By John Vandermosten, CFA
1Q:17 Operational and Financial Results
On May 9th Lipocine Inc. ( LPCN) filed its first quarter 2017 10-Q in conjunction with a press release highlighting recent achievements. The company reported 1Q:17 net loss of ($4.9) million which equates to ($0.26) on a per share basis. This compares to our estimates of ($8.9) million and ($0.48) per share. Actual R&D expenditures for the dosing validation (DV) and dosing flexibility (DF) study were lower than our estimates, contributing to the difference between our estimates and actuals.
First quarter 2017 R&D expenses were $3.1 million, increasing 15% from the $2.7 million spent in 1Q:16. Higher CRO expenses related to LPCN 1021, as well as DV and DF studies were partially offset by lower manufacturing costs for the product. Further offsets were seen in LPCN 1111 and LPCN 1107 CRO costs, as both declined year over year. G&A expenses of $1.8 million declined 58% compared to the same quarter a year ago on lower business development, market research and pre-commercialization activities related to LPCN 1021 as well as a reduction in workforce which occurred in the third quarter of 2016.
Highlighted Events Year to Date
➢ Dosing flexibility study initiated in early January following prior month’s launch of dosing validation study.
➢ On March 6, the company entered into a Controlled Equity Offering agreement with Cantor Fitzgerald where up to $20 million in stock may be sold under an at-the-market offering.
➢ During the first quarter, 667 thousand shares were sold under the offering agreement raising net proceeds of $2.7 million
➢ On February 15, Lipocine announced the promotion of Gregory Bass to Chief Commercial Officer. Mr. Bass joined the company in 2006 and will now lead the commercialization of Lipocine’s product candidates, chiefly the TRT program.
➢ On April 24th Lipocine announced it had completed enrollment of the LPCN 1021 fixed dose trials.
➢ Topline results from DV and DF studies for LPCN 1021 expected in June 2017
➢ Resubmission of LPCN 1021 NDA anticipated in 3Q:17
➢ Submission of LPCN 1107 Phase III protocol anticipated in 2Q:17
LPCN 1021 (Tlando) Update
Lipocine is completing its Dosing Validation (DV) and Dosing Flexibility (DF) studies which are expected to provide top-line results next month. The DV trial is an open-label, fixed dose, single treatment arm of Tlando enrolling 100 subjects. The dosing period is 24 days and the primary endpoint is the percentage of subjects with an average 24-hour serum testosterone concentration average (“Cavg”) within the normal range. Secondary endpoints will examine maximum serum testosterone concentrations (“Cmax”).
The DF study was announced in a January 5th release. It will contrast with the DV study in that it will provide a daily dose of 450 mg, divided into three equal parts. Trial design will match that of the DV trial and will include the same primary and secondary endpoints.
LPCN 1111 – Once Per Day TRT
LPCN 1111 completed its Phase 2b study in 3Q:16 and the next step is to conduct preclinical toxicology in canine models. These should be completed by mid-year preparing for the anticipated end-of-Phase 2 meeting with the FDA in 2H:17. Our estimates call for FDA approval in 2019 and first sales in 2020 with the product absorbing sales from LPCN 1021, due to its improved dosing schedule. We anticipate a Phase 3 trial launching in 2018.
LPCN 1107 – Pre-Term Birth
LPCN 1107, or oral hydroxyprogesterone caproate, has completed its Phase 1a and 1b studies and held its end-of-Phase 2 meeting with the FDA. Since LPCN 1107 is an already known molecular entity, Phase 2 studies are not needed and the next step is to submit a Phase 3 protocol to the FDA via a special protocol assessment (SPA) in the second quarter of 2017. In the end-of-Phase 2 meeting, the FDA agreed to a randomized, open label, two arm clinical study to include a LPCN 1107 arm and a comparator intramuscular arm with treatment up to 23 weeks.
Manufacturing scale-up work for LPCN 1107 is currently underway and must be complete before the start of the Phase 3 clinical study. Additionally, a food effect study will also need to take place either before or during the study. The FDA has granted orphan drug designation to LPCN 1107 based on a major contribution to patient care, which will provide several benefits that should accelerate approval and provide additional exclusivity for the product.
We expect a 2Q:17 topline announcement for the DV and DF trials, followed by 3Q:17 analysis, preparation and resubmission for LPCN 1021. Since the FDA will be reviewing new data, we continue to assume a six month review by the FDA. Based on this timeline, the agency could determine approval by 2Q:18 supporting an ultimate launch by 2H:18. We believe that the FDA’s emphasis on dosing protocols rather than on a fundamental flaw with the Lip’ral technology support eventual approval. We estimate first sales of LPCN 1107 in 2H:18.
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