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Monday, September 19, 2016

Immune Forms Pain & Neurology Spin-Off Called Maxim Pharma

Last week, Immune Pharmaceuticals, Inc. (NASDAQ: IMNP) announced the formation of a pain and neurology focused subsidiary that will own worldwide rights to AmiKet™ and Amiket™ Nano for the treatment of neuropathic pain, along with all the intellectual property around both key assets. The new company, called Maxim Pharmaceuticals, Inc., is wholly-owned by Immune Pharma at this time; however, Immune has also entered into a binding agreement with a syndicate of experienced healthcare investors to purchase up to $20 million Maxim capital stock, with an initial investment of $5 million expected in the next 30 days.

The creation of a pain and neurology focused subsidiary is an important step towards realizing what Immune believes is the significant value of AmiKet for shareholders. Below is a quick review of AmiKet, the transaction, and what to expect over the next several months at Maxim Pharma.

Background On AmiKet

AmiKet is a topical formulation containing 4% amitriptyline and 2% ketamine, both U.S. FDA approved compounds, designed for the treatment of neuropathic pain. AmiKet is applied twice daily and should offer several advantages for the treatment of neuropathic pain, including a potent analgesic effect and lack of systemic adverse events. This type of topical delivery of a non-opioid is the preferred mode of administration by many patients and physicians.

Immune has conducted a total of nine Phase 1 and Phase 2 clinical studies with AmiKet in over 700 patients. A multicenter, double-blind, randomized, placebo-controlled, parallel group Phase 2 non-inferiority study examined AmiKet compared to oral gabapentin (1,800 mg/day) for the treatment of post-herpetic neuralgia (PHN) in 360 patients over four weeks (1). The primary endpoint was the change in mean pain score, measured on an 11-point scale, from baseline to final week of treatment. The data are presented below (source: Immune Pharma).

Results show AmiKet to be non-inferior to gabapentin for the relief of pain associated with PHN. Additionally, the data demonstrated statistically superior pain relief compared to placebo, as well as a significantly greater reduction from baseline in average sleep disturbance score compared to placebo (average reduction: 1.87 vs. 1.31, p=0.0265) (2). Gabapentin, marketed by Pfizer as Neurontin®, posted worldwide sales at peak of over $2.7 billion until generics arrived in 2004.

In 2010, the FDA granted AmiKet orphan drug status for the treatment PHN. As such, if approved in PHN, AmiKet will have seven years of market exclusivity. AmiKet Nano is an improved topical nanoparticle formulation of AmiKet that will provide better penetration of the two drugs, along with intellectual property protection to 2036. AmiKet also received Fast Track designation from the U.S. FDA in 2012 for chemotherapy-induced peripheral neuropathy (CIPN).

If successfully commercialized in PHN, the label expansion for AmiKet and AmiKet Nano is substantial. There are several neuropathic pain indications that make sense beyond PHN, including the aforementioned CIPN, as well as HIV-related neuropathy and diabetic neuropathy (DPN).


Maxim Pharma Valuation & Future

Immune has established the pre-money valuation for Maxim at $15 million. As noted above, Immune shareholders currently own 100% right now. Upon the initial investment of $5 million from the syndicate of experienced healthcare investors, Immune will own 75% of Maxim, with the other 25% owned by the syndicate. The binding agreement allows for the future investment of up to an additional $15 million, which would result in Immune owning approximately 43% of the company upon full investment. I expect the first tranche to close in the next 30 days.

The initial $5 million investment is enough to allow Maxim to push AmiKet into a Phase 3 trial by the middle of 2017. Maxim likely will be engaging with both the U.S. and EU regulatory authorities over the next several months. I expect a second Phase 3 trial will be required and that Maxim is likely 24 months from filing the first application on AmiKet once the Phase 3 trial begins. A total investment of $20-25 million likely is required to file, with an additional $5 million necessary for pre-commercialization activities.

