HRTX : Heron Therapeutics Analysis and Research Report

2018-05-25 - by Asif , Contributing Analyst - 114 views

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Overview

Heron is a commercial-stage biotechnology company focused on improving the lives of patients by developing best-in-class treatments that address some of the most important unmet patient needs. Heron Therapeutics is developing novel, patient-focused solutions that apply its innovative science and technologies to already approved pharmacological agents for patients suffering from cancer or pain.

On August 9, 2016, its first commercial product, SUSTOL, was approved by the FDA. The company developed SUSTOL for the prevention of chemotherapy-induced nausea and vomiting (“CINV”). SUSTOL is indicated, in combination with other antiemetics, in adults for the prevention of acute and delayed nausea and vomiting associated with initial and repeat courses of moderately emetogenic chemotherapy (“MEC”) or anthracycline and cyclophosphamide (“AC”) combination chemotherapy regimens. The company commenced commercial sales of SUSTOL in the U.S. in October 2016.

On November 9, 2017, its second commercial product, CINVANTI, was approved by the FDA. CINVANTI is an intravenous formulation of the neurokinin-1 (“NK1”) receptor antagonist aprepitant. The company developed CINVANTI for the prevention of CINV as an adjunct to other antiemetic agents. CINVANTI, in combination with other antiemetic agents, is indicated in adults for the prevention of acute and delayed nausea and vomiting associated with initial and repeat courses of highly emetogenic cancer chemotherapy (“HEC”) including high-dose cisplatin and nausea and vomiting associated with initial and repeat courses of MEC. The company commenced commercial sales of CINVANTI in the U.S. in January 2018.

TX-011 is a long-acting formulation of the local anesthetic bupivacaine in a fixed-dose combination with the anti-inflammatory meloxicam for the prevention of postoperative pain. By delivering sustained levels of both a potent anesthetic and an anti-inflammatory agent directly to the site of tissue injury, HTX-011 was designed to provide superior pain relief while potentially reducing the need for systemically administered pain medications such as opioids, which carry the risk of harmful side effects, abuse and addiction. The Phase 2 development program for HTX-011 was designed to target the many patients undergoing a wide range of surgeries who experience significant postoperative pain. Following an End-of-Phase 2 meeting with the FDA, the company initiated its Phase 3 program, which completed enrollment in January 2018. The company anticipate reporting top-line results in the first half of 2018, and the company expect to file an NDA for HTX-011 in the second half of 2018. Heron Therapeutics has been granted Fast Track designation for HTX-011 by the FDA for local administration into the surgical site to reduce postoperative pain and the need for opioid analgesics for 72 hours. Fast Track designation is intended to facilitate the development and expedite the review of new therapies to treat serious conditions with unmet medical needs by providing sponsors with the opportunity for frequent interactions with the FDA.

CINV Product Portfolio

SUSTOL

SUSTOL is its first commercial product. SUSTOL was approved by the FDA on August 9, 2016, and the company commenced commercial sales in the U.S. in October 2016.

SUSTOL is indicated in combination with other antiemetics in adults for the prevention of acute and delayed nausea and vomiting associated with initial and repeat courses of MEC or AC combination chemotherapy regimens. SUSTOL is an extended-release, injectable 5-hydroxytryptamine type 3 (“5-HT3”) receptor antagonist that utilizes its Biochronomer technology to maintain therapeutic levels of granisetron for ³5 days. The SUSTOL global Phase 3 development program was comprised of two, large, guideline-based clinical studies that evaluated efficacy and safety in more than 2,000 patients with cancer. The efficacy of SUSTOL in preventing nausea and vomiting was evaluated in both the acute phase (day 1 following chemotherapy) and the delayed phase (days 2-5 following chemotherapy).

SUSTOL is the first extended-release 5-HT3 receptor antagonist approved for the prevention of acute and delayed nausea and vomiting associated with both MEC and AC combination chemotherapy regimens. A standard of care in the treatment of breast cancer and other cancer types, AC combination chemotherapy regimens are among the most commonly prescribed HEC regimens as defined by both the National Comprehensive Cancer Network (“NCCN”) and the American Society of Clinical Oncology (“ASCO”).

