By Jason Napodano, CFA
, $4.27/share) is currently in 2 phase 3 trials for PA, a “safer aspirin
product that combines 325mg of enteric coated aspirin with the PPI 40mg
omeprazole (sold as branded Prilosec). It’s a novel formulation and a
simple idea that builds off the already approved pathway defined by Vimovo
We expect that once approved Pozen’s “safer aspirin” will find its way
into daily aspirin therapy for cardiovascular disease. The potential
label will be for secondary prevention of cardiovascular or cerebrovascular events
in patients at risk for gastric or esophageal ulcers. This is an
enormous market. Cardiovascular disease is the leading cause of death in
the U.S., with over 50% mortality. An American has a heart attack
roughly every 26 seconds!
Aspirin has been used to prevent recurrent myocardial infarction (MI)
since the 1940’s when the drugs anti-platelet activation properties
where first discovered. In 1988, the U.S. FDA approved the use of
aspirin for the prevention of recurrent MI. Since that time, data
reported in The Lancet from the ISIS-2
(2nd International Study of Infract Survival of MI) demonstrates that
daily use of 162.5mg aspirin reduces the potential for vascular
mortality by 23% (p<0.00001) vs. placebo in the first five weeks
following a myocardial infarction. Long-term follow-up data suggest the
benefit of daily aspirin use persists in the prevention of recurrent MI
as long as 10 years post event.
Over 50 million American’s use daily aspirin therapy
Unfortunately, of the 50+ million Americans that take daily aspirin
therapy, as many as 50% are at risk for major complications due to
gastric bleeding. Roughly 25% of the people that start a daily aspirin
therapy will discontinue or reduce frequency
or dose due to serious gastrointestinal side-effects
. Market research shows a significant opportunity for Pozen’s product. Data published from the CAPRIE
(Clopidogrel versus Aspirin in Patients at Risk of Ischemic Events)
study in 1996 shows that Plavix (clopidogrel) offers only a modest 8.7%
efficacy improvement over aspirin, and Plavix posted sales over $7
billion worldwide at its peak. Aspirin use is limited by
gastrointestinal intolerance and bleeding.
The AHA and ACC recommend
daily aspirin use at 75mg to 162mg per day. The European Society of
Cardiology recommends 75mg to 150mg per day. These guidelines were put
into place to reduce the potential for GI-related bleeding events. Data published
in the American Journal of Cardiology shows a 2-fold reduction in major
bleeding events and a 3-fold reduction in total bleeding events on
daily aspirin use <100mg when compared to use >200mg. Pozen’s
“safer aspirin” product, a drug that is designed to provide a full 325
mg dose of aspirin while greatly reducing the risk for GI-bleeding and
ulcers, could find significant use among the 50+ million American’s at
risk for recurrent MI and GI-related side-effects.
Management has conducted market research
yielding encouraging statistics. At about $1/day, roughly 30% of
physicians would prescribe PA-325/40 to their patients in need of
secondary prevention aspirin therapy. We see this as a $250 million
opportunity in the U.S.
…Phase 2 Data Gives Us Confidence…
Pozen’s phase 2 trial with PA-325/40 showed a 90% reduction in
endoscopic diagnosed Lanza 3 & 4 GI-related damage compared to 325
mg of aspirin alone, and a 50% reduce when compare to 81 mg (baby)
aspirin. The current phase 3 program, being conducted under a U.S. FDA
Special Protocol Assessment (SPA), is essentially a larger version of
the successful phase 2 trial. Management expects enrollment to complete
shortly, with data expected in the second quarter 2012.
As a reminder, the primary endpoint of the trials is, “Cumulative
incidence of gastric ulcers following administration of either PA32540
or 325 mg enteric-coated aspirin in subjects at risk for developing
aspirin-associated ulcers.” Based on previous data
(below), and data from the Vimovo pivotal programs, we think hitting statistical significance is a slam dunk.
We expect the U.S. NDA filing to take place in the third quarter 2012.
The 12-month safety study with PA-325/40 to evaluate the long-term
safety of the drug in patients who are at risk for developing
aspirin-associated gastric ulcers has been completed. Pozen is reviewing
the data and we expect a presentation shortly. Management noted the
initial analysis is consistent with what was expected. The full data
will give excellent insight into the outcome of the phase 3 programs
…Co-Rx Study Show Potential…
In March 2011
Pozen announced positive top-line results from a phase 1 study of
PA-325/40 used in conjunction with clopidogrel (sold as branded Plavix).
The data from the Co-Rx Study
suggest that PA-325/40 given in conjunction with clopidogrel, dosed at
least 10 hours apart, resulted in an approximate 20% improvement
inhibition of ADP-induced platelet aggregation (anti-clotting) when
compared to a current standard of care (81 mg of EC aspirin, EC
omeprazole 40 mg and clopidogrel).
This suggests that the dosing combination of Plavix and PA-325/40
could offer a promising new option for the secondary prevention of
heart attacks and strokes in cardiovascular patients who require aspirin
therapy, but are at risk for gastric ulcers. We expect to see
additional data from this study at an upcoming scientific meeting later
in the year.
