Sizing Up Elagolix – A Blockbuster Drug

In June 2012, Abbott Labs (NYSE:ABT) initiated a phase III clinical trial with elagolix to evaluate the safety and efficacy of the drug in female patients with endometriosis. Below we provide some detail on what endometriosis is, how elagolix works, why we are confident in the design of the phase III trial, and just how big a market opportunity this represents.

About Endometriosis

Endometriosis is a gynecological medical disorder that occurs when cells from the lining of the uterus (endometrium) grow in other areas of the body, most commonly on the peritoneum which lines the abdominal cavity, the ovaries, bowel, rectum, and bladder. These endometrial tissue implants are influenced by hormonal changes and respond similarly to the cells found inside the uterus, only they are not shed during menstruation. Instead, they may grow and shrink with hormonal changes, bleed irregularly, and lead to severe cramping or pelvic pain. Endometriosis is a common issue in women with infertility.

The cause of endometriosis is unknown. One theory is that the shed endometrial cells during menstruation travel backwards through the fallopian tubes into the pelvis, where they implant and grow. This is called retrograde menstruation. This backward menstrual flow occurs in many women, but researchers think the immune system may be different in women with endometriosis. As such, genetic predisposition plays a role in the development of endometriosis, with about a 10-fold increased incidence in women with an affected first-degree relative.

Endometriosis can affect any female, from premenarche to post-menopause; however, it is primarily a disease of the reproductive years. Accordingly, endometriosis is typically diagnosed between the ages of 25 and 35, although researchers believe the condition probably begins about the time that regular menstruation begins. Its prevalence varies, but sources suggest up to 10% of the general reproductive-age female population is affected. Nearly 25% of women with endometriosis are asymptomatic.

As noted above, infertility is common with endometriosis. About 25 to 50% of infertile women have endometriosis, and 30 to 50% of women with endometriosis are infertile (source). Endometriosis is an estrogen-dependent process, and can persist beyond menopause and in up to 40% of patients following hysterectomy. Approximately 400,000 hysterectomies per year are attributed to endometriosis (source).

For additional information on endometriosis, we recommend this detailed medical report.

Elagolix

Elagolix is a novel, oral gonadotropin-releasing hormone (GnRH) antagonist developed by Neurocrine Biosciences (NASDAQ:NBIX). Neurocrine licensed the worldwide rights to elagolix to Abbott Labs in June 2010 (press release) and received $75 million upfront from the pharmaceutical giant. Since June 2010, Neurocrine has earned an additional $30 million in milestones and $23 million in sponsored R&D payments. Neurocrine has the potential to earn up to an additional $427 million in regulatory and development payments and $50 million in commercial payments, along with royalties on sales.

GnRH is a peptide that stimulates the secretion of the pituitary hormones that are responsible for sex steroid production and normal reproductive function. Researchers have found that chronic administration of GnRH agonists, after initial stimulation, reversibly shuts down this transmitter pathway and is clinically useful in treating hormone-dependent diseases such as endometriosis. Several companies have developed peptide GnRH agonists on this principle, such as Lupron (Abbott) and Zoladex (AstraZeneca [NYSE:AZN]).

However, since these drugs are peptides, they must be injected via a depot formulation rather than the preferred oral route of administration. In addition, GnRH agonists can take up to several weeks to exert their desired effect once the initial stimulation has occurred, a factor not seen with the use of Neurocrine’s GnRH antagonists. More importantly, until the desired effects are maximized, GnRH agonists have shown a tendency to exacerbate the condition via a hormonal flare. And ultimately, profound suppression of GnRH is similar to that seen after menopause and can be associated with hot flashes and the loss of bone mineral density.

