A 3-Way Race To The Next Generation IPF Drug: Galapagos, FibroGen, ProMetic
Summary
- IPF (Idiopathic Pulmonary Fibrosis) is a debilitating and fatal lung disease with no cure, with a median survival of 3 years. Esbriet (pirfenidone) and Ofev (nintedanib) are IPF approved treatments.
- IPF affects ~200,000 patients in the US. The combined global sales of Esbriet and Ofev reached $1.1B in 2016, and the IPF market is estimated to reach $5B in 2025.
- FibroGen, Galapagos, ProMetic are all developing next-generation IPF drugs and have presented the results of their IPF phase 2 studies at American Thoracic Society 2018.
- I take a closer look at the results from these three companies and discuss an investment thesis.
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IPF (Idiopathic Pulmonary Fibrosis) is a debilitating and fatal lung disease with no cure that typically affects adults over the age of 40, with a median survival of 3 years.
The two currently approved treatments are Esbriet (pirfenidone) from the Roche Group ( OTCQX:RHHBY), and OFEV (nintedanib) from Boehringer Ingelheim, both of which were approved for IPF in Oct. 2014. In their respective pivotal trials, both drugs were shown to slow the loss of the patients' respiratory function, as measured by the forced vital capacity (FVC(ml)).
However, neither of these drugs are able to stop or reverse the loss of lung function due to fibrosis, and there was no survival benefit (i.e. reducing the risk of death) demonstrated in the pivotal trials. Thus, the treatment options remain poor for IPF patients and a significant unmet medical need exist for the next generation IPF treatment that can not only slow but stop or reverse the loss of lung function.
IPF affects ~200,000 patients in the US. The combined global sales of pirfenidone and nintedanib reached $1.1B in 2016, and the IPF market is estimated to reach $5B in 2025. In other words, a considerable addressable market for any new IPF drug developers.
3 IPF Drug Developers Presenting IPF Trial Results At The American Thoracic Society 2018 Galapagos ( GLPG), FibroGen ( FGEN), and ProMetic ( OTCQX:PFSCF) are three companies that are developing next-generation IPF treatments.
All these companies have recently announced their participation at the American Thoracic Society (ATS) 2018 in San Diego, California, presenting their respective results from their completed phase 2 studies.
Galapagos announced that in addition to presenting 3 abstracts at the ATS meeting, the results of their phase 2a IPF study, FLORA, have been published in the most recent issue of the Lancet Respiratory Medicine. From the May 20 PR:
"FLORA was an exploratory, randomized, double-blind, placebo-controlled trial investigating a once-daily oral dose of GLPG1690. The drug candidate was administered for 12 weeks in 23 IPF patients, 17 of whom received GLPG1690 and 6 of whom received placebo. Over the 12-week period, patients receiving GLPG1690 showed an FVC increase of 8 mL, while patients on placebo showed an FVC reduction of 87 mL (mean from baseline). GLPG1690 was well-tolerated by IPF patients in the FLORA trial."
FibroGen announced on May 21, 2018, the updated results from their phase 2b IPF study, PRAISE, while the topline results were reported in the PR on Aug. 7, 2017. More on FibroGen's results later.
ProMetic also announced on May 22, 2018, new clinical data from their phase 2 IPF trial, whose results were reported in the PR on Feb. 22, 2017.
ProMetic's IPF trial was a phase 2, open-label, single-arm, exploratory, observational study to evaluate the safety and tolerability of PBI-4050 in 40 IPF patients for 12 weeks. In this study, PBI-4050 was given to patients who were receiving pirfenidone, nintedanib, or neither drug.
- In the PBI-4050 monotherapy group (n=9), FVC remained stable, -12ml.
- In the PBI-4050 + nintedanib (n=15), FVC=+2ml.
- In the PBI-4050 + pirfenidone (n=16), FVC declined significantly to -105ml. PBI-4050's plasma concentration was reported at 50% of the expected level in this group, suggesting a drug-drug interaction.
It should be noted that both Galapagos and ProMetic's IPF studies were small, proof-of-concept trials that showed safety and exploratory efficacy data. Both phase 2 trials only studied the treatment effect for 12 weeks, while FibroGen's phase 2b was much bigger and longer, 48 weeks.
Comparing FibroGen's Phase 2b Data To The Approved Drugs There were three phase 3 trials ( CAPCITY 004 & 006 and ASCEND) conducted for pirfenidone and two phase 3 trials ( INPULSIS 1 & 2) for nintedanib to support their respective approvals.
* treatment benefit is statistically significant.
The graph below shows the range of FVC data reported in ASCEND and INPULSIS 2.
(Source) FibroGen data ('x's) added for comparison. FibroGen's Pamrevlumab met the trial's primary efficacy endpoint of change of FVC% predicted from baseline to week 48, which is positive.
Note, however, that the Pamrevlumab treated group's FVC change (-129ml) is within the range of the reported data from INPULSIS 2 (for pirfenidone) and ASCEND (for nintedanib) and not outside the range (i.e. neither better nor worse).
Investment Thesis
All three companies' IPF results are positive and very encouraging. Both Galapagos and ProMetic have recently announced the design of their upcoming phase 3 trials for IPF (Galapagos' PR; ProMetic's PR). If either or both companies can, in their phase 3 studies, show a similar treatment benefit (i.e. stop or reversal of FVC reduction) as shown in their phase 2 results, it will represent a major breakthrough in IPF treatments and have the potential to be a much more efficacious next-generation treatment than what is currently available. Similarly, FibroGen's Pamrevlumab has shown to be effective in slowing down the progression of IPF and was well tolerated by the patients.
According to Yahoo Finance, Galapagos has a market cap of ~$5.1B, FibroGen ~$4.5B, and ProMetic ~$447.7M (all in USD, May 22, 2018). This difference in valuation perhaps explains the different degree of response to the similar positive news (i.e. presenting IPF data at ATS meeting).
(Source: Seeking Alpha: A comparison in the 5-day chart ending on May 22).
For the recent 5 days, ProMetic stock (purple) increased by 8.62% while Galapagos (blue) was up by 5.50% and FibroGen (brown) 3.89%.
Given the fact that the IPF market is considerable, all three companies have the potential to complete their IPF programs if their future phase 3 trial results are positive and successfully meet their efficacy and safety end points. All three companies have extensive, advanced pipelines in development, which make all of them good candidates for long-term investment.
ProMetic, being the smallest in terms of market capitalization, may have the most room for the stock to appreciate if their phase 3 trial can repeat the early efficacy data.
Cash Position
- At the end of Q1 2018, Galapagos has cash & cash equivalent of €1.1B and a quarterly burn rate of €37.3M
- At the end of Q1 2018, FibroGen has cash & cash equivalent of $659M and a quarterly burn rate of $41M.
- At the end of Q1 2018, ProMetic has C$127.2M pro-forma cash and a quarterly burn rate of C$34.6M.
Risks
The most significant risks include but are not limited to significant delay or future trial failures for IPF drug candidate and/or for other drug candidates, or for other indications; regulatory failures: if in spite of positive phase 3 trial results, these companies fail to obtain the FDA approval to be able to commercialize their IPF drug; delay or failure in commercial launch if their IPF drug is approved. For Galapagos and FibroGen, the dilution risk is minimum, but for ProMetic, the financial risk of a near-term equity offer is very likely if no significant partnership or non-dilutive source of funding secured within the next 6 to 12 months.'
Jim |