As a reminder, The Co-Rx study was a phase 1, randomized, open-label,
two-arm crossover study in which 30 healthy subjects were treated with
one of the following:
- PA-325/40 in the morning plus 300mg clopidogrel over 10 hours later
on day 1, and PA-325/40 in the morning plus 75mg clopidogrel 10 hours
later on days 2-7
- 81mg enteric-coated aspirin plus 300mg clopidogrel plus 40mg
enteric-coated omeprazole (Prilosec) all in the morning on day 1
followed by 81mg enteric-coated aspirin plus 75mg clopidogrel plus 40mg
enteric-coated omeprazole all in the morning on days 2-7
Subjects were first randomized to treatment A or treatment B and then
crossed over to the alternate treatment. Each treatment was separated by
a 14 day washout period. The primary objective of the study was to
assess the effects of PA-325/40 and enteric-coated omeprazole on
clopidogrel activity as measured by ex-vivo platelet aggregation using
20 uM adenosine diphosphate (ADP), a commonly used platelet assay of
clopidogrel effect. The primary endpoint was the percent inhibition of
platelet aggregation (IPA) after morning dosing on day seven of each
period. In the study, PA-325/40 in the morning, plus clopidogrel 10
hours later, resulted in a significantly greater IPA than 81 mg
enteric-coated aspirin plus 40mg enteric-coated omeprazole plus
clopidogrel all dosed in the morning.
On October 3, 2011
Pozen retained Keelin Reeds LLC to assist in the strategic partner
search for PA-325/40. Keelin Reeds is a global expert in helping life
science companies value assets, develop business development strategies
and execute partnership transactions. Pozen believes it has added
substantial value to the asset by executing the critical NDA development
and pre-commercialization phases around PA-325/40. Management intends
to secure a relationship with one or more strategic partners in order to
maximize the sales potential of the drug in both the U.S. and globally.
The ideal strategic partner for Pozen is one who embraces the company’s
philosophy of affordable pricing and shares management’s vision for the
We sat down with management
at Pozen (CEO John Plachetka & CFO Bill Hodges) on January 9, 2012.
Mr. Plachetka reiterated his goal on signing a commercialization
partnership for PA-325/40 this year. We think the deal will be superior
to the Vimovo transaction with AstraZeneca
that provided $40 million upfront, $45 million in approval milestones,
and potentially $290 million in sales milestones plus roughly 10%
royalties on sales.
That being said, we think Pozen would like to remain active in the
positioning and commercial strategy planning for PA-325/40. In September 2009
Pozen hired Elizabeth A. Cermak as Chief Commercial Officer. Ms. Cermak
will be responsible for the development and implementation of Pozen’s
commercialization efforts. Ms. Cermak was employed for twenty-five years
at Johnson & Johnson, where she held positions of increasing
responsibility at Ortho-McNeil Pharmaceuticals, McNeil Consumer and
Specialty Pharmaceuticals and other J&J subsidiaries.
In July 2011
Pozen hired Tomas S. Bocanegra, M.D. as Executive VP of Development.
Dr. Bocanegra is responsible for driving all product development
activities at Pozen, starting with lead pipeline candidate, PA-325/40.
In August 2011
Pozen hired Clint Burrus as VP of Customer Development. In this role,
Mr. Burrus will be responsible for developing and executing managed
markets, trade and reimbursement strategies for PA-325/40. The company
is clearly pushing forward on its plans with PA, putting the necessary
piece in place ahead of the planned NDA filing in the third quarter
Pozen plans to conduct an Internet-centric / direct-marketing strategy
around PA-325/40. Given the planned cost of the drug at around $1/day,
the traditional model that employs large primary-care sales force, heavy
physician detailing, direct-to-consumer television and print
advertising, and couponing and patient access cards to reduce the high
out-of-pocket expense indicative of Tier-3 formulary coverage will not
work. Instead, Pozen plans to use the Internet and social media to
educate and promote PA in a more efficient manner.
In September 2011
Pozen assembled an esteemed group of digital thought-leaders both in
and outside of healthcare to help progress the company's vision for
revolutionizing the traditional pharmaceutical commercial model. The Digital Advisory Board
(DAB) will work alongside management as it prepares to assist in the
launch and market PA-325/40. The DAB comprised of leaders in technology,
social media and digital marketing, bringing expertise and insights
from a wide range of industries to Pozen.
…A Simple Concept…
PA is such a simple product concept. Fifty million American’s use daily
aspirin therapy, with 50% of those patients at risk of developing major
complications due to gastric bleeding. Roughly 25% of the people that
start a daily aspirin therapy will discontinue or reduce frequency or
dose due to serious gastrointestinal side-effects. We believe that PA,
at $1/day, is about a $250 million product, and that's with only 5%
penetration. We think this is easily achievable.
- 50 Million Americans on Aspirin x 25% At risk for GI bleeds x 5% Convert to PA x $1 per day x 365 days => $230 Million.
Below is a cartoon that first appeared in the New Yorker magazine we believe sums up the PA story nicely.
We expect that Pozen will sign a commercialization agreement on PA in
2012. Our financial model assumes a $15 million upfront payment in 2012,
along with the potential for over $100 million in backend milestones,
including $20 million for approval in 2013. We expect that Pozen will
capture 20-25% of the PA net sales as a royalty. Our sales forecasts and
royalty payment schedule is below.
We see the PA franchise at Pozen (NPV of royalties and milestone
payments), including operating costs and corporate overhead, worth
approximately $50 to $60 million ($1.75 to $2.00 per share). The current
Pozen market capitalization is $127 million
. Given that Pozen exited 2011 with $111 million in cash and investments (thanks to the recent Treximet royalty sale
) and collects roughly 10% royalties and milestones
on worldwide sales of Vimovo
at AstraZeneca, we do not believe the PA story is fairly represented in the stock today. Our rating is 'Outperform