Neurocrine’s orally active, non-peptide GnRH antagonists potentially offer several advantages over injectable GnRH peptide drugs, including rapid onset of hormone suppression without a hormonal flare. Also, injection site reactions commonly observed in peptide depots are avoided and dosing can be rapidly discontinued if necessary – a clinical management option not available with long-acting depot injections. Importantly, with elagolix it may be possible to alter the level of pituitary GnRH suppression, thereby titrating circulating estrogen levels. Using this approach, an oral GnRH antagonist may provide patients relief from the painful symptoms of endometriosis while avoiding the need for the active management of bone loss.

In summary, we see the following advantages to elagolix over existing medications such as Lupron, Zoladex, or depot formulation contraceptives such as medroxy-progesterone (Depo Provera):

  1. Orally active. Elagolix is given as a once-daily oral tablet, avoiding injection-site reaction seen with depo formulations. Elagolix can be dose-titrated and quickly discontinued if necessary.
  2. Reversible. Because elagolix can be quickly discontinued, ovulation returns typically after the first month of cessation of therapy. Women receiving long-acting formulations of Lupron and Depo Provera can take months to see normal return to ovulation.
  3. Rapid effect. Elagolix does not cause the initial GnRH flare effect seen with agonists (drugs that simulate GnRH which the body then shuts down via feed back loop), which can worsen symptoms near-term and take weeks or even months before they reduce symptoms.
  4. Less side-effects. The mechanism of action of a GnRH antagonist (GnRH suppression seems to have a benign affect on changes in bone mineral density and hot flash as elagolix does not suppress estradiol levels to the effect of Lupron).

The Phase III Trial

The phase III trial, called Violet Petal (ClinicalTrial.gov identifier: NCT01620528), is a 24-week, multinational, randomized, double-blind, placebo-controlled study designed to evaluate the safety and efficacy of elagolix in 875 women, age 18 to 49, with moderate-to-severe endometriosis-associated pain. It will be conducted at approximately 160 sites in the United States, Puerto Rico and Canada. As of the end of October 2012, Abbott reports being on track with respect to patient recruitment and enrollment.

The primary endpoint will be a dual-endpoint in reduction in dysmenorrhea (painful menstruation) and non-menstrual pelvic pain (NMPP) for women on two doses of elagolix (150 mg and a yet unannounced higher dose) vs. placebo in a 1-1-2 randomization over 6 months. Efficacy will be assessed by a responder analysis for statistical evaluation. The inclusion of a higher dose of elagolix, perhaps 250 mg or 300 mg (150 mg BID) is intriguing. It allows for a potential full label with dose titration and prescribing options post approval.

Confident In Design

We are confident in the design of the phase III trial, and the efficacy and safety previously seen with elagolix. In total, Neurocrine has presented data from 12 phase I programs and 6 phase II programs (2 phase IIa and 4 phase IIb) on roughly 1,000 patients. Results from the phase IIb (n=137) Daisy Petal (Study-901) program first released in May 2010 provide the best proof-of-concept data for the phase III trial initiated in June 2012. Results were statistically significant in all primary and secondary endpoints.

We are also encouraged by the fact that during the phase IIb Daisy Petal program elagolix demonstrated excellent safety and tolerability. Discontinuation due to adverse events was low at 4.4% for elagolix vs. 1.4% for the placebo during the first eight weeks of the program. The discontinuation rate increased to only 5.1% at week 24. The most common adverse event reported more often with elagolix than with placebo was nausea (~10% of the subjects). This was consistent with what we saw in previous clinical studies. Importantly, there were no elagolix treatment-related serious adverse events.

Responder analysis from the phase IIb trial showed an 85% response rate with 150 mg elagolix. We believe Abbott is looking for greater than 90% response rate in the phase III trial through the inclusion of a higher dose. Secondary endpoints include dyspareunia (painful intercourse) and patient global impression of change (PGIC), as well as analgesic use. Following the 6 month controlled portion of the trial, patients will enroll in a 6 month open-label extension study where Abbott will look for signs of persistent efficacy. For the safety analysis, patients will be followed for an additional 12 months, after which Abbott will conduct a DXA scan to assess changes in bone mineral density.