At this time, not much is known about the syndicate of experienced healthcare investors, only that part includes a prominent New York-based family office, and may include a broader group of investors which will be secured through an investment bank to be selected by both parties. Pursuant to the binding agreement, immediately following the $5 million initial funding, Immune will expand the Board of Directors of Maxim to five members, which will include one representative of the syndicate investors. A newly appointed Chief Executive Officer of Maxim is also expected to be announced in the coming weeks (3).

Maxim's goal is to become a fully-integrated specialty pharma company with a focus on pain and neurology. Companies that are successful with a similar model include Depomed Inc. (DEPO), Endo Pharmaceuticals (ENDP), Mallinckrodt plc (MNK), and Purdue Pharma. I believe Maxim will be pursuing additional pain or neurology assets in 2017, one of which may be Immune's LidoPain product (4). Maxim will use reasonable efforts to become publicly traded on a national stock exchange within 18 months of the effective date of the agreement.

In the meantime, Immune is eligible to receive up to $25 million in development milestones and up to $120 million in commercial milestones, as well as product sales royalties from AmiKet or AmiKet Nano from Maxim. Immune will also be eligible to receive 25% and up to 50% of sublicense fees received by Maxim. The deal is not too far off from what I predicted back in April 2015.


Chronic pain affects 100 million people in the U.S., more than the total affected by heart disease, cancer, and diabetes combined. IMS Health reported over 328 million prescriptions for pain medications and sales of prescription pain products totaled $13 billion in 2014. Lidoderm®, a 5% topical lidocaine, posted sales of $1.2 billion at Endo Pharmaceuticals prior to the patent expiration in 2013. A topical product such as AmiKet offers patients a safer and more effective approach for the treatment of neuropathic pains, such as PHN, could be a $350 million product in the U.S. Label expansion into CIPH and DPN put the peak market opportunity for AmiKet and AmiKet Nano over $1 billion.

I think this is a good deal for shareholders of Immune Pharma. AmiKet is now in the hands of Maxim Pharma and Immune can focus more attention on the two ongoing Phase 2 trials with bertilimumab, one in bullous pemphigoid and the other in ulcerative colitis. Positive data from these programs have the potential to turn around the stock. In the meantime, as Maxim progresses with AmiKet into Phase 3, Immune has the opportunity to receive increased equity in Maxim or cash milestones to drive bertilimumab forward. I look forward to seeing a similar transaction for the oncology assets perhaps in 2017.


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BioNap, Inc. holds no position in shares of IMNP.


  1. Jason, what do you have in mind for cash milestones when you write "as Maxim progresses with AmiKet into Phase 3, Immune has the opportunity to receive increased equity in Maxim or cash milestones to drive bertilimumab forward"?

    The May license option agreement says that development milestones would be made in shares rather than cash. Commercial milestones would be either shares or cash.

    Also, AmiKet failed to show efficacy in a 462-patient phase 3 CIPN trial: "This double-blind, placebo-controlled clinical trial demonstrated that 2% ketamine plus 4% amitriptyline (KA) cream did not alleviate chemotherapy–induced pain, numbness, and tingling in cancer survivors. Further, secondary analyses assessing pain alone also showed no benefit for KA cream. Although many interventions show promise of efficacy for painful CIPN in smaller trials, this topical treatment joins many others that have proven ineffective in large confirmatory trials."

    1. Tom,

      The first $25M in development milestones are all in Maxim equity. That's why I said, "increased equity in Maxim". After that, the next $120M can be either equity or cash. I guess it depends on if Maxim is public or not. I would suspect that Maxim will go public before AmiKet launches. My guess is that they go public between the 1st and 2nd Phase 3 trial.

      The initial indication is for PHN. I'm aware that the drug failed for CIPN but I do not see them spending any money in CIPN until PHN hits the market. I actually think PHN is all they need to do because the product will see sizable off-label use in other neuropathic pains even without the expanded label. DEPO's Gralise does around $75M in sales annually and I think only 20-30% is on-label in PHN.


  2. Amazing, thanks for the write up Jason. I am hoping to see Amiket value quickly but Bertilimumab is still immune's goldmine. Hope the phase 3 read out from trials are more than satisfactory. As far as SP goes, the behavior has been so erratic in the last few months but am invested in Immune and hope to see substantial movement before the year ends.