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LPCN: Coming at the FDA Like a Spider Monkey

By John Vandermosten, CFA


2017 Operational and Financial Results

Lipocine Inc. (NASDAQ:LPCN) filed its 2017 10-K and posted its earnings release on March 12, summarizing an volatile year which included new dosing studies for Tlando and a resubmission of the drug to the FDA. Several key events have taken place year to date with additional financing secured and an advisory committee meeting that sought additional information for the company’s testosterone replacement therapy product. Progress was also made on patent rights and class action lawsuits, placing Lipocine in a stronger position overall with respect to Clarus’ patent.

As expected, no revenues were reported in 2017. Total expenses were $21.2 million, up 11% over the prior year, with $11 million of this total allocated to R&D and $10.2 million allocated to G&A. R&D rose 36% as Lipocine conducted two important dose validation studies, increased manufacturing capabilities and prepared for the January 2018 advisory committee meeting. G&A fell slightly on lower Tlando commercialization costs and lower legal expenses.

Cash stood at $21.5 million at December 31, 2017 and during the first quarter, the company entered into a loan agreement, drawing an additional $10 million. Cash burn for the year was ($16.7) million, an improvement over 2016 levels of ($18.3) million.

The most important effort during 2017 and year to date 2018 was the progress made on Tlando with the FDA. In mid-2016, Lipocine received a CRL which identified an anomaly in the titration scheme that required further study. Following a post-action meeting, the company launched a dosing flexibility and dosing validation study which were completed and announced in June 2017. In August 2017, Lipocine resubmitted its new drug application for Tlando to the FDA and an advisory committee date of January 10th 2018 was set along with a PDUFA date of May 8th 2018. At the meeting, the committee voted six to thirteen against the benefit/risk profile for Tlando citing blood pressure concerns, the need for an ambulatory blood pressure study and whether testosterone concentrations measured in serum tubes were reliable.

To address these concerns, Lipocine has begun preparing to conduct an ambulatory blood pressure monitoring (ABPM) study and a phlebotomy study. Both protocols have been submitted to the FDA under an IND for comments. Lipocine will be ready to begin immediately following input from the agency. The phlebotomy study should be a relatively short and inexpensive effort, however, the ABPM is not expected to be finished prior to the May 8th PDUFA date and Lipocine would agree to conducting the work after approval. In conjunction with the efforts to address the concerns of the AdCom, Lipocine is also meeting with congressional members with oversight of the FDA making the case that the FDA outlined everything it needed in study design during its 2017 meeting, and should not bring up new concerns that are not justified by the data at this late stage in the approval process. The company is also drafting letters with legal counsel to deliver to the FDA making the case that no other approved product was required to perform the studies. These will be delivered if necessary following FDA action. See our January 11 report for additional discussion of the AdCom.

Lipocine is coming at the FDA from multiple directions on the regulatory, congressional and legal fronts with the goal of focusing attention on the original pathway, protocol and processes developed. While we are not sure of the likelihood of success for this approach, we see Lipocine’s all-in efforts as a strong positive.

And finally, our previous commentary regarding the Clarus patent dispute left off with the USPTO granting a motion for Lipocine’s and Clarus’ initial priority dates regarding Tlando. This change shifted the focus to Lipocine’s 2009 patent, which the company believes contains sufficient evidence to support their claim of priority and is dated prior to the earliest priority that will be accorded Clarus. Management expects that the court should have all of the documentation by the required July deadline, after which the court will deliver a ruling. There is no mandated timeline for the court’s action, but we expect a response before year end 2018.

Highlighted Events Year for 2017 and Year to Date

• Completion of enrollment of the LPCN 1021 fixed dose trials – April 2017
• Topline results from DV and DF study - June 2017
• SPA for LPCN 1107 (Pre-term birth) submitted to FDA - June 2017
• Resubmission of Tlando to FDA – August 2017
• USPTO Motions decision – September 2017
• Updated form S-3 filed registering $150 million in securities – October 2017
• AdCom delivers a 6:13 vote against the benefit/risk profile for Tlando – January 2018
• Entry into a $10 million load agreement with Silicon Valley Bank – January 2018
• Settlement of Securities Class Action Lawsuit – February 2018


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