In February 2017, the NCCN included SUSTOL as a part of its NCCN Clinical Practice Guidelines in Oncology for Antiemesis Version 1.2017. The NCCN has given SUSTOL a Category 1 recommendation, the highest level category of evidence and consensus, for use in the prevention of acute and delayed CINV in patients receiving HEC or MEC regimens. The guidelines now identify SUSTOL as a “preferred” agent for preventing CINV following MEC. Further, the guidelines highlight the unique, extended-release formulation of SUSTOL.

CINVANTI

CINVANTI is its second commercial product. CINVANTI is an intravenous formulation of the NK1 receptor antagonist aprepitant. CINVANTI was approved by the FDA on November 9, 2017, and the company commenced commercial sales in the U.S. in January 2018.

CINVANTI, in combination with other antiemetic agents, is indicated in adults for the prevention of acute and delayed nausea and vomiting associated with initial and repeat courses of HEC including high-dose cisplatin and nausea and vomiting associated with initial and repeat courses of MEC.

CINVANTI is a proprietary, intravenous formulation of aprepitant, an NK1 receptor antagonist for the prevention of CINV. NK1 receptor antagonists are typically used in combination with 5-HT3 receptor antagonists. The only other injectable NK1 receptor antagonist currently approved in the U.S. for both acute and delayed CINV, EMEND ® IV (fosaprepitant), contains polysorbate 80, a synthetic surfactant, which may increase the risk of hypersensitivity reactions and other infusion site reactions. The CINVANTI formulation does not contain a synthetic surfactant, such as polysorbate 80. The company's CINVANTI data has demonstrated the bioequivalence of CINVANTI to EMEND IV, supporting its efficacy for the prevention of both acute and delayed CINV associated with both MEC and HEC. Results also showed CINVANTI was better tolerated in healthy volunteers than EMEND IV, with significantly fewer adverse events reported with CINVANTI.

Pain Management Product Portfolio

HTX-011

HTX-011, which utilizes its Biochronomer technology, is a long-acting formulation of the local anesthetic bupivacaine in a fixed-dose combination with the anti-inflammatory meloxicam for the prevention of postoperative pain. By delivering sustained levels of both a potent anesthetic and an anti-inflammatory agent directly to the site of tissue injury, HTX-011 was designed to provide superior pain relief while potentially reducing the need for systemically administered pain medications such as opioids, which carry the risk of harmful side effects, abuse and addiction. The Phase 2 development program for HTX-011 was designed to target the many patients undergoing a wide range of surgeries who experience significant postoperative pain.

In October 2017, the company announced that Heron Therapeutics has been granted Fast Track designation for HTX-011 by the FDA for local administration into the surgical site to reduce postoperative pain and the need for opioid analgesics for 72 hours. Fast Track designation is intended to facilitate the development and expedite the review of new therapies to treat serious conditions with unmet medical needs by providing sponsors with the opportunity for frequent interactions with the FDA.

In August 2017, the company announced the positive outcome of a recent End-of-Phase 2 meeting with the FDA. General agreement was reached with the FDA on the design and key elements for HTX-011’s Phase 3 program that will be required to support an NDA. The program includes two pivotal Phase 3 efficacy studies in bunionectomy and hernia repair, representing a bony model and a soft tissue model, respectively. The company's Phase 3 program is designed to achieve a broad indication for the reduction in postoperative pain for 72 hours following surgery. The primary endpoints of the Phase 3 efficacy studies will be the difference in mean area under the curve (“AUC”) of pain intensity scores through 72 hours compared with placebo. The first key secondary endpoints will be the difference in mean AUC of pain intensity scores through 72 hours compared with bupivacaine. Additional key secondary endpoints measuring reduction in opioid use and proportion of subjects who are opioid-free are included to support an opioid-sparing claim. In addition to the Phase 3 efficacy studies, additional patients will be enrolled in ongoing Phase 2b studies to meet the target patient numbers established by the FDA and to provide further evidence of the broad utility of HTX-011 across multiple surgical models. Importantly, the FDA noted that, beyond the agreed-upon Phase 3 program, no additional clinical work is needed to meet the “Combination Rule” for fixed-dose combination products. Following its End-of-Phase 2 meeting with the FDA, the company initiated its Phase 3 program, which completed enrollment in January 2018. The company anticipate reporting top-line results in the first half of 2018, and the company expect to file an NDA for HTX-011 in the second half of 2018.

