Nektar Therapeutics (NKTR - $ 20.62) 1-Overweight
Lehman Brothers Jan 27, 2006
Exubera EC Approval As Expected; US Next
Investment Conclusion
We believe the next several months will prove to be very important to the Exubera story, with US regulatory actions expected today, and possible commercial roll-out of the drug in U.S. and Europe soon thereafter. We continue to recommend purchase of Nektar shares, as we see significant upside potential from current levels given attractive valuation & additional catalysts expected in the coming weeks and months.
Summary
! The EC approved Exubera yesterday for adult patients w/Type I and II diabetes, w/approval following the CHMP's recommendation.
! No changes to our forecast, w/our peak sales estimates for Exubera remaining $1.5B in the US and $750M in Europe.
! As expected, Exubera use excludes patients with underlying respiratory issues & smokers - subpopulations that were not targeted populations in clinical trials. See label details below.
! PDUFA today - we are confident in the approvability of Exubera, given the positive FDA panel recommendation and qualitative aspects of that recommendation.
Nektar shares, as we see significant upside potential from current levels given attractive valuation & additional catalysts expected in the coming weeks and months. More specifically, we expect some additional follow-through stock outperformance with the expected near-term regulatory actions. As to Exubera’s commercialization and indications of patient and physician demand for the product, we would look beyond the first few months following launch for reliable data points, as we envision a slow but steady ramp-up rather than significant immediate sales, given the novelty of the delivery system. Reiterate our 1-OW rating and price target of $27, which represents $25/share total NPV from marketed & pipeline product, plus approximately $2/share net cash. Our NPV total includes Exubera NPV of $11/share where we assume 90% probability of Exubera reaching the US market and 80% probability to market in Europe with 2006 commercial launches. Total NPV also includes nearly $7/share of marketed products (Pegasys, Neulasta, Somavert & Macugen) and $7/share of other pipeline products.
LABEL DETAILS
CONTRAINDICATIONS - NO SURPRISES:
Having reviewed the label, we see no surprises, as key safety considerations were consistent with those discussed during the September 8 FDA advisory panel (see our FC note dated 9/9/05), but with greater precision around usage.
In line with our expectations, Exubera use excludes patients with underlying respiratory issues and smokers -- subpopulations that were not Exubera target populations in the clinical trials. Specifically, patients should not take Exubera if they have poorly controlled or unstable lung disease, or if they smoke or have stopped smoking less than six months prior to starting Exubera treatment. If a patient starts smoking or resumes smoking, he or she must stop using Exubera and see a health care provider about a different treatment. We view positively the absence of a broader contraindication in patients who have EVER smoked, which was perhaps better than some have expected, and which could have led to more limited prescribing. Also as expected, the label states that before starting Exubera treatment, lung function test will be conducted. Upon FDA approval, we expect similar labelling in the U.S.
DOSING AND ADMINISTRATION: Exubera is available in 1mg and 3mg blisters, with a patient’s physician prescribing the starting premeal dose based on the patient’s body weight. According to the label, a 1 mg unit dose blister is approximately equal to 3 IU of fast-acting subcutaneous insulin and a 3 mg unit dose blister is approximately equal to 8 IU of fast-acting subcutaneous insulin (instructions emphasize that 3 separate 1mg blisters are a higher dose than one 3mg blister). Dose adjustments may be required based on meal size and nutrient composition, time of day (higher insulin requirements in the morning), pre-meal blood glucose concentration, recent or planned exercise. As far as administration, Exubera should be given within 10 minutes before the start of a meal (due to rapid onset of activity). In the summary of the product characteristics, it states that the total daily dose should be divided into three pre-meal doses.
NEXT STEPS IN EUROPE - PRICING/REIMBURSEMENT IN INDIVIDUAL COUNTRIES: The EC approval comes at the end of the EMEA’s 300 day review process; according to the clock, with the CHMP's recommendation issued on Day 210. On Day 300 (yesterday), the EC issues the final decision, and will also issue the European Public Assessment Report (EPAR), which details the EC’s specific recommendations regarding Exubera. The EC decision will be valid 30 days after Day 300 for all EU member countries (there are 25), as well as the European Free Trade Association (EFTA) countries. Each EU and EFTA country will then work with the applicant (Pfizer) to determine Exubera pricing and reimbursement. Once this is agreed upon, the individual country will issue a marketing authorization for Exubera, allowing its launch. Timing of marketing authorization issuance varies by country.
Company Description:
Nektar Therapeutics is developing a pulmonary drug delivery system applicable to a wide range of peptides, proteins and other macromolecules currently delivered by injection.
New: 1-Overweight New: $ 27.00
Old: 1-Overweight Old: $ 27.00 |
