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$PATH NuPathe Awaits FDA Decision for Migraine Skin Patch

publication date: Apr 27, 2011
author/source: Mike Havrilla
$PATH NuPathe Awaits FDA Decision for Migraine Skin Patch
Written by Mike Havrilla. 

NuPathe (NASDAQ:PATH) is a specialty pharmaceutical company that applies its drug delivery technology to develop new treatments for neurological conditions. $PATH completed its initial public offering (IPO) in August 2010 at $10 per share for 5 million shares of common stock, raising $43 million in net proceeds – with shares currently trading around a 25% discount to the IPO price at the time of writing this article.
In mid-March, $PATH reported its 4Q10 and full-year 2010 results, including the following highlights:
- as of 2/14/11, has 14.5 million (M) shares of common stock outstanding
- long-term (LT) debt = $3.7M + current portion of LT debt = $1.5M for $5.2M in total debt outstanding as of year-end  2010
- as of year-end 2010, has $39M in cash / equivalents and expects to receive $1.5M NDA filing fee refund => cash on hand is sufficient to fund operations through potential FDA approval and commercial launch during 1H12
- net loss during 4Q10 of ($6.2M) and full-year 2010 net loss of ($24.4M) & used $18.4M of cash for operating activities in 2010
Below is a summary of the Company’s lead product candidate which is currently awaiting a FDA decision…
- FDA Decision 505(b)(2) NDA -- ZELRIX (Sumatriptan single-use skin patch for acute migraine headaches) 
- ZELRIX is based on the Company’s SmartRelief drug delivery technology, which differentiates the product from passive skin patches by utilizing an active transdermal delivery system based on iontophoresis (utilizing a small electrical charge to deliver medication through the skin) to control both the amount and rate of medication delivery for molecules such as sumatriptan that cannot be passively delivered through the skin.
- On 1/10/11, announced NDA accepted by FDA w/ expected decision by 8/29/11 under standard 10-month review, seeking approval as skin patch (transdermal) treatment for migraine headaches, novel formulation of approved migraine drug IMITREX
- being positioned as potential second-line use treatment for migraines following failure of first-line treatment w/ oral triptan drugs such as IMITREX
- ZELRIX is absorbed through the skin and avoids common GI side effects of oral triptan drugs such as nausea and vomiting
- met pre-defined endpoints vs. placebo skin patch for treatment of single migraine headache in 530 patients two hours after applying patch, including pain-free, pain relief, nausea free, and migraine free
- in open-label 12-month clinical trial in 183 patients, reported the following as percentage of migraines treated:  pain relief (58%), pain free (24%), nausea free (79%) with only three patients reporting triptan related side effects and most common adverse events related to local skin reactions at the site of application (including itching, pain, and hypersensitivity) w/ 25 patients (13.7%) discontinuing use of ZELRIX due to side effects
- planned commercial launch during 1H12 utilizing a sales force of approximately 100 targeted toward over 10,000 neurologists and other headache specialists
- plans to position ZELRIX as second-line treatment following failure (i.e. inadequate headache relief or intolerable side effects) of oral triptans and is targeting insurance (formulary) coverage similar to other brands in the space (i.e. Tier 2 status in term of insurance coverage and copays)
The Company's other drug delivery technology is known as LAD (long-acting delivery) with two preclinical candidates in development, including NP201 (a novel formulation of the marketed drug ropinirole or REQUIP) (the continuous symptomatic treatment of Parkinson's disease with expected IND during 1H11 for FDA clearance to begin clinical testing in humans) and NP202 (the long-term treatment of schizophrenia and bipolar disorder with expected IND filing to begin clinical testing in 2012).
The prospects for FDA approval of ZELRIX appear above average (70%) since the product is based on a widely used migraine drug that is developed in a novel skin patch formulation designed to address the nausea / vomiting that may accompany migraines and greatly reduce the effectiveness of oral triptan drugs. ZELRIX is being positioned nicely for a second-line indication following failure of an oral triptan drug as an alternative to the less well tolerated route of injecting triptan drugs under the skin (subcutaneously) or switching to another triptan drug.
Risks to $PATH include the lack of previous approvals or any marketed drugs since this represents its first filing for FDA approval as a development-stage company and recent IPO. If FDA approval is achieved, the Company will be competing in a market for triptan drugs that is now dominated by generic formulations and $PATH will need to achieve favorable co-pay and formulary status with third-party payers such as insurance companies to achieve commercial success and widespread use by patients. Other risks include reliance on third-party manufacturing (although this practice is fairly common in the industry so not a major concern) that is not under direct control by the Company and the incidence of local (skin patch site) side effects associated with use of the ZELRIX skin patch.
According to Yahoo! Finance, $PATH is covered by five stock research analysts with a price target range of $12-17 and an average consensus estimate of nearly $14 per share. The stock price range is $5.06-10.22 since the IPO three months ago with shares currently trading near the middle of this range. I am currently tracking $PATH for a potential buy 1-2 months ahead of the late August FDA decision date with a run-up price target of $10-12 w/ $15-18 potential if approved – representing a similar trade to $PCRX in terms of current prices and upside potential, but with a FDA decision date about one month later for $PATH.
Disclosure: Mark is long PATH