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Wednesday, June 14, 2017

RedHill Reports Positive Phase 3 For Bekinda, Launches Donnatal and EnteraGam

This morning, RedHill Biopharma Ltd (RDHL) reported positive top-line results from the Phase 3 GUARD study investigating BEKINDA® 24 mg for the treatment of acute gastroenteritis and gastritis. Below is a quick review of the top-line results. RedHill will host a conference call on June 21st at 8:00 AM ET to provide additional analysis and discuss the data with investors.

Yesterday, the company announced the initiation of promotional activities for two gastrointestinal specialty products in the U.S., Donnatal® and EnteraGam®. This is an important step for the company on its path to transform into a fully-integrated commercial organization with a primary focus on gastrointestinal and inflammatory diseases. Besides Bekinda for acute gastroenteritis, RedHill's Phase 3 pipeline contains two additional GI-focused assets, RHB-104 for Crohn's disease and RHB-105 for H. pylori infection.

Phase 3 Bekinda® Hits! 

On June 14, 2017, RedHill reported top-line results from the GUARD study. GUARD was a randomized, double-blind, placebo-controlled Phase 3 study designed to evaluate the efficacy and safety of Bekinda in treating acute gastroenteritis and gastritis. A total of 321 adults and children over the age of 12 were enrolled at 21 medical centers in the U.S. and randomized in a 60:40 ratio to receive either Bekinda 24 mg or placebo, respectively.

In order to qualify for the study, a subject must have vomited at least twice in the preceding 4 hours before presenting to the medical center. The primary endpoint was the proportion of patients without further vomiting, without rescue medication, and who were not given intravenous hydration from 30 minutes post the first dose of the study drug until 24 hours thereafter, compared to placebo. It was a tough endpoint to hit and I expected the number of patients "vomit free" (i.e. the placebo response) to be high.

As it turns out, I was right. On an intent-to-treat (ITT) basis, 53.9% of the placebo subjects achieved the primary endpoint. A high number, no doubt; however, the good thing for RedHill is that 65.8% of the patients on Bekinda achieved the primary endpoint. The results were statistically significant at p=0.03. On a per protocol (PP) basis, 69.5% of patients on Bekinda achieved the primary endpoint vs. only 54.9% on placebo. The p-value was 0.01.


Importantly, Bekinda was found to be safe and well tolerated in this indication. Electrocardiogram results showed no adverse changes with treatment. Additional results are expected next week when management will host a conference call and webinar to present the findings to investors.

Background on BEKINDA®

Bekinda is an oral, bi-modal, extended-release, once-daily formulation of the antiemetic drug ondansetron. Ondansetron is a selective serotonin 5-HT3 receptor type antagonist originally approved in January 1991 and sold under the brand name Zofran® by GlaxoWellcome Inc. for the prevention of chemotherapy and radiation-induced nausea and vomiting, and the prevention of postoperative nausea and vomiting. Zofran® sees significant use in the prevention of nausea and vomiting, largely due to the drug's benign safety profile and general utility in preventing emesis. The patent expired in December 2006, but not before the drug achieved peak sales that year of $1.7 billion.

The recommended dose of ondansetron for the prevention of radiation-induced nausea and vomiting is one 8 mg tablet one to two hours before therapy, then 8 mg orally every eight hours for five days post-treatment. That's a total of 16 tablets! It's an inconvenient number because the half-life of the drug is only 3-4 hours.

RedHill's once-daily oral formulation is designed to provide ease of use and greater patient compliance over the generic twice-daily formulation. The graph below shows the pharmacokinetic comparison between Zofran® (ondansetron) and Bekinda. Bekinda offers virtually identical onset of action to the standard 8 mg Zofran® tablet, but with superior TMAX and AUC that allows for once-daily dosing. The data also shows a low coefficient of variance among patients.


- Acute Gastroenteritis / Gastritis Market Opportunity -

Gastroenteritis (inflammation of the stomach and small intestine) and gastritis (inflammation of the stomach) are often simply referred to as "stomach flu". The primary symptoms are vomiting and diarrhea, both of which can lead to additional symptoms, including abdominal pain and dehydration. It affects an enormous number of Americans each year.

According to the U.S. CDC estimated 19-21 million people in the U.S. get infected with norovirus and develop acute gastroenteritis each year. This leads to 1.7-1.9 million outpatient visits and 400,000 ER visits per year. Severe cases result in 56,000-71,000 hospitalizations and 570-800 deaths, mostly among young children and the elderly each year. And although the norovirus is the number one cause of acute gastroenteritis in the U.S., it still only accounts for 21% of the cases. Doing the math, one can back-calculate that there are likely over 100 million episodes of acute gastroenteritis in the U.S. each year. In fact, RedHill presented numbers at its April R&D Day noting 179 million cases in the U.S. each year (see below).

