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Tuesday, May 9, 2017

Why Radicava® Approval is Good News For BrainStorm Cell Therapeutics

On May 5, 2017, the U.S. FDA approved Radicava® (edaravone) for the treatment of amyotrophic lateral sclerosis (ALS). The drug was developed by Mitsubishi Tanabe Pharmaceuticals of Japan and will be sold by MT Pharma America in the U.S. According to the FDA's press release, the agency, "Rapidly engaged with the drug developer about the filing," to facilitate U.S. approval given the lack of available treatment options. Radicava is the first ALS drug approved in the U.S. in 22 years; and, although the drug is not a significant breakthrough treatment, it is new hope for ALS patients.

I think the approval of Radicava in the U.S. is good news for BrainStorm Cell Therapeutics (NASDAQ: BCLI) for several reasons. Firstly, it shows acknowledgment by the FDA that there are limited treatment options available to patients today and that the agency has a willingness to approve new ALS medications. Secondly, BrainStorm's drug, NurOwn®, looks superior to Radicava on a number of attributes, including efficacy and dosing. Finally, Radicava will cost $145,000 per year before discounts or insurance coverage, which represents a tremendous economic incentive for BrainStorm to aggressively pursue regulatory approval.

A Little About Radicava®

Edaravone (MCI-186) is a novel free radical scavenger first approved for treatment of acute cerebral infarction in Japan in 2001. Early preclinical work with edaravone demonstrated the drug has neuroprotective effects by inhibiting vascular endothelial cell injury and ameliorating neuronal damage in ischemic brain models (1). The suspected mechanism of action is that edaravone eliminates lipid peroxides and hydroxyl radicals during cerebral ischemia and protects nerve cells within or around the ischemic region from free radical damage (2).

A Phase 3 study was conducted by Mitsubishi Tanabe under the principal investigation of Koji Abe et al at Okayama University Hospital in Japan. The 36-week study included a 12-week pre-observation period followed by a 24-week treatment period where patients were randomized (1:1) to receive placebo or edaravone i.v. infusion over 60 min for the first 14 days in cycle 1, and for 10 of the first 14 days during cycles 2 to 6. The efficacy primary endpoint was the change in the revised ALS functional rating scale (ALSFRS-R) scores during the 24-week treatment. Changes in ALSFRS-R during the 24-week treatment were –6.35±0.84 in the placebo group (n=99) and –5.70±0.85 in the edaravone group (n=100); the results were not statistically significant (p=0.411). Efficacy results were further stratified by diagnostic criteria (see below), but still did not demonstrate statistically significant separation. Furthermore, adverse events were high, 88.5% in the placebo group and 89.2% in the edaravone group (3).

A post hoc analysis of the Phase 3 trial suggested that edaravone could be efficacious in a restricted subgroup that includes recently diagnosed patients with milder disease symptoms. In this light, a second Phase 3 trial was conducted by Mitsubishi Tanabe in 137 patients with newly diagnosed ALS in the past two years and a forced vital capacity (FVC) in excess of 80%. Over 24 weeks, those on edaravone lost 5.0 points on the ALS-FRS, compared to 7.5 in the placebo group, a statistically significant difference (p=0.001). All patients were on riluzole background therapy.

A review of the edaravone clinical program was conducted by H. Sawada at Utano National Hospital in Kyoto, Japan. The author concluded that edaravone is safe, and although the differences are small, effective when used in combination with riluzole in preserving ALSFRS-R in subjects with newly diagnosed (short disease duration) ALS that have preserved vital capacity (4).

Edaravone was approved in Japan for the treatment of ALS in June 2015. The drug is also marketed in India by Edinburgh Pharmaceuticals under the brand name Arone®. It was awarded Orphan Drug designation in the U.S. and approved on May 8, 2017. The chart below was taken from the Radicava label. Investors can see, the therapeutic effect is rather small.

Despite this small effect, the cost is roughly $145,000 per year. Interestingly, that is over 4X the cost in Japan (5).

What This Means For BrainStorm's NurOwn®

I think the approval of edaravone as Radicava in the U.S. is very good news for BrainStorm Cell Therapeutics. Firstly, it shows acknowledgment by the FDA that there are limited treatment options available to patients today and that the agency has a willingness to approve new ALS medications. It is very rare that the U.S. FDA approves medications for use in the U.S. without randomized, controlled trials in U.S. patients. I noted above that Radicava has been designated as an Orphan Drug, so perhaps this is part of the reason why the agency was so eager. The decision came a full month ahead of the PDUFA date, and 22 years since the last ALS drug, Rilutek® (riluzole), hit the market.

Secondly, BrainStorm's drug, NurOwn®, looks superior to Radicava on a number of attributes, including efficacy and dosing. BrainStorm's Phase 2b data, conducted in U.S. patients, shows the efficacy of NurOwn is quite similar to Radicava.

