Memorandum

Intarcia files New Drug Application for ITCA 650 (implantable exenatide mini-pump) with the FDA – November 21, 2016

Executive Highlights

  • Intarcia announced today the submission of a New Drug Application (NDA) for implantable GLP-1 agonist ITCA 650 (exenatide mini-pump). An FDA decision is expected in 10-12 months, or by 4Q17.
  • ITCA 650’s unique mechanism of drug delivery – via continuous, subcutaneous release – could tackle the challenge of medication adherence, to say nothing of reducing injection burden for needle-phobic patients. The GLP-1 agonist market is growing remarkably fast from a high base – it hit $4 billion in 2015, up 20% from a year earlier, when it had grown 12%. Undoubtedly, this new product should accelerate growth even more.
  • We spoke with CEO Mr. Kurt Graves about the company’s positive outlook for ITCA 650, about upcoming head-to-head studies vs. leading oral (SFUs and SGLT-2s!) and injectable diabetes therapies, about preliminary plans for a larger CVOT, and about how the product will be priced.

This morning, Intarcia announced that a New Drug Application (NDA) has been submitted with the FDA for implantable GLP-1 agonist ITCA 650 (exenatide mini-pump) as a treatment for type 2 diabetes. We’ve been eagerly looking forward to this submission – the submission comes after minor delays, with previous guidance indicating 3Q16 (management then shared in September that the filing would be pushed back to Q4). CEO Mr. Kurt Graves emphasized to us in a separate call this morning that this was “not your typical NDA” and we agree. In addition to the drug itself, the regulatory application also covers all aspects of the Medici technology platform (the product’s implantable mini-pump device and high temperature stability components), placement and removal kits for the mini-pump, and a range of human factors that become relevant with a new combination drug and a new device– in sum, the ITCA 650 NDA packet was a whopping 1.3 million pages (!). On the drug side, we expect this includes positive safety and efficacy data from FREEDOM-1 (ITCA 650 vs. placebo), FREEDOM-1 HBL in participants with high baseline A1c between 10-12%, and FREEDOM-2 (ITCA 650 vs. Merck’s Januvia [sitagliptin]), as well as results from FREEDOM-CVO showing cardiovascular safety. It sounds like Intarcia invested in due diligence prior to filing the NDA in order to save time and resources down the line, which seems smart. The company is expecting a typical 10-12-month review process, which means an FDA decision is expected in late 3Q or 4Q17. It’s uncertain whether or not the agency will schedule an Advisory Committee meeting. Overall, given the novel delivery mechanism – continuous, subcutaneous release of exenatide for three or six months (initiation and maintenance doses, respectively) – we certainly wouldn’t be surprised if the FDA sought the opinions of an Advisory Committee and would be surprised if it did not.

Mr. Graves underscored that ITCA 650 is designed to ensure better patient adherence than any currently-available GLP-1 agonist because it eliminates the need for daily or weekly injections: “You know the patient is getting the medicine, and that’s a big deal for our healthcare system when the majority of patients are not treated to target glucose levels and/or adherent to their therapy after just 6-12 months.” Intarcia is clearly banking on the long-term subcutaneous drug delivery of ITCA 650 to differentiate the GLP-1 agonist from others in its class; commercial competitors include Novo Nordisk’s Victoza (liraglutide), Lilly’s Trulicity (dulaglutide), AZ’s Bydureon (exenatide once-weekly), AZ’s Byetta (exenatide twice-daily), GSK’s Tanzeum (albiglutide), and Sanofi’s Adlyxin/Lyxumia (lixisenatide). Despite the incredible strides that GLP-1 agonists have made thus far in type 2 diabetes care – this class grew 20% to just under $4 billion for the full year 2015 – Mr. Graves shared his view that outcomes haven’t trended for the better since these agents first hit the market in 2005 with Byetta. He pointed out that average A1c, proportion of patients reaching target A1c, hypoglycemia rates, and other important barometers for diabetes treatment quality have been flat or have gotten worse in the past decade. Supporting his point about gaps in the current state of injectable GLP-1 therapies, a recent study in the journal Diabetes, Obesity and Metabolism finds that only 49% of patients persisted through 12 months of liraglutide treatment and that diabetes-related costs increased substantially and significantly for patients on liraglutide therapy. “So you have to ask, are you bringing the next incremental pill or injection to market, or are you coming out with something truly new and designed to address pressing problems in type 2 diabetes around sub-optimal control and poor adherence rates?” As a side note, we must point out data on diabetes-related outcomes by drug class are not widely available – in fact, we recently requested this of a database analyzed by Dr. Silvio Inzucchi and Dr. Kasia Lipska in a piece in Diabetes Care around which headlines said the new therapies (including GLP-1 agonists) made no difference. (In that case, there was no analysis of how patients on newer therapies actually did by class, only the entire database in aggregate.)

