Valeant Pharmaceuticals (NYSE:VRX)
On September 28, 2015 shares of Valeant closed the day down approximately 16% after congressional democrats announced that they would file a subpoena to look into the matter about the company’s high priced drugs. The two democrats that filed for this subpoena are Elijah Cummings and Bernie Sanders. More specifically these Democratic congressional representatives want to know why two heart drugs are raised in price by an outrageous amount. For instance both heart drugs have gone up in price by 525% and 212% respectively.
They want to know that if such a huge rise in price for both these medications, which these heart patients desperately need to live, are justified to be raised by such a huge amount? Typically raising the costs of these drugs have been happening for years but lately company’s that produce drugs for rare diseases, or those in which patients don’t have many options have seen the costs skyrocket greatly. Now the government wants to tackle this issue to help keep costs at a reasonable price.
The congressional democrats didn’t want to file a subpoena but they were left no choice when Valeant refused to comply with supplying them with documents about the prices of their drug products. In addition Valeant states that the reason for raising the prices that much is to match up with competitors who are selling the same type of drugs at higher costs. How true this is remains to be seen but it seems the government along with many patients/doctors are not happy about these types of price gouging tactics.
Esperion Therapeutics (NASDAQ:ESPR)
On September 29, 2015 shares of Esperion Therapeutics closed the day down approximately 48% after the company provided info about their end of phase 2 meeting with the FDA. The reason for this meeting was so that the company could continue to develop its ECT-1002 therapy into a phase 3 clinical trial. The ECT-1002 drug is being used to treat patients with hypercholesterolemia or high LDL-C — bad cholesterol.
Why did the stock tank so much if the company is advancing its ECT-1002 drug into a phase 3 clinical trial? The bad news is not that the company is advancing the drug, but the problem is what the FDA wants the company to do in terms of proof from the clinical compound. For instance Esperion has set up with the FDA to run two phase 3 clinical trials using its drug compound. One phase 3 clinical trial will run with patients who have statin intolerance — meaning unable to take statins to lower their bad cholesterol.
The other group of patients in another phase 3 trial will be those who take statins but where the statin therapy they take has no positive effect on reducing their LDL-C cholesterol. It is bad that these two trials will take time to run and waste a lot of money but in addition the FDA is requiring a third clinical trial. The third clinical trial the FDA is requiring is a cardiovascular outcomes trial. That means that the FDA wants to see if patients switch from statin therapy to ECT-1002 will they see some significant improvement. In addition the FDA wants to see if ECT-1002 reduces the risk of heart problems as well as an added benefit.
Lastly the drop in share price could possibly be attributed to one additional problem as well. The other problem is that competitor drugs will be on the market for years before ECT-1002 ever hits the market. For instance Regeneron Pharmaceuticals (NASDAQ:REGN)/Sanofi (NYSE:SNY) Praluent and Amgen (NASDAQ:AMGN) Repatha will have a three to four year lead over Esperion’s drug. For now Esperion should trade accordingly but this setback is not a permanent loss. Investors who are willing to wait a few years should eventually reap some profits but it will take some time.
Sarepta Therapeutics (NASDAQ:SRPT)
On October 1, 2015 shares of Sarepta Therapeutics ended the day up approximately 22 % after the company announced additional positive phase 2b data for its Eteplirsen drug being developed to treat patients with Duchenne Muscular Dystrophy — DMD. So what exactly caused the huge spike in share price for Sarepta? Well according to the company final analysis concluded that patients in the 6 minute Walk Test — 6MWT — were able to obtain 151 meters walking distance over an external control in another study.
The fact that Etepliren helped these patients improve in walking distance was good enough but the drug showed additional positive effects. For instance the FDA wanted to see if Eteplirsen could help these patients create dystrophin proteins. That is because dystrophin proteins are needed for normal muscle movement, but these patients’ bodies lack the ability to produce these dystrophin proteins. Sarepta’s drug was able to help restore the ability for these patients to create these dystrophin proteins for muscle movement.
DMD is a very debilitating disease in which children are wheelchair bound at an early age and then have a very short life ahead because of lack of proper muscle movement. There are currently no FDA approved drugs used to treat DMD therefore Sarepta is attempting the shortest path possible to get this drug approved for these patients. One way in doing so is by working with the FDA to submit a New Drug Application — NDA — on a rolling basis. What that means is that Sarepta would submit the NDA within the next few months and then have FDA talks/data throughout the period before the final review.
This form of rolling NDA basis speeds up the review process so that the FDA can possibly be able to approve the drug early. In addition the FDA is thinking about granting Eteplirsen FDA Accelerated Approval in which the FDA would review the drug quicker than all other drug submissions submitted. If Eteplirsen does receive this Accelerated Approval then it could possible be reviewed and approved by February of 2016. Approval is not guaranteed but given the fact that no other therapy exists for DMD it is highly likely that the FDA will be a lot more lenient on this review compared to others.
[Image Courtesy of Daily Reckoning]