year TAP data expected in Q2/00.
Although some media stories say that two years of data will be needed for approval, this is not accurate. The FDA has already agreed that approval can be based on one year of data.
During the analyst meeting following the panel, the president of CIBA VISION commented that over 1,000 patients in the U.S. had been treated as part of the treatment IND program and 150 lasers had been placed. In Europe the number of patients treated as part of a similar mechanism is now counted as number of patients per center per day. This bodes well for initial sales.
In terms of final approval timing, the FDA has until February 2 to approve the drug; however, in comments made following the panel meeting, Wiley Chambers, the head of the ophthalmology division at the FDA, said the product would probably be approved before the six months is up.
ASSESSMENT: The panel meeting went very well. Visudyne should get approval for the indication QLT/ CIBA are seeking within the next 2.5 months.
Now that the approval issue has been dealt with, the only issue bears can bring forward is one of market size. AMD represents a large part of a retinologist's practice; is often referred to as the largest unsolved problem in ophthalmology, and is the U.S. National Eye Institute's number-one priority. We outlined the available data which looks at the question of market size in our report last December. Based on the Beaver Dam study, which is the largest recent study done which looked at incidence of AMD, our conclusion is that there are 200,000 new patients per year in the U.S.
Taking a different approach, Dr. Neil Bressler has also estimated a similar number (203,000). In talks given by the U.S. National Eye Institute, the same estimates were used. There are some reports that the patient population may be smaller than this, but these are based on 20-year-old studies done at a time when wet AMD was not well identified. We therefore believe concerns about the number of new patients per year are unfounded, and one must also remember that there is already a large pool of patients (0.9-1.5 million in the U.S.) who already have wet AMD and a proportion of these are still eligible for treatment. CIBA only needs to penetrate 6.5% of the NEW patients in order to meet consensus sales estimates for next year.
RECOMMENDATION: We are upgrading the stock from an S4 to an S5. The average price increase for "single" large product companies between advisory committee meeting and approval is about 50% with a range of -10% to 150%. We believe QLT should perform above average given the concerns regarding potential for approval that have circulated in the past few weeks. |