We expect that this program will take 12 months to enroll. Top-line data from the phase III trial should be available in the first half of 2014, with the full analysis in 2015. Abbott plans to conduct a second confirmatory phase III trial mirroring the first trial expected to start in early 2013. We expect that this program will include sites outside North America, with an emphasis on Western Europe. Full analysis from the second trial is expected in 2016, along with the New Drug Application (NDA) planned for 2016.

Market Opportunity

Abbott Labs is an excellent partner for Neurocrine Bio. Abbott is a pioneer and market leader in GnRH agonists with Lupron for the treatment of hormone-responsive cancers such as prostate cancer or breast cancer. Abbott has a strong appreciation for the GnRH mechanism and the company is clearly committed to making elagolix a success with Lupron expected to lose patent protection in 2015. We believe that Abbott will look to replace Lupron in the Ob/Gyn market with elagolix thanks to superior efficacy and tolerability, as well as patent protection.

Above we noted sources that site the prevalence of endometriosis at around 10% of the general female population between the ages of 18 and 49. This is roughly 10 million women in the U.S. However, we also note that nearly 25% of these women are asymptomatic. Our findings are consistent with research done by Datamonitor in 2009 citing 7.5 million women in the U.S. alone are believed to suffer from clinically significant endometriosis.

Neurocrine notes that 75% of endometriosis sufferers have symptoms defined as moderate or severe. Data from IMS Health suggests that 10-20% of all oral contraceptive prescriptions are written off-label for endometriosis, and that Ob/Gyn’s prescribe NSAIDs and opioids off-label to approximately 25% of their endometriosis patients.

The question is, what percent of moderate to severe endometriosis patients are adequately treated by NSAIDs, oral contraceptives, and opioids? Above, we noted that approximately 400,000 hysterectomies per year are attributed to endometriosis. We suspect that another 350-400,000 women are to the point that they are failing these other medications and nearing a hysterectomy (essentially pulling forward one year all the women that are heading towards a hysterectomy next year). As such, we believe there are approximately 800,000 women in the U.S. that are ideal potential candidates for elagolix. We think it is realistic for Abbott to penetrate 50% of this market.

We believe that elagolix will launch competitively priced with branded neurological or fibromyalgia pain medications such as Cymbalta or Lyrica, at around $7 per day. We believe a typical course of treatment will be 7 to 8 months on therapy. Elagolix’ intellectual property is protected by a composition of matter patent through 2024. We suspect that Abbott will file additional applications and extensions (through Hatch-Waxman) that could protect the drug to 2029. We suspect that elagolix pricing can peak at $9 to $10 per day by 2025.

Multiplying all this through, we arrive at a peak U.S. opportunity for elagolix in endometriosis of $800 million (800k patients x 50% penetration x $9.50 per day x 210 days).

For the purpose of this article we focused solely on endometriosis. However, we remind investors that Abbott is also studying elagolix in a phase IIa exploratory trial for the treatment of uterine fibroids. In September 2011, Abbott announced it had commenced this program, expected to enroll up to 325 women with heavy uterine bleeding associated with uterine fibroids at clinical sites around the U.S. for a total of 3 months. The doses for the trial have not been disclosed, but Neurocrine describes them as a broad range with previous work done in phase I program. We expect the trial to take about twelve months to complete, meaning we should see data over the summer of 2013. The primary endpoint will be quantified blood loss assessed by alkaline hematin.

We think this is an important step forward for Abbott and Neurocrine because development of elagolix outside the U.S. will probably focus on uterine fibroids. The opportunity in uterine fibroids may be as large as in endometriosis. As such, globally, we think elagolix is a blockbuster drug, with peak sales that could approach $1.5 billion if the drug works in both endometriosis and uterine fibroids. One blockbuster drug may not move the needle meaningfully for Abbott Labs, but for Neurocrine Bio it could be a potential game-changer.