Today Fennec (FENC) announced that the company initiated its rolling NDA for chemo induced hearing loss in patients 1 month- 18 years of age with localized, solid tumors. In other words, Fennec is filing for a “broad” label. This broad label has been supported by Phase 3 data, KOLs and patient advocacy groups (read more here). We view today’s news as a large de-risking event for Fennec.
Before initiating the NDA, Fennec most likely met with the FDA for a pre-NDA meeting. Although no mention was made in the press release, we believe that filing for broad label implies the FDA was supportive during this latest meeting.
Why Is Broad Submission Important?
With broad submission Fennec’s drug PEDMARK will have less commercial hurdles, if/when it receives FDA approval. Doctors would not have to prescribe the drug off-label, which would also simplify the insurance/coverage process. This, in turn, would also mitigate generic risk, such as the use of compounded STS.
Importantly, a potential acquirer would be more interested in Fennec after today’s de-risking. We believe PEDMARK has a good shot of approval, and now, a more defined target market. We estimate there are approximately 5,400 kids in the US/EU with localized cancers. Assuming a conservative $50,000 drug price and 40% penetration, we project peak sales to hit $108M in 2026. We still believe an acquirer would pay north of $20/share.
Smooth Approval Process Expected in 2019
Fennec will submit their NDA in Q1 2019 and expects approval in 2H 2019. Overall, the company has been well received by the governing bodies. The FDA has granted Fennec Fast Track & Breakthrough designations (details here) and the EMA has also had discussions about a broad label (details here). We believe the company is also well positioned for an FDA Priority Review. The FDA informs the applicant of a Priority Review designation within 60 days of the receipt of the NDA. In Fennec’s case, this would be the next catalyst sometime in Q2 2019.
With today’s news, we think Fennec now has the support of Phase 3 data, KOLs, patient advocates and the governing bodies (FDA/EMA). This leads us to believe Fennec is well positioned to be granted approval and become an attractive acquisition target in 2019. Even though we are currently down from our $6.75 entry price, we are holding.
PropThink contributors are LONG FENC
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