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Wednesday, November 19, 2014

Acorda Acquires Civitas And Validates The Market

On September 24, 2014, Acorda Therapeutics (ACOR) announced it had made an offer to acquire privately-held Civitas Therapeutics for $525 million in cash. The impetus of the acquisition by Acorda was to get CVT-301, a Phase 3 inhaled formulation of levodopa for the treatment of off episodes in Parkinson’s patients. With CVT-301, Acorda believes it has an attractive late-stage asset to add to the company’s CNS-focused pipeline. The CVT-301 Phase 3 study is expected to begin enrollment in early 2015, with a new drug application (NDA) planned for 2016. Acorda estimates the market opportunity for CVT-301 is more than $500 million. Civitas had been previously planning an initial public offering, but the $525 million all-cash offer from Acorda was simply too attractive to pass up.

Civitas’ CVT-301 looks only a few months ahead of Cynapsus’ APL-130277. Cynapsus just recently completed the CTH-105 study discussed above. The next step is a bridging study, dubbed CTH-200, designed to be a single dose, crossover comparative bioavailability and pharmacokinetic study in healthy volunteers. This study is designed to provide the clinical “bridge” to the FDA’s finding of safety and efficacy for the reference-listed drug (Apokyn®) – a necessary step to file an application via the 505(b)(2) pathway. The CTH-200 Bridging Study is expected to begin shortly. Meanwhile, Cynapsus has already scheduled an “End of Phase 2” meeting with the U.S. FDA to discuss the Phase 3 program. This meeting is expected to take place in early February 2015. As such, we expect the Phase 3 program for APL-130277 to begin during the second quarter of 2015. Again, based on the recent positive data from CTH-105, we estimated CVT-301 is only a few months ahead of APL-130277.

…And We Think Cynapsus Drug Is Clearly Better…

Ever since the announced acquisition of Civitas, investors have been asking, “Why Civitas and not Cynapsus?” and “What does the added competition do to our forecasts?” The answer is simple – We think Acorda bought the wrong drug and that APL-130277 clearly has better attributes than CVT-301.

Specifically, CVT-301 is an inhaled formulation of levodopa. Levodopa is the most common form of dopamine replacement therapy, a backbone regimen and standard of care for the treatment of Parkinson’s disease. Parkinson’s disease is a slowly progressing neurological disorder characterized by tremor, stiffness and decreased movement. The decreased movement is a direct result of the lack of dopamine in the brain. Levodopa, when taken orally, is converted into dopamine in the substantia nigra by dopa decarboxylase. The administration of levodopa temporarily diminishes the motor symptoms associated with the lack dopamine in the substantia nigra. Carbidopa, a dopa decarboxylase inhibitor, is commonly dosed with levodopa to prevent L-DOPA metabolism before it reaches the blood-brain barrier. In fact, co-formulations of levodopa/carbidopa (Sinemet-CR) are available. Civitas’ formulation of levodopa bypasses the gut metabolism through inhalation, a pathway known to for rapid uptake and onset of action.

There are, however, major limitations to the use of levodopa as a treatment for Parkinson’s disease. Mainly, the patient must have substantial remaining dopaminergic neurons in the substantia nigra to metabolize the drug. However, according to research published in the Journal of Neural Transmission by P. Riederer et al in 1976, pathological studies of Parkinson’s disease show at least 70-80% of the dopaminergic neurons are lost before the onset of symptoms. This work was confirmed by K. Yoshikawa et al, 2004. This explains why levodopa is very effective for a period of time, then wanes with disease progression. A newly diagnosed Parkinson’s patient has the capacity to process levodopa. As the patient loses this capacity, the therapeutic window for levodopa therapy begins to narrow. Levodopa also has a relatively short half-life of only 60-90 minutes. The drug's effect, even in the mild Parkinson’s patient, only lasts for 1.5 to 2.0 hours post-dose (Brooks, D, 2008).

Work conducted by Olanow et al., 2006 shows that a therapeutic window for Parkinson’s disease patients rapidly closes (narrows) as patients gain experience with Levodopa use. This is due to a combination of disease progression, loss of dopaminergic neurons in the substantial nigra, and the short half-life of the drug.

As such, dosing dynamics for levodopa are challenging (Schapira et al., 2009). Too much drug (or too frequent dosing) leads to leads to dyskinesia, a direct result of excess dopamine in the brain. Too little drug leads to increase “off” time (bradykinesia / akinesia), the specific condition that both Civitas and Cynapsus are aiming to treat.

We question the concept of treating “off” episodes in Parkinson’s patients with more levodopa. Many neurologists and movement disorder doctors will delay the use of levodopa in newly diagnosed Parkinson’s patients specifically to avoid the narrowing of the therapeutic window and the risks of complications such as dyskinesia (see this YouTube video from the MJFF talking about Levodopa and Off/On time). We believe CVT-301 complicates the dosing regimen for the Parkinson’s patient taking a drug like Sinemet-CR. We suspect substantial acceleration of the narrowing of the therapeutic window and dyskinesia with the use of the drug. And as the Parkinson’s patient progresses from mild to moderate or severe disease, we suspect that CVT-301 will become a less effective drug. We also strongly question the approvability of an inhaled drug, with chronic use, in an elderly population for a non-pulmonary disease. The pathway to approval for CVT-301 seems arduous.

Apomorphine, the active drug in the only currently approved rescue medication for the treatment of off episodes in the U.S. in Apokyn®, is not a dopamine replacement therapy. Apomorphine is a dopamine agonist, and acts directly at the post-synaptic dopamine receptor, thus bypassing the need for dopamine and dopaminergic neurons in the substantial nigra. Instead, apomorphine can act directly on the gabaergic neurons that are not impacted by Parkinson’s disease, and provide an effective treatment option as a rescue medication to patients at all stages of disease progression.