In fact, if we delve further into the data, one can conclude that NurOwn is the superior drug. Firstly, there is an interesting dichotomy of patients. The edaravone clinical studies were conducted in newly diagnosed, fairly mild ALS patients. For example, to enroll in the first Phase 3 trial, subjects must have a forced vital capacity of 70% or greater. Many of these subjects had ALS for less than two years and had a FVC in excess of 80% and showed no loss of function (levels above 80% are generally considered normal). This is in stark contrast to BrainStorm's Phase 2b data were the company showed that the most significant benefit with NurOwn came in patients with rapidly progressive disease.

Some argue that response to NurOwn was simply the ebbs and flows of the disease; I disagree. The Phase 2b trial enrolled 48 subjects in total. The data show that 70% of the NurOwn patients achieved a ≥ 100% improvement in ALSFRS-R slope two weeks after injection vs. only 5% for the placebo (p=0.005). The placebo group showed no subjects achieving a ≥ 1 point improvement in ALSFRS-R at any time point; whereas, for NurOwn, it was 45% after week 2 and still above 20% at week 16. Finally, the biomarker data back up my belief that NurOwn is having a fundamental effect on disease pathophysiology.

I've stated in the past, the fact that NurOwn seems to work the best in patients with the most rapidly progressing disease makes use of the drug a "no-brainer" in my opinion for those patients and their physicians. ALS is a rapidly progressing fatal disease. As of today, there are only two drugs on the market, and both (riluzole and edaravone) show only a modest slowing of disease progression in fairly mild subjects. The rapidly progressing patient - call it second-line, call it refractory - has no options. That's where NurOwn can pick up huge market share in my opinion.

Another important point is that all the benefits of NurOwn are coming after a single intrathecal injection. This compares to 64 intravenous injections of edaravone over the 24 week treatment period! Many argue that the results of NurOwn wane after week 8. I do not disagree with this; however, investors need to understand the protocol for the upcoming Phase 3 program will include repeat dosing of NurOwn - one intrathecal injection every 8 weeks for 24 weeks (3 total injections). I'm very excited to see what kind of results NurOwn can achieve with repeat dosing.

Finally, Radicava will cost $145,000 per year before discounts or insurance coverage, which represents a tremendous economic incentive for BrainStorm to aggressively pursue regulatory approval. Radicava is a small molecule, and even with the cost of building a specialty sales force in the U.S., MT Pharma America should see excellent profitability with Radicava. According to the ALS Association, there are an estimated 5,600 new ALS patients in the U.S. each year. Thus, Radicava is targeting over $800 million in potential peak sales.

NurOwn is a cell therapy and expected to cost between $150,000 and $200,000 per year. Investors may balk at that level, believing it is too expensive and limits the market opportunity. I disagree, especially considering the ALS patients BrainStorm will target with NurOwn, i.e. rapidly progressing individuals with no treatment options, are most likely going to fail Radicava beforehand. As such, the second-line or refractory ALS market is larger than the newly diagnosed population MT Pharma will target with Radicava.

The ALS Association estimates there are 30,000 ALS patients in the U.S. If Radicava targets an $800 million market, NurOwn targets a multi-billion market. And that's just in the U.S. In the EU, there are an estimated 50,000 ALS patients. Jason Kolbert, Head of Healthcare Research at Maxim Group, models NurOwn generating sales of $4.7 billion (before risk adjustment) in the U.S. and EU in 2023 based on his most recent report.

And this is just in ALS. Last month, I noted that management is looking to expand NurOwn into Autism (see my article).


Radicava approval is good news for ALS patients and good news for BrainStorm Cell Therapeutics. It not only provides an interesting comparison, of which NurOwn comes out looking very strong, but it also provides a roadmap to management on what is necessary to gain approval. The primary endpoint in the upcoming Phase 3 study with NurOwn is the change in ALSFRS-R score - exactly what Mitsubishi Tanabe used in Japan to gain approval for its drug early this week. 

The multi-dose Phase 3 trial should begin in the next few weeks. It will be a randomized, double-blind, placebo-controlled, multi-dose trial that will take place at multiple centers in the U.S. and Israel. I anticipate approximately 150 patients being enrolled at a randomization of 1:1. This will be a major milestone for the company and establish an important catalyst for the shares once initiated. Pending regulatory submissions in Canada and Israel are also important events to watch in the near future. 

Furthermore, BrainStorm is expanding its management team and focusing on securing non-dilutive capital. The company has the cash to begin the study and an excellent track record of bringing in non-dilutive grants to keep shareholder dilution to a minimum. I think things are lining up nicely for the company. Zacks Biotech Analyst, David Bautz, thinks the shares are worth $13. I agree with this number and think it's a fair target for the stock in the next 12 months.


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