 

The company estimates that 10% of these cases seek medical attention, the majority of which are treated by hydration, probiotics, antibiotics, antispasmodics, and antiemetics, resulting in about 1.5 million prescriptions per year and $3.1 billion in direct medical expenses associated with these medications.

Despite the fact that the label only notes prevention of chemotherapy and radiation-induced nausea and vomiting and prevention of postoperative nausea and vomiting, ondansetron sees significant use in the emergency room (ER) for acute gastroenteritis (GE). In fact, ondansetron ranks as one of the most commonly prescribed drugs in the ER in the U.S., with over 20 million doses prescribed in 2013 according to the CDC's National Center for Health Statistics. The majority (~75%) of the generic ondansetron tablets are given in the emergency department, with 25% given the medication at discharge. RedHill believes antiemetics, a category dominated by ondansetron, generate $1.0 billion in sales (at generic pricing) in acute gastroenteritis.

It seems logical that RedHill's Bekinda, a rapid-acting and long-lasting formulation designed to improve compliance and eliminate the need for return visits to the ER, could gain meaningful share. In fact, it might make sense for the company to create a Bekinda "dose pack" that can be given to the patient to take home to prevent the need for a returned visit to the ER. With modest pricing and good formulary coverage, BEKINDA looks like a $150 million opportunity in the U.S.

BEKINDA for IBS-D

RedHill is also developing Bekinda for the treatment of diarrhea-predominant irritable bowel syndrome (IBS-D). IBS is an idiopathic GI disorder characterized by abdominal pain and altered bowel habits. IBS can have unpredictable and significant impacts on quality of life. It is highly prevalent and estimated to affect between 5% and 30% of the U.S. population, or around 35 million people - mostly women - according to published data.

There are three subtypes of IBS, diarrhea-predominant (IBS-D), constipation-predominant (IBS-C), and mixed (IBS-M). The CDC estimates that 40-60% of all IBS cases are IBS-D. Depending on the diagnosis, different medications are prescribed to treat the symptoms of the disease.


There is a clear scientific rationale for the use of a selective serotonin 5-HT3 receptor type antagonist like ondansetron in this indication. In fact, Lotronex® (alosetron) is approved for IBS-D, but with restrictions due to severe toxicities. Pilot studies of existing formulations of ondansetron have demonstrated utility in treating IBS-D. 5-HT3 receptor antagonists, like alosetron and ondansetron, are used to suppress the excessive activity of serotonin receptors in the gut. Importantly, ondansetron does not show the same types of tolerability issues evident with alosetron.

A Phase 2 clinical study with BEKINDA (12 mg) is currently ongoing examining the drug as a treatment for IBS-D. Target enrollment was 127 patients at 16 clinical centers in the U.S. The primary endpoint is a response in stool consistency as compared to baseline, per FDA guidance definition. Patient enrollment completed in April 2017 and top-line data are expected in September 2017.

- Opportunity in IBS-D -

About 9 million individuals in the U.S. seek medical treatment for IBS, resulting in over $20 billion in direct and indirect medical costs each year. A RedHill's R&D Day, the company presented the slide below noting roughly 4.5 million individuals in the U.S. with a diagnosis of IBS, approximately 2.7 million of which have IBS-D. Data from Symphony / Foster Rosenblatt pegs the IBS market at 4.2 million prescriptions per year, generating $1.8 billion in sales in 2016. The majority of the market today is in IBS-C, dominated by the launch of Allergan's oligo-peptide guanylate cyclase-C (GC-C) agonist, Linzess® (linaclotide), in 2012.


However, the IBS-D market is expected to grow rapidly in the coming years now that there are two new drugs recently approved for this specific subtype of IBS. These drugs are Allergan's Viberzi® (eluxadoline), a μ-opiod receptor agonist / d-opioid receptor antagonist used to down-regulate the concentration of serotonin in the gut and Valeant's Xifaxan® (rifaxmin), a non-absorbed, broad-spectrum antibiotic that alters the gut flora.


Given that Bekinda presents a different, yet proven, mechanism of action from Viberzi and Xifaxan, it will be interesting to see what kind of market share RedHill can capture if approved. Both Viberzi and Xifaxan have non-preferred formulary status. Viberzi costs $8,000+ per year; Xifaxan, which is limited to three treatments per year, costs over $4,000 per year. With 5% market share and pricing at only $2,000 per year (my guess), Bekinda is a potential $250 million drug in IBS-D.

Commercial Launch Of Donnatal® & EnteraGam®

According to my analysis, Bekinda has a commercial opportunity in the U.S. of around $400 million. However, management is keenly aware that launching a potential $400 million drug into in the U.S. market will be no easy task. In this regard, the company recently acquired and began promoting two specialty products for similar GI indications, Donnatal and EnteraGame.

