On the heels of dropping its bid to acquire troubled Transcept Pharmaceuticals (TSPT), Retrophin, Inc. (RTRX) announced its newest clinical development candidate on Wednesday: RE-034 (cosyntropin). Retrophin filed an S-1 on the 18th outlining plans to raise $40 million and list on the NASDAQ. With a burgeoning pipeline, including some compelling orphan targets, and a CEO who knows how to cater to investors, RTRX is worth a nibble in the $6-7 range. We’ll take a modest position next year with more clarity on the NASDAQ IPO timeframe.
RE-034 is a synthetic version of a naturally-occurring adrenal gland hormone, ACTH. It is a long-acting synthetic analog (amino acids 1-24) of the naturally-occurring adrenocorticotropic hormone (ACTH) formulated with zinc. The naturally-occurring ACTH is marketed outside the U.S. as tetracosactide. Naturally-occurring ACTH has a full length of 39 amino acids (adrenocorticotropic hormone, 1-39) and is processed and made from pre-POMC/POMC in the pituitary. RE-034 contains the 24 amino acids RTRX believes are necessary to attain the same clinical benefit as natural ACTH.
Retrophin plans to file an Investigational New Drug (IND) Application and initiate a phase 1 trial in the first half of 2014. The company plans to initiate phase 3 clinical trials of RE-034 for the treatment of infantile spasms (IS), or West Syndrome, a catastrophic form of epilepsy. Retrophin met with the U.S. Food and Drug Administration (FDA) and agreed on a clinical trial design for approval in West Syndrome, noting that the trials will be relatively small and short. Management believes that it is likely to gain Orphan Drug status for this indication, meaning it will be eligible for financial support for clinicals, a more expeditious regulatory pathway, and some commercial exclusivity.
More notable are the company’s plans to obtain approval for the treatment of nephrotic syndrome, a severe condition that can significantly damage or destroy the kidneys. Management estimates the market for steroid-resistant nephrotic syndrome (SRNS) to be $400 million currently, and it may be as large as $5 billion when fully mature. The clear comparator here is Questcor Pharmaceuticals (QCOR), which did more than $600M in revenue in the last twelve months with its own ACTH analog, H.P. Acthar Gel (note that Acthar has 19 grandfathered, approved indications, so the comparison is flawed).
RTRX released very limited information about its planned protocols for RE-034 for the SRNS indication, citing similar work being done by other companies including AbbVie (ABBV), Palatin Technologies (PTN), and others in the ACTH space. However, based on management’s comments, we expect that trial details will be posted before the year-end on the government’s clinical trials website.
Separately, RTRX announced that it would no longer pursue the acquisition of Transcept Pharmaceuticals. Transcept management responded that it believed RTRX lacked the funding to complete the transaction; however, given that TSPT has opted instead to potentially close down its operations and sell off assets, it is more likely that the company found potential bids too low – or at least too low to achieve a consensus.
