Looking Inside the Biotech Black Box (Part 6)

Theratechnologies Case Study – along the path to regulatory approval of tesamorelin

In Part 5 of this blog series, the early corporate history of Theratechnologies was outlined, culminating in the decision to focus on the clinical development of analogs of growth hormone-releasing factor (GRF). GRF is the master hormone which naturally stimulates secretion of growth hormone (GH, somatotropin, somatropin) which acts directly or indirectly by stimulating the synthesis of growth factors, such as IGF-1, and their receptors. Theratechnologies’ two GRF analogs showed a lasting and effective action on the synthesis and secretion of growth hormone and, as a consequence, on the secretion of growth factor IGF-1.

The following statement appeared in several Theratechnologies’ AIFs.

By year 2000, it is expected that the world market for growth hormone will be US $1.5 billion. On the basis of available statistics, the Corporation believes that the market for ThGRF molecules, which addresses a wider range of applications, is even more important.

Assuming that ThGRF molecules will take market share from GH, and perhaps even expand the market, what information could an investor access to assess this statement? The first place to look is the FDA list of approved drugs – go to http://www.accessdata.fda.gov/scripts/cder/drugsatfda/index.cfm, search for ‘somatropin’ and find the following table [modified by removing products which have been discontinued]. Some of these products were approved after 2000 but it would have been apparent at that time that there were multiple approved products and other news sources would have indicated several others were in development.

This table also identifies a route to two other sets of information.

Identify the manufacturers, go to their web sites and find the sales of the GH products in their 10-K filings and annual reports (also at sec.gov)

• •  Eli Lilly reported Humatrope sales of US$301 M in 2000
• •  Genentech (now part of Roche) reported sales for the Nutropin group of products at US$227 M in 2000 and also identified competitors Novo and Serono

Look at the approved indications (company, product or FDA website), which are the same for most products

• •  Pediatric: Treatment of children with growth failure due to growth hormone deficiency (GHD), Prader-Willi Syndrome, Small for Gestational Age, Turner syndrome, and Idiopathic Short Stature
• •  Adult: Treatment of adults with either adult onset or childhood onset GHD

As an analyst covering Theratechnologies in its early years, I looked at the approved indications, looked at the incidence of growth failure in children, looked at GH sales and reached the conclusion that there was substantial off-label use of approved GH products, which was verified by looking at the medical literature. Theratechnologies could have chosen to seek an approval similar to the GH products but this would not likely have provided any market differentiation in a crowded market. Theratechnologies therefore chose to look at several potential new indications, some of which would have been suggested by off-label use of GH.

One GRF analog, ThGRF 1-29 was tested in Phase 1 trials by Beaufor Ipsen. While the product was shown to be safe, Beaufor Ipsen decided to wait for clinical data on another analog, ThGRF 1-44 (tesamorelin), for which Theratechnologies started the first clinical trial in January 1999. The following Phase 1 and 2 clinical trials were conducted before making the decision on which indication to study in Phase 3 trials.

• •  Phase 1 safety study (started January 1999) – no safety concerns
• •  Phase 1b safety study (started December 1999) – no safety concerns
• •  Phase 2 COPD study (started in 2001) – successful
• •  Phase 2 hip fracture study (started 2001) – not successful
• •  Phase 2 sleep disorder studies (2 started in 2001) – mixed results
• •  Phase 2 immune boost to flu vaccine
• •  Safety study in type 2 diabetics – no safety concerns
• •  Phase 2 in HIV-related lipodystrophy (started in 2003) – effect on visceral fat but not on subcutaneous fat

Theratechnologies made the decision to run two Phase 3 clinical trials in HIV-associated lipodystrophy with a reduction in visceral fat as the primary clinical endpoint. Once that decision has been announced by any company, two critical questions must be asked.

How strong is the clinical data from the Phase 2 trial(s) on which the ‘go’ decision was based?

Are there any differences between the structure of the Phase 2 trial on which the decision was based and the Phase 3 trials and, if yes, what is the justification for those differences?

What was the structure of and the results of the Phase 2 trial?

• •  The first information is contained in the April 15, 2004 press release by the company on the results of the Phase 2 trial (access on the company website or sedar.com).
• •  Some additional details may get released at medical conferences but this is difficult for the average investor to find.
• •  It is possible to get information on the final peer-reviewed publication of the Phase 2 clinical trial at http://www.ncbi.nlm.nih.gov/pubmed/. A search for tesamorelin gives 59 publications, one of which is the publication of the Phase 2 HIV-associated lipodystrophy clinical trial [AIDS. 2005 Aug 12;19(12):1279-87].

Companies do not release the detailed structures of their Phase 3 clinical trials until they are published in peer-reviewed journals or they are outlined in briefing documents for FDA advisory panels. Some information is available in the clinical trials database https://clinicaltrials.gov/, where the easiest search is probably by drug name – in this case, TH9507 is the best name to use and gives 15 trials. One of the Phase 3 trials is listed here but the only detailed information is on patient inclusion / exclusion criteria, which is important but needs to be assessed along with treatment details.

For a company where the valuation and investor interest is based on 1 product and 1 indication, the start of a controlled Phase 3 trial is the start of an information void. The next important information is the release of top line Phase 3 data where the most important question is:

Did the trial meet its primary clinical endpoint?

We will look at the answer to that question and others in Part 7 of this blog series.

[The author and his immediate family members may have long or short positions in the shares of some companies mentioned in or assessed during the preparation of this blog. Past share price performance may not be an indicator of future share price performance. This blog does not consider the investment objectives, financial situation or particular needs of any particular person. Investors should obtain professional advice based on their own individual circumstances before making an investment decision.]

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