In August 2017, the company reported final Phase 2 study results using the doses, route of administration and statistical methodology that will be used in the Phase 3 studies. These results indicate that HTX-011 has consistently demonstrated superiority over placebo and bupivacaine, the current standard of care, in all surgical models evaluated. HTX-011 has been generally well tolerated in the Phase 2 program, which has involved more than 600 administrations of HTX-011. The most frequent treatment-related adverse events with HTX-011 reported have been nausea and vomiting, which occurred at similar rates in both bupivacaine control and placebo control patients.

Bunionectomy — Study 208

In August 2017, the company reported final Phase 2 study results from Study 208 using the doses, route of administration and statistical methodology that will be used in the Phase 3 studies. These results indicate that HTX-011 has consistently demonstrated superiority over placebo and bupivacaine, the current standard of care, in patients undergoing bunionectomy. These results were as follows:

• 60 mg of HTX-011 reduced pain through 72 hours significantly better than placebo (P=0.0003) and bupivacaine 50 mg (P=0.0166);

• HTX-011’s pain reduction through 72 hours, as compared to placebo, was 24 times greater than a similar dose of bupivacaine; and

• 60 mg of HTX-011 significantly reduced opioid consumption through 72 hours as compared to both placebo (p=0.0047) and bupivacaine (p=0.0382).

Inguinal Hernia Repair — Study 202

In August 2017, the company reported final Phase 2 study results from Study 202 using the doses, route of administration and statistical methodology that will be used in its Phase 3 studies. These results indicate that HTX-011 has consistently demonstrated superiority over placebo and bupivacaine, the current standard of care, in patients undergoing inguinal hernia repair. These results were as follows:

• 300 mg of HTX-011 reduced pain through 72 hours significantly better than placebo (P=0.0045) and bupivacaine 75 mg (P=0.0427);

• HTX-011’s pain reduction through 72 hours, as compared to placebo, was more than 4 times greater than bupivacaine; and

• 300 mg of HTX-011 reduced opioid consumption by 35.5% compared to placebo and by 26.7% compared to bupivacaine and significantly increased the proportion of patients who were opioid-free through 72 hours compared to both placebo (p=0.0001) and bupivacaine (p=0.0108).

Abdominoplasty — Study 203

In August 2017, the company reported updated preliminary Phase 2 study results using the statistical methodology that will be used in the Phase 3 studies. These results indicate that HTX-011 has consistently demonstrated superiority over placebo and bupivacaine, the current standard of care, in patients undergoing abdominoplasty. These results were as follows:

• 400 mg of HTX-011 reduced pain through 72 hours significantly better than placebo (P=0.0041) and bupivacaine 100 mg (P=0.0399);

• HTX-011’s pain reduction through 72 hours, as compared to placebo, was more than 5 times greater than bupivacaine; and

• 400 mg of HTX-011 significantly reduced opioid consumption through 72 hours as compared to both placebo (p=0.0047) and bupivacaine (p=0.0161).

Biochronomer Technology

The company's proprietary Biochronomer technology is designed to deliver therapeutic levels of a wide range of otherwise short-acting pharmacological agents over a period from days to weeks with a single administration. The company's Biochronomer technology consists of bioerodible polymers that have been the subject of comprehensive animal and human toxicology studies that have shown evidence of the safety of the polymer. When administered, the polymers undergo controlled hydrolysis, resulting in a controlled, sustained release of the pharmacological agent encapsulated within the Biochronomer-based composition. Furthermore, its Biochronomer technology is designed to permit more than one pharmacological agent to be incorporated, such that multimodal therapy can be delivered with a single administration.

Sales and Marketing

The company's U.S.-based sales and marketing team consists of 49 employees as of February 1, 2018. The sales and marketing infrastructure includes a targeted, oncology sales force to establish relationships with a focused group of oncologists and oncology nurses. The sales force is supported by sales management, internal sales support, an internal marketing group and distribution support. Additionally, the sales and marketing teams manage relationships with key accounts, such as managed care organizations, group purchasing organizations, hospital systems, oncology group networks, and government accounts. Heron Therapeutics has also entered into an arrangement with a third-party for the provision of related supplemental services for CINVANTI.

Customers

SUSTOL is distributed in the U.S. through a limited number of specialty distributors (“Customers”) that subsequently resell SUSTOL to healthcare providers, the end users of SUSTOL.