The knock on apomorphine is that because the drug is rapidly metabolized by the liver, it must be administered by a route that bypasses the gut. As such, the currently approved formulation of apomorphine in the U.S. is a subcutaneous injection. Subcutaneous injectable apomorphine, sold in the U.S. as Apokyn®, is a horrible impractical and inefficient drug, flawed by its delivery system and quick peak-to-trough pharmacokinetic profile. Apomorphine is highly lipid soluble and quickly crosses the blood-brain barrier. The onset of action is as little as five minutes but only lasts for 60-90 minutes. Under QID dosing for levodopa, patients with advanced disease may still experience off episodes.

Self-administration of subcutaneous Apokyn is next to impossible for the akinetic (or dyskinetic) Parkinson’s patient. For example, the Instructions For Use for Apokyn® is 27 pages long and consists of steps that logically seem impossible for the frozen or rigid Parkinson’s patient to complete. Because self-administration of Apokyn® is nearly impossible, the treatment of off episodes requires direct caregiver support, likely from a skilled nurse. This places an undue burden on the healthcare system.

The above inhibiting attributes greatly limit sales of Apokyn in the U.S. Cynapsus’ APL-130277 is a sublingual formulation of apomorphine, with each thin film strip found inside an easy to open non-superimposable die cut peelable foil laminate pouch. The product can be self-administered, under the tongue, and is designed to be used anywhere, anytime, with little or no assistance required. The comparable dose strength of Apokyn® sells for $13-15 per injection. We believe Cynapsus APL-130277, with a far more convenient administration and lack of skilled caregiver requirement, will see sizable market shares gains and expansion over the current Apokyn market.

For example, Cynapsus sponsored neurologist surgery (n=500) with data conclusions suggesting a 7.5-fold increase in penetration across the board for mild, moderate, and severe Parkinson’s patients. It is for these reasons that we believe APL-130277 has peak U.S. sales far more than Apokyn, or Acorda’s newly acquired CVT-301.


Off time is a significant problem for patients with advanced Parkinson’s disease. In the U.S., there are an estimated one million PD patients (4-6 million globally). According to a recent survey by the Michael J. Fox Foundation, more than 90% of PD patients report having “off” episodes each day. Roughly two-thirds have “off” time greater than two hours, with 20% experiencing “off” time of greater than four hours. This is a significant problem for PD patients and an enormous unmet medical need.

Data from the recently completed CTH-105 study clearly validates the proof-of-concept for APL-130277. The drug demonstrated substantial signs of efficacy for all doses (10, 15, 20, 25, and 30 mg). The onset of action was as soon as ten minutes for some patients, with mean “time to on” of 22 minutes – admittedly not as rapid as CVT-301 but still well within the reasonable range for a rescue medication. More importantly, duration of effect was still evident at 90 minutes, exceeding what has been demonstrated with Apokyn or what we suspect will be shown in the CVT-301 Phase 3 trial given the half-life of levodopa has been documented to be less than 90 minutes.

In conclusion, we see APl-130277 as an easier-to-use and more effective drug than CVT-301, along with a better mechanism of action and pathway to approval. Data from CTH-105 de-risks the story, and Cynapsus has enough cash to fund all necessary clinical trials before the U.S. NDA filing (see our quick review of the Q3 financial results). A recent paper published by researchers out of the UK on behalf of EUROPAR and EPDA confirms our belief that this is a potentially enormous market. The paper concludes that early-morning “off” episodes are a significantly larger problem than believed even five years ago, with nearly two-thirds of all PD patients suffering from all stages of the disease (Rizos et al., 2012).

We do not know whether or not Acorda approached Cynapsus with a potential buy-out to acquire APL-130277 before its decision to scoop-up Civitas for $525 million. What we do know is that Cynapsus, on a fully-diluted basis, is currently worth only $75 million. If Civitas was worth $525 million, Cynapsus is worth more. As such, we could be looking at a ten-fold increase in valuation for Cynapsus over the next 2 years.


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  1. Hi Jason, just wanted to say thanks for all of the work you do. As someone said on Twitter, you are consistently the smartest, best informed analyst on any call. Keep up the good work! A lot of us really appreciate it.

  2. I agree with Anonymous. I thoroughly enjoy reading your analyses, which I find well reasoned and well written.

  3. Replies
    1. Agree with the props to you! What do you think this means for possible outside purchase of company! Thank you.

  4. Well, I got into this too high based on your recommendation, but kept averaging down as you continued to make the case for the company. Now I am holding 2,500 shares at an average of .66 per share and couldn't be happier. Thanks, Jason! I don't have a lot of money to invest (those $50 stocks are way out of my league) but looking forward to your next pick at this price level.

  5. Thanks for the great summary of the CTH-105 results. Came accross CYNAF from your recommendation after their offering this spring. It was a great decision.

    One thing to note I thought was interesting as I compared CTH-105 and CVT-301 Phase 2 study protocols on the site. For CVT-301 UPDRS III scores were measure only up to 60 minutes. APL-130277 UPRDS III scores were measured up to 90 minutes. To me this reaffirms your opinion that CVT-301 just won't be that effective in part due to the relatviely short half-life of Levodopa. Seems that Civitas acknowledges this as well by setting the primary measure of UPDRS III scores only to 60 minutes. Less chance of trial failing.

  6. Cynapsus to Uplist to TSX senior exchange Nov 28

    Thank you for the excellent article Jason.


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