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AGRX: NDA for Twirla® Filed with FDA; Six Month Review Time Expected

06/28/2017
By David Bautz, PhD

NASDAQ:AGRX

Business Update

NDA for Twirla® Resubmitted

On June 27, 2017, Agile Therapeutics (NASDAQ:AGRX) announced that it resubmitted the new drug application (NDA) to the U.S. Food and Drug Administration (FDA) for its lead product, Twirla® (AG200-15), a once-weekly low–dose combination hormonal contraceptive patch. We anticipate the FDA announcing a PDUFA date within approximately 30 days, which is likely to indicate a six-month review.

We recently initiated coverage of Agile Therapeutics, a link to the summary of which is included at the bottom. We are enthusiastic about Twirla’s® opportunity in a market that was estimated to be worth $3.7 billion in 2016. We believe that the company has adequately addressed all the concerns raised by the FDA in the complete response letter (CRL) received regarding Twirla’s® initial application, and we anticipate Twirla® being approved in late 2017. 

Valuation

We value Agile (NASDAQ:AGRX) using a probability adjusted discounted cash flow model that takes into account potential future revenues for Twirla®. Now that the NDA has been refilled, we believe the FDA will perform a 6-month review, which should lead to a PDUFA date before the end of 2017.

Even with a Pearl Index that is slightly higher than has previously been seen in other approved hormonal contraceptive products, we do not believe this is a reason for the FDA not to approve Twirla®. The company has done a good job of showing why the PI is higher than previously seen in other hormonal contraceptive trials based on a correlation between BMI and the PI. Trials for previous hormonal contraceptive products typically had an upper limit for BMI to be included in the trial, thus it is not surprising those trials would show a lower PI than the SECURE trial. Once approved, we don’t believe the slightly higher PI will have an adverse impact on peak revenues. We base this on market research presented by the company showing that clinicians do not discuss PI values with their patients and instead focus on the characteristics of each product that may fit best with a particular patients lifestyle while assuming that if approved by the FDA the product is effective at preventing pregnancy. Lastly, we believe the SECURE trial adequately addressed all the concerns the FDA had when the CRL for Twirla® was issued, thus we anticipate the product being approved in late 2017. 

According to EvaluatePharma, the U.S. hormonal contraceptive market (including both combination and progestin-only products) totaled $3.7 billion. We forecast for Agile to attain 9% market share 7 years after launch in 2018. This leads to peak revenues of approximately $400 million. After accounting for operating expenses, an estimated 35% tax rate, a 12% discount rate, and an 80% probability of approval we value Twirla® at $258 million. When taking into account estimated capital requirements for the launch of Twirla® of $35 million, and dividing by the fully diluted share count of 32.9 million share, this leads to a valuation of approximately $7.00 per share.

READ THE FULL RESEARCH REPORT HERE

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