Mr. Graves expressed confidence that ITCA 650 will fill an unmet need in type 2 diabetes care in the US, and that it holds the potential be a life-changing innovation for many patients. We see tremendous potential for ITCA 650 to grow the GLP-1 agonist class with even greater momentum. If approved (and assuming no unusually prohibitive cost or access barriers), this product could be an appealing therapeutic option for people with type 2 diabetes and would expand patient choice with a unique addition to the GLP-1 agonist market. A new entry that is implantable would be definitively positive in our view, though we do not yet know what formulary status would look like given approval.

  • Mr. Graves announced a new clinical trial, set to dose its first patient in 1Q17, which will compare ITCA 650 head-to-head with an SGLT-2 inhibitor and a sulfonylurea. All participants in the three-arm study will be on a background of metformin therapy, and will be randomized to receive (i) ITCA 650, (ii) an SGLT-2 inhibitor oral agent, or (iii) a sulfonylurea. “Our long-term goal,” Mr. Graves continued “is to show that this medicine is the best you can use with metformin. Over time, we aim to examine it head-to-head with leading orals and injectables on top of metformin.” We very much respect Intarcia’s commitment to continued clinical studies of ITCA 650, particularly given the large investment required behind each of these trials. With so many diabetes drug classes and with an increasing number of products in each, head-to-head comparisons could be extremely beneficial, as they might help patients and providers sort through the web to make an informed, patient-centered choice based on individual preferences and the distinct clinical advantages of different agents. It’s clear that Intarcia hopes to position ITCA 650 competitively as a second-line treatment option and move the use of GLP-1 agonists earlier in the diabetes treatment algorithm. Currently, GLP-1 agonists are often viewed as a “first injectable” option, following multiple oral agents. We expect the reduced daily burden associated with ITCA 650 will make this GLP-1 agonist an attractive option for some patients and some HCPs earlier in the course of diabetes treatment. We expect GLP-1 agonists will be pushed even earlier in the treatment algorithm with the Novo Nordisk’s oral formulation of GLP-1 agonist semaglutide, currently in phase 3, as well. The emergence of basal/GLP-1 combos should do the same – Novo Nordisk as well as Sanofi both had high-profile approvals in this area today.
    • Mr. Graves shared that the company plans to initiate an additional trial for ITCA 650 post-approval evaluating real-world outcomes, but provided no further details. Something to look out for is how GI side-effects, particularly nausea, play out in the real-world vs. in clinical trials – this is a classic outcome beyond A1c about which some patients and providers feel very strongly. ITCA 650 has shown a favorable safety/tolerability profile in studies so far, with only 2-3% of participants discontinuing treatment due to nausea in FREEDOM-1 – not a cause for huge concern. That said, side-effects are often more pronounced in imperfect, real-world patients vs. more “ideal” clinical trial participants. We’re also curious about the patient tolerability for the implantation procedure. Adverse events have been low in clinical trials to date from what we understand and that the procedure is relatively quick and easy to teach to providers. That said, we’d welcome “real-world” patient experiences with any pain, etc. associated with the procedure and the implant. We look forward to further safety and tolerability data from real-world outcomes studies of ITCA 650, pending approval.
  • While the company is considering various design options for a larger cardiovascular outcomes trial (CVOT) for ITCA 650, no details on study design or timing have yet been disclosed. This would be the second CVOT in the product’s clinical development program, following FREEDOM-CVO. Importantly, this first trial was designed only to show non-inferiority vs. placebo (or CV safety) by meeting the FDA’s pre-approval hazard ratio threshold of 1.8. FREEDOM-CVO enrolled ~4,000 participants, accrued 150 MACE events, and followed patients for a mean 1.2 years. It’s unclear at this point if ITCA 650’s post-approval CVOT would be designed to demonstrate superiority, though we cannot imagine another CVOT that would not be powered for superiority – what would be the point! According to FDA guidelines, the CVOT must demonstrate a hazard ratio for cardiovascular risk with ITCA 650 that is 1.3 or less – this would almost certainly require a larger participant pool and longer mean follow-up time, which Intarcia would presumably expect. Given the encouraging data demonstrating cardioprotection for Novo Nordisk’s Victoza and semaglutide, there is optimism that ITCA 650 will similarly demonstrate a cardiovascular benefit in a larger and longer trial – in fact, we think demonstrating cardioprotection will be key for ITCA 650’s long-term success given the increasingly high bar for new diabetes drugs to win payer reimbursement and patient and provider adoption. As a reminder, Novo Nordisk’s Victoza demonstrated CV benefit in the LEADER trial (1,302 MACE events; 3.5-5 years follow-up), and phase 3 GLP-1 agonist candidate semaglutide also showed cardioprotection in SUSTAIN 6, albeit another smaller CVOT (254 MACE events; two years follow-up). CVOTs are ongoing for AZ’s Bydureon (~14,000 enrolled), Lilly’s Trulicity (~9,622 enrolled), and GSK’s Tanzeum (~9,400 enrolled), with expected completion in April 2018, April 2018, and May 2019, respectively – see our CVOT timeline for more.
  • Mr. Graves emphasized that the company plans to price ITCA 650 very responsibly: “I think you’ll see one of the most responsible stances on access and pricing than anyone has brought to type 2 diabetes in a long time.” This was terrific to hear. The company has previously indicated that it intends to price ITCA 650 somewhere in between DPP-4 inhibitors or SGLT-2 inhibitors and currently available injectable GLP-1 agonists on a per-day basis. That said, Mr. Graves has previously emphasized to us that the goal is not necessarily to price ITCA 650 lower than other GLP-1 agonists so much as to price it competitively with branded orals in order to advance the product to an earlier position in the diabetes treatment algorithm. This goal is further reflected in the head-to-head trials Intarcia has and is planning to conduct with ITCA 650 and Januvia, an SFU, and an SGLT-2 inhibitor. In particular, we expect SFUs to compare particularly poorly given potential for weight gain, edema, congestive heart failure, hypoglycemia.
  • Intarcia is in a strong cash position heading into commercialization of ITCA 650. The company recently secured $215 million in the first close of a major equity financing, with a larger close (~$300-$400 million) expected by the end of the year. Moreover, Intarcia anticipates >$500 million in major milestones over the next two-three years, and will collect the third and final $100 million payment from the $300 million royalty/equity conversion completed last year. In total, the company should have over $1 billion in cash over the next two to three years. This is great news for the marketing prospects of ITCA 650 – in fact, management stated following the first close in September that funding would be heavily allocated to the ongoing development of the implantable exenatide mini-pump. This cash position also affords Intarcia the runway to stay private through the first year post-launch of ITCA 650 – we hope very much it can do this so it does not need to turn inordinate focus to investors.
  • Mr. Graves also shared that ex-US filing of ITCA 650 is slated for 1H17. Intarcia is partnered with Servier for commercial activities surrounding ITCA 650 in markets ex-US and ex-Japan.