The company commenced commercial sales of CINVANTI in January 2018. CINVANTI is distributed in the U.S. through a limited number of specialty distributors and full line wholesalers that subsequently resell CINVANTI to healthcare providers and hospitals, the end users of CINVANTI.

Sales to two Customers accounted for 10% or more of its SUSTOL net revenues for the year ended December 31, 2017. The loss of either of these Customers could materially and adversely affect its business, results of operations, financial condition and cash flows. Due to the relatively short lead-time required to fill orders for its products, backlog of orders is not material to its business.

Heron Therapeutics has engaged a third-party service provider to act as its exclusive distributor for commercial shipment and distribution of its products to its Customers in the U.S. In addition to distribution services, other related services, including product storage, returns, customer support and administrative support are provided.

Competition

The biotechnology and pharmaceutical industries are extremely competitive. The company's potential competitors are many in number and include major and mid-sized pharmaceutical and biotechnology companies. Many of its potential competitors have significantly more financial, technical and other resources than the company do, which may give them a competitive advantage. In addition, they may have substantially more experience in effecting strategic combinations, in-licensing technology, developing drugs, obtaining regulatory approvals and manufacturing and marketing products. The company cannot give any assurances that the company can compete effectively with these other biotechnology and pharmaceutical companies. Any products that the company may develop or discover will compete in highly competitive markets. The company's potential competitors in these markets may succeed in developing products that could render its product candidates obsolete or non-competitive.

SUSTOL faces significant competition. Currently available 5-HT3 receptor antagonists include: AKYNZEO® (palonosetron combined with the NK1 receptor antagonist netupitant, marketed by Eisai, Inc.); SANCUSO® (granisetron transdermal patch, marketed by ProStrakan Group Plc); and generic products including ondansetron (formerly marketed by GlaxoSmithKline plc as ZOFRAN), granisetron (formerly marketed by Hoffman-La Roche, Inc. as KYTRIL) and palonosetron (formerly marketed by Eisai in conjunction with Helsinn Healthcare S.A. as ALOXI). Currently, palonosetron is the only 5-HT3 receptor antagonist other than SUSTOL that is approved for the prevention of delayed CINV associated with MEC regimens. SUSTOL is indicated in combination with other antiemetics in adults for the prevention of acute and delayed nausea and vomiting associated with initial and repeat courses of MEC or AC combination chemotherapy, which is considered to be a HEC regimen by the NCCN and ASCO. No other 5-HT3 receptor antagonist is specifically approved for the prevention of delayed CINV associated with HEC regimens. According to Transparency Market Research, sales of therapeutics for the prevention of CINV approximated $620 million in 2013, and sales of such therapeutics are expected to reach $1 billion in 2020.

NK1 receptor antagonists are also administered for the prevention of CINV, in combination with 5-HT3 receptor antagonists, to augment the therapeutic effect of the 5-HT3 receptor antagonist. CINVANTI faces significant competition. Currently available NK1 receptor antagonists include: AKYNZEO; EMEND® (aprepitant, marketed by Merck & Co, Inc.); EMEND IV (fosaprepitant, marketed by Merck & Co); VARUBI® (rolapitant, marketed by Tesaro, Inc.) and potentially other products that include an NK1 receptor antagonist that reach the market. According to FactSet Research Systems, Inc., in 2015, Merck & Co.’s EMEND and EMEND IV generated U.S. sales of $535 million.

If Heron Therapeutics is able to successfully develop HTX-011 for the prevention of postoperative pain, the company will compete with MARCAINE (bupivacaine, marketed by Hospira, Inc.) and generic forms of bupivacaine; NAROPIN (ropivacaine, marketed by Fresenius Kabi USA, LLC) and generic forms of ropivacaine; EXPAREL® (bupivacaine liposome injectable suspension, marketed by Pacira Pharmaceuticals, Inc.) and potentially other products in development for the prevention of postoperative pain that reach the market. According to Decision Resources Group, LLC, the addressable market for HTX-011 consisted of 23 million procedures annually in the U.S. in 2012 and is expected to increase to 29 million in 2021.

