The Market
It’s still early days, and there’s a good while to go (likely not before the end of the decade) until we can start thinking about a potential commercialization strategy for Tazemetostat. Having said this, what’s the size of the target market when the time comes? DLBCL is the most common form of Non Hodgkin’s lymphoma, accounting for between 30-40% of all NHL cases. Approximately 5000 patients receive a DLBCL diagnosis every year in the US.
The cost for NHL drugs (based on approvals across the last half decade) come in at anywhere between $10,000 to $30,000 per month, which gives a $120,000 to $360,000 annual cost. The potential for multi billion dollar revenues from a drug that promises to halt DLBCL tumor progression is clear. Epizyme would only need to pick up 20% penetration in the new diagnosis population in the US, and charge at the very low end of the average cost, to generate $1.2 billion annually from Tazemetostat.
Trading Strategy and Valuation
The market currently values Epizyme Inc (NASDAQ:EPZM) at a little over $657 million. The company has more than $312 million cash on hand (at March 31, 2016) which should easily fund its ongoing trial through to the end of 2018 and likely beyond. The data did little to impact the Epizyme’s market cap based on the fact that it was mixed in its inference. That is, the efficacy readout offered up some bullish sentiment, but the relatively low response rate tempered any potential gains.
Going forward, look out for an announcement that relates to a potential fifth trial arm. If Epizyme Inc (NASDAQ:EPZM) announces the initiation of said arm, there’s a bit of upside to be had. That aside, however, chances are the company won’t move too much ahead of topline.
This Week in FDA vs Biotech Part II, Teva’s Vantrela Gets Abuse-Deterrent Label
Last week we reported extensively on Teva Pharamceutical Industries Ltd. (NYSE:TEVA) drug Vantrela, up for a panel review on June 7. Vantrela is Teva’s reformulation of hydrocodone for round the clock daily pain management. In that report, we had said that despite a Reuters press release that Food and Drug Administration (FDA) officials had said that Vantrela is not abuse-deterrent when taken orally, there was no evidence from any official FDA document available on the FDA website that indicated that Vantrela was not abuse-deterrent when taken orally.
On June 7, not only was Vantrela approval recommended by a vote of 14 to 3, but the FDA panel also voted 14 to 3 that if approved, VANTRELA ER should be labeled as abuse-deterrent by the oral route.
In that research piece we said the following:
The problem is, the briefing document available on the FDA website does not directly state FDA’s opinion on the abuse deterrence of Vantrela when taken orally. There are some indications in the data that manipulation followed by oral administration is not as effective at deterring abuse as dissolving the drug in a tincture, isolating and injecting, but the data does show some level of effectiveness with manipulated oral administration. So whether the statement that Vantrela ER “does not have abuse-resistant properties when taken orally, according to a preliminary review by the U.S. Food and Drug Administration” in the words of Reuters is speculation, word of mouth or something else is unclear.
Not to toot our own horns or anything like that, especially because we did speculate that the abuse deterrent label would not be recommended for the oral route as we assumed that the Reuters report was based on something that we just couldn’t find, this whole scenario does show the importance of examining primary sources rather than relying on ambiguous reports even from a respected outfit like Reuters. As it turns out, Teva Pharamceutical Industries Ltd. (NYSE:TEVA) got the label recommendation, and the report turned out to be slightly misleading, though of course not purposely so. Reuters was probably basing its report on someone at the FDA, possibly one of the 3 people that voted against the abuse-deterrent oral label, but the fact that those concerns were not raised in any official document we could find did indicate that the opinion was a minority and should probably have been reported as such.
As a refresher to the science, while Teva is tight-lipped as to the proprietary nature of its abuse deterrence formula, we speculated based on redacted experimental data that Vantrela works by defending the active opioid ingredient in layers of both polar and nonpolar molecules that together would help deter dissolution in both polar and nonpolar solvents. Further, even if a patient were able to dissolve the protective layer away prior to oral ingestion, full extraction of the active ingredient could theoretically require temperatures so high that extracting it would lead to the warping or possibly even destruction of the active pain killing ingredient, our so-called self-destruct mechanism if a potential abuser tries to manipulate the tablets.