Close Concerns Questions

Q: Will the FDA schedule an Advisory Committee meeting prior to a decision on the NDA for ITCA 650?

Q: What other head-to-head studies (besides the completed FREEDOM-2 trial vs. Merck’s Januvia [sitagliptin] and the planned trial vs. an SGLT-2 inhibitor/a sulfonylurea) are in the works for ITCA 650?

Q: Real-world outcome trials hold potential to show the full benefits of built-in adherence over longer-term treatment periods.  What real-world outcomes trials are planned for ITCA 650?

Q: What trial design features are being considered and discussed for the second, larger CVOT of ITCA 650? When can we expect this CVOT to begin?

Q: What will the commercialization strategy look like for ITCA 650? How will the company highlight unique aspects of the implantable mini-pump that separate this product from other GLP-1 agonists?

Q: How will the list price of ITCA 650 factor in the cost of the insertion/removal procedure along with the cost of the drug itself?

Q: How will the cost of ITCA 650 compare to other GLP-1 agonists? To branded oral medications?

Q: What is the impact of ITCA 650 on HCPs? Who will want to take on the procedures, both implantation and explanation?

Q: How will this new addition to the GLP-1 market shake-up the reimbursement landscape – what will new formularies look like?

-- by Payal Marathe, Helen Gao, and Kelly Close