Manufacturing and Clinical Supplies

The company do not own or operate manufacturing facilities for the production of commercial or clinical quantities of SUSTOL, CINVANTI or HTX-011. The company rely on a small number of third-party manufacturers to produce its compounds and expect to continue to do so to meet the preclinical and clinical requirements of its product candidates and for all of its commercial needs. The company currently have long-term commercial supply agreements with certain third-party manufacturers. The company's manufacturing and processing agreements require that all third-party contract manufacturers and processors produce active pharmaceutical ingredients and finished products in accordance with the FDA’s current Good Manufacturing Practices (“cGMP”) and all other applicable laws and regulations. The company maintain confidentiality agreements with potential and existing manufacturers in order to protect its proprietary rights related to SUSTOL, CINVANTI and HTX-011.

Some of the critical materials and components used in manufacturing SUSTOL, CINVANTI and HTX-011 are sourced from single suppliers. An interruption in the supply of a key material could significantly delay its research and development process or increase its expenses for commercialization or development of products. Specialized materials must often be manufactured for the first time for use in drug delivery technologies, or materials may be used in the technologies in a manner that is different from their customary commercial uses. The quality of materials can be critical to the performance of a drug delivery technology, so a reliable source that provides a consistent supply of materials is important. Materials or components needed for its drug delivery technologies may be difficult to obtain on commercially reasonable terms, particularly when relatively small quantities are required or if the materials traditionally have not been used in pharmaceutical products.

Intellectual Property

The company's success will depend in large part on its ability to:

  • obtain and maintain international and domestic patents and other legal protections for the proprietary technology, inventions and improvements the company consider important to its business;
  • prosecute and defend its patents;
  • preserve its trade secrets; and
  • operate without infringing the patents and proprietary rights of other parties.

The company intend to continue to seek appropriate patent protection for the product candidates in its research and development programs and their uses by filing patent applications in the U.S. and other selected countries. The company intend for these patent applications to cover, where possible, claims for composition of matter, medical uses, processes for preparation and formulations.

Heron Therapeutics has filed a number of U.S. patent applications on inventions relating to the composition of a variety of polymers, specific products, product groups and processing technology. As of December 31, 2017, the company had a total of 20 issued U.S. patents and an additional 27 issued (or registered) foreign patents. The patents on the bioerodible technologies expire between June 2018 and March 2026. Currently, SUSTOL is covered by six patents issued in the U.S. and by 27 patents issued in foreign countries including Austria, Belgium, Canada, Denmark, the EU, Finland, France, Germany, Greece, Ireland, Italy, Japan, Luxembourg, Netherlands, Portugal, Spain, Sweden, Switzerland, Taiwan, and the United Kingdom. U.S. patents covering SUSTOL have expiration dates ranging from May 2021 to September 2024; foreign patents covering SUSTOL have expiration dates ranging from May 2021 to September 2025. Currently, CINVANTI is covered by two patents issued in the U.S. with expiration dates of September 2035, and HTX-011 is protected by six patents in the U.S. with expiration dates ranging from May 2021 to April 2035. The company's policy is to actively seek patent protection in the U.S. and to pursue equivalent patent claims in selected foreign countries, thereby seeking patent coverage for novel technologies and compositions of matter that may be commercially important to the development of its business.

Although the company believe that its rights under patent applications the company own provide a competitive advantage, the patent positions of pharmaceutical and biotechnology companies are highly uncertain and involve complex legal and factual questions. The company may not be able to develop patentable products or processes, and may not be able to obtain patents from pending applications. Even if patent claims are allowed, the claims may not issue, or in the event of issuance, may not be sufficient to protect the technology owned by or licensed to it. Any patents or patent rights that the company obtain may be circumvented, challenged or invalidated by its competitors.

The company also rely on trade secrets, proprietary know-how and continuing innovation to develop and maintain its competitive position. The company seek protection of these trade secrets, proprietary know-how and any continuing innovation, in part, through confidentiality and proprietary information agreements. However, these agreements may not provide meaningful protection for, or adequate remedies to protect, its technology in the event of unauthorized use or disclosure of information. Furthermore, its trade secrets may otherwise become known to, or be independently developed by, its competitors.

Employees

As of February 1, 2018, the company had 145 full-time employees; 73 are involved in research and development activities, 49 are involved in sales and marketing activities and 23 are involved in administration, human resources, finance, legal and information technology. None of its employees are covered by a collective bargaining agreement and management considers relations with its employees to be good.


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