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Wednesday, January 11, 2017

JPM Meeting Notes - HedgePath Pharmaceuticals (HPPI)


HedgePath Pharmaceuticals (HPPI) is another name I’m very excited about for 2017. The company’s Phase 2b trial with SUBA-Cap (itraconazole) is continuing to enroll patients. Target enrollment is 40 patients and it sounds like the company will get to that number by the end of the first quarter 2017. That sets up several catalysts for the shares over the near-term, including interim and full data analyses from the Phase 2b study in patients with Basal Cell Carcinoma Nevus Syndrome (BCCNS). As a reminder, I think the previous interim updates from the company have been outstanding.

If the full data analysis looks as good as the interim updates, I think you will see the company file for approval after this Phase 2b study. That’s not unprecedented. Both Roche (with Erivedge®) and Novartis (with Odomzo®) gained approval in their respective BCC patient populations after only Phase 2b studies. SUBA-Cap has several important advantages over both Erivedge and Odomzo that lead me to believe SUBA-Cap could become the market leader here. Itraconazole is well known and has been used safely in a chronic regimen by AIDS patients for decades.

Investors also need to understand the opportunity in BCCNS is substantial. Yes, this is an ultra-rare disease and only impacts 10,000 patients in the U.S., but these are patients that suffer a horrible affliction and often undergo multiple excisions a year for as many as hundreds of BCCNS tumors. Erivedge and Odomzo are not approved for BCCNS and I believe HedgePath can corner this market – a $250 million opportunity. The obvious progression for HedgePath would then be to expand the label into locally advanced and/or metastatic BCC, the label for Erivedge, which presents easy another $500 million peak sales opportunity. That makes HedgePath look cheap to me. Keep in mind, Novartis originally developed and gained approval for Odomzo in the narrow population of locally advanced BCC, and just sold the drug to Sun Pharma for $175 million in December 2016!

I discussed two other topics with management. The first is the fact that Mayne Pharma, a rapidly growing generic pharmaceutical company with a new focus on dermatology, recently just acquired 50.5% of HedgePath. Mayne is the manufacturer of SUBA-Cap for the clinical studies and it is logical to believe that Maybe will eventually acquire the remaining 49.5% of HedgePath (at a premium in my opinion) once the regulatory hurdle has been cleared. This is the clear exit for HedgePath investors and I do not think it is much beyond 1-2 years away.

The second topic of discussion was the recently filed an application seeking Breakthrough Therapy Designation (BTD) for SUBA-Cap for the treatment of BCCNS. The turnaround time on those applications is hard to peg exactly, but this sets up a major catalyst if granted in the coming months.

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BioNap is long shares of HPPI.

6 comments:

  1. Great updates from the conference Jason. Any update on the timing of moving SUBA-itraconazole into a second clinical trial, either for lung or prostate cancer? I think this would be an important catalyst for the stock.

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    1. I think the current focus is on getting the P2 BCCNS study completed and (hopefully) filed to the FDA. Once that's under review I think management will turn their attention to the next study, which will likely be in metastatic or locally advanced BCC. That makes sense, as the drug is likely to work and positive data will immediately put HPPI in the driver's seat to take share away from Erivedge® and Odomzo®. After that, I think lung makes the most sense.

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  2. Interesting. Did management say they'd move into metastatic or locally advanced BCC or is this your thinking? The reason I ask is because my understanding is that the company may have to price SUBA lower for the larger BCC market (if approved for that) than what they would for the Nevus indication. And they may be reluctant to do this, for once you lower price for an indication it's almost impossible to get a higher price for another indication, i.e. prostate or lung cancer. So this would be kind of contrary to where I thought they were heading.

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    1. That's a good question and I'm not really sure of the answer. However, just because they do a study in BCC doesn't necessarily mean they have to file for approval in BCC... if you see what I mean.

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  3. Well I didn't think of that angle...but then they still run into problems of insurance reimbursement for the larger BCC indication if they don't technically have an approved label for that. If they do the BCC trial then, imo, they need to file for approval for it. Can you comment if management indicated they're going to do a BCC trial or are you inferring this is their plan?

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    1. I'm just telling you what I think. I don't think the company will say anything until after the BCCNS regulatory plan has been finalized.

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