Bellus (BLU) is up over 10% this morning on news that Merck’s Phase 3 candidate gefapixant met efficacy endpoints in chronic cough (read here).
Merck was testing gefapixant twice daily at 45mg and 15mg. The higher 45mg dose met primary efficacy endpoints - demonstrating a statistically significant decrease in 24-hour coughs per hour (average hourly cough frequency based on 24-hour sound recordings) versus placebo at 12 and 24 weeks.
The lower 15mg dose did not meet primary efficacy endpoints. Remember, in Phase 2 Merck tested 20mg/50mg, but only the 50mg dose met efficacy endpoint. In Phase 3, Merck was only testing 15mg to see if a larger sample set could show statistically significant reduction in cough, while minimizing the taste effect. This was not the case.
Merck disclosed that safety and tolerability profile of gefapixant during the trials to date was consistent with the previously reported Phase 2 study. In other words, the taste alteration remains.
Bottom Line: Merck’s data further validates the P2X3 drug class in chronic cough. Bellus’ own candidate is a highly selective P2X3 antagonist. Due to this, we think Bellus will be reporting data in mid-2020 that will distinguish it as the best in class chronic cough candidate (read past content here). Bellus’ cough reduction should be in line with Merck, but there should be little to no taste alteration. Merck acquired the gefapixant candidate for $500M upfront + $750M in milestones. That sets the precedent for Bellus, which is currently trading at about a $300M enterprise value. We see at least 60% upside from current levels.
PropThink contributors are LONG BLU
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