 - In December 2016, RedHill entered into an exclusive co-promotion agreement with Concordia granted RedHill certain U.S. promotional rights to Donnatal (tablets and elixir). Under terms of the agreement, the parties will share revenues generated in RedHill's territories. Donnatal (Phenobarbital, Hyoscyamine Sulfate, Atropine Sulfate, Scopolamine Hydrobromide) is an oral prescription drug classified as possibly effective as an adjunctive therapy in the treatment of IBS and acute enterocolitis. The drug slows the natural movements of the gut by relaxing the muscles in the stomach and intestines.

- In April 2017, RedHill entered into an exclusive license agreement with Entera Health that granted RedHill exclusive U.S. rights to EnteraGam. Per terms of the deal, RedHill will pay Entera a tiered royalty on net sales generated from RedHill's promotion of the product. EnteraGam is a commercially-available medical food intended for the dietary management of chronic diarrhea and loose stools. It is a serum-derived bovine immunoglobulin/protein isolate (SBI) with a unique mechanism of action intended to restore gut balance. SBI has been shown in clinical studies to reduce loose stools and improve stool consistency as well as other symptoms, such as abdominal pain, bloating and urgency, in patients with chronic diarrhea and loose stools. The product must be administered under medical supervision and has potential real-world applications in IBS-D and inflammatory bowel disease (IBD). 

I think the peak sales opportunities of Donnatal and EnteraGam are small; however, the importance of RedHill gaining commercial experience in the IBS and IBD cannot be understated. RedHill's goal is to become a fully-integrated commercial organization. Bekinda has real potential in acute gastroenteritis and even more potential in IBS-D. By launching Donnatal and EnteraGam, RedHill will be able to build a sustainable commercial business that includes a sales force, medical and regulatory affairs, and gain experience on things like reimbursement and formulary access. It also allows RedHill to establish important relationships with payors, physicians, and patients - getting the RedHill name out into the commercial market - which will be incredibly important when products like Bekinda, RHB-104, and RHB-105 reach FDA approval.

Conclusion

I'm pleased to see top-line data from the Phase 3 GUARD study meet the primary endpoint. Although an additional trial in acute gastroenteritis is likely necessary prior to the company seeking U.S. FDA approval, it's an important step in building investors confidence around the story. I'm excited to see the Phase 2 IBS-D data in September 2017. This positive data from GUARD today increases my confidence level in that outcomes.

I think Bekinda is a $400 million drug. I also think there are larger organizations that might be interested in the drug. For example, Allergan is obviously a major player in IBS-D with Linzess and Viberzi. Bekinda, with a different and proven mechanism of action, might be a nice addition to Allergan's portfolio. Likewise, Valeant, a company that RedHill already has a partnership with for Phase 3 ready bowel prep drug, RHB-103, is the other big player in IBS-D with Xifaxan. Prescriptions of Xifaxan are limited due to the potential for antibiotic resistance to develop to the generic formulation, which is an important antibiotic used to combat traveler's diarrhea and C. difficile infection. Bekinda might make an attractive additional to Valeant's IBS portfolio and allow the company to compete more effectively against Allergan.

Other late-stage assets at RedHill, including Phase 3 RHB-104 for Crohn's disease and RHB-105 for H. pylori infection, round out an impressive GI-focused pipeline. RedHill also now promotes two commercial products, Donnatal for IBS and EnteraGam for chronic diarrhea that further strength the core focus on GI and make RedHill an attractive emerging specialty pharma story for long-term investors.

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BioNap is party to a services agreement with the company that is the subject of this report pursuant to which BioNap is paid twenty-five hundred dollars per month by the company in exchange for the provision of research reports, investor relations services, and general consulting services. BioNap holds no position in shares of RDHL, AGN, or VRX. Please see additional information on our Disclaimer.

2 comments:

  1. Hi Jason, Thanks again for your quick analysis and feedbacks on RDHL P3 Guard results. I agree it seems very good news 65,6% in term of effiacy but how to interpret the high placebo results 54,3% ? Can it be even worse in next P3 (higher placebo rate achieving primary endpoint) and if so, is there a risk that such a result can not support an FDA Bekinda approval in 2018/2019 ? Next RDHL conference call planned on June 21th will be important. Thanks.

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    Replies
    1. Hi Toscane,

      I think it is likely the company will need to conduct another P3 trial. Management needs to speak with the U.S. FDA about this. Perhaps the next trial will have a different endpoint that will mitigate the high placebo response rate. The endpoint was very tough to hit. If you read above you see that to qualify a patient must have vomited "at least" twice before getting the drug and that the endpoint was "no more vomiting or rescue medication". For ~50% of the population, a placebo (i.e. no medication) was enough to achieve this endpoint because the disease itself is mostly self-limiting. However, even in the face of this difficult endpoint, Bekinda was superior. Perhaps the next P3 the enrollment criteria will be easier - perhaps only one previous vomit or perhaps no placebo at all. Instead perhaps Bekinda vs. generic ondansetron. I do not know. I'm just speculating, but these are things the company will talk with the FDA about probably in the Q4 2017 or Q1 2018. We will learn more on June 21st. Thanks, Jason

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