Akcea Plunges as Analysts Fear Wider Fallout From Drug Setback

(Bloomberg) -- Akcea Therapeutics Inc. and Ionis Pharmaceuticals Inc. got a rude surprise last night after the Food and Drug Administration issued a complete response letter on their Waylivra, following a contentious vote at a May advisory committee meeting. Investors are wondering if this will affect Akcea-Ionis’s more important pipeline candidate, Tegsedi.

Tegsedi is being developed for transthyretin amyloid (ATTR) polyneuropathy. Peer Alnylam Pharmaceuticals Inc. shares soared yesterday on Pfizer Inc.’s results for a competing treatment for the same disease, ATTR, but in the cardiomyopathy type.

Many analysts covering Ionis and Akcea remain optimistic ahead of a FDA decision on Tegsedi, expected by Oct. 6. Stifel’s Paul Matteis wrote that, “Tegsedi’s prior approval in the EU also gives us confidence that the dataset should stand up to scrutiny and be viewed as having a favorable risk/benefit profile by a major regulator.” Evercore ISI’s Joshua Schimmer was less sanguine and said Tegsedi’s future was murky.

The CRL for Waylivra, a treatment for a rare inherited disease that stops fats from breaking down properly, is driving down Akcea as much as 29 percent in early trading, while Ionis is lower by as much as 16 percent.

Stifel, Paul Matteis

“We had expected an approval, though safety was acutely in focus during the Waylivra adcomm. Previously, the FDA held an advisory committee (adcomm) where the panel was somewhat mixed, though ultimately they voted in favor of approval (12 yes votes versus 8 no votes). At the heart of the discussion was the association between Waylivra exposure and platelet abnormalities seen in clinical studies.”

“AKCA was close to the vest on the nature of the CRL making it difficult for us to know what the path forward is for Waylivra leading us to remove valuation credit. However, we do know from the adcomm that the FDA was focused [on] the risk of platelet declines and with Waylivra’s overall risk/benefit profile. We think the main investor question on this announcement will be regarding read-through to Tegsedi.”

“Tegsedi’s prior approval in the EU also gives us confidence that the dataset should stand up [to] scrutiny and be viewed as having a favorable risk/benefit profile by a major regulator. However, for Akcea specifically, Tegsedi now represents the majority of our new valuation, so any setback could impact our target price and the stock significantly.”

Rates Akcea a hold, price target cut to $25 from $33. Ionis is also hold, price target to $45 from $47.

Wells Fargo, Jim Birchenough

“With a prior mixed FDA panel review focused on adverse platelet effects and adequacy of dose reduction and monitoring we believe that likely CRL concerns could be addressed by more prospective data on adequacy of risk mitigation in the phase 3 open label extension study and expanded access program. We would note that with only 1500 of an estimated global target market in the US, and greater opportunity in EU and Canada, that regulatory decisions outside the US in 4Q18 could provide upside potential from today’s disappointment.”

“With inevitable questions on implications for the October 6 FDA decision on more important antisense therapeutic Tegsedi we would highlight a lesser and more predictable effect on platelets, more prospective data on risk mitigation, greater clinical benefit including quality of life, greater disease burden, approval in Europe and lack of FDA panel as supporting a more positive outcome.”

Wells Fargo rates both outperform; cut Akcea price target to $44 from $46, Ionis target remains $106.

Evercore ISI, Josh Schimmer

“We had already zeroed out any volanesorsen (Waylivra) contribution after the ad comm briefing documents came out given the significant safety concerns for the limited clinical benefit. AKCA/IONS has indicated that the FDA may consider approving, but the path forward remains a bit murky as the company still needs to work out the next steps with the FDA.”

“It remains unclear if this will have any read-through to Tegsedi (inotersen).”

Ionis rated in line with a price target of $46.

Needham, Chad Messer

“While the FDA decision places the launch of Waylivra on hold, we do not expect read through to other programs at Ionis or Akcea.”

“Waylivra is also being tested in a pivotal study in familial partial lipodystrophy (FPL). FPL patients do not carry the same disease related risk for thrombocytopenia as FCS patients, which we believe will lead to a different risk:benefit equation.”

“Akcea’s Tegsedi for treatment of TTR, which has reported cases of thrombocytopenia, is already approved in the EU and is pending approval in the US with an October 6th PDUFA date. No adcomm was requested for Tegsedi review. No cases of thrombocytopenia have been seen so far in any of Ionis’ 13 LICA programs, with blinded data available past 6 months from the most advanced of these.”

BMO, Do Kim

“We believe an FDA request for more safety data could be addressed without an additional trial. The ongoing extension portion of Phase 3 trial as well as patients in the early access programs should provide additional safety findings from stricter monitoring protocol. We assume a safety issue could lead to a refiling within six months with approval in 2H19.”

BMO cut Akcea target to $34 from $40 and Ionis target to $69; both rated outperform.

B. Riley FBR, Madhu Kumar

Kumar, who doesn’t cover Ionis or Akcea, is one of the few analysts to predict a more negative outcome for Tegsedi. He remained bullish and kept his buy-rating on competitor Alnylam with a price target of $230. “Waylivra’s CRL, likely driven by safety concerns, exposes Tegsedi to similar rejection risk,” he wrote.

Waylivra’s complete response letter “undercuts” the Ionis and Akcea bull argument “that development of a monitoring system will be sufficient to address concerns around platelet losses on phosphorothioate ASO [antisense oligonucleotide]” The recent approval of Alnylam’s drug Onpattro, which Kumar sees as “an arguably more effective therapy that lacks the safety risks seen with phosphorothioate ASOs,” further undercuts the argument that there is unmet need in the disease.

“We believe the Waylivra CRL indicates a similar potential rejection risk for Tegsedi, reinforcing Onpattro’s leadership in the hATTR-PN therapy landscape.”

Bloomberg Intelligence, Cinney Zhang

“The scarce details regarding the CRL, more likely related to safety concerns than manufacturing issues, builds uncertainty and bodes ill for Ionis’ other key drug Tegsedi (inotersen), which is under FDA review.”

“Safety signals seen in trials are weighing on the drugs’ competitive profiles and commercial prospects, making execution and marketing key, if launched. Data due in the coming months for early-stage pipeline drugs, particularly for those using the newer LICA technology, need to show potential to reinvigorate confidence in the company’s platform.”

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