By David Bautz, PhD
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On May 9, 2019, Opiant (OPNT) announced financial results for the first quarter of 2019. The company recorded a total of $5.4 million in revenue for the three months ending Mar. 31, 2019, which consisted of $3.7 million in royalty revenue from the sale of NARCAN® Nasal Spray, $1.6 million of grant and contract revenue, and $0.08 million from treatment investment revenue. This compares to royalty revenue of $1.6 million for the three months ended Mar. 31, 2018. The increase in royalty revenue is due to the increase in sales of NARCAN® Nasal Spray by Emergent BioSolutions (EBS), which totaled $65.5 million in the first quarter of 2019. This was well ahead of our estimate, which was due to the effects of co-prescribing legislation that began on Jan. 1, 2019 in California. Emergent stated that revenues are likely to be more in line with the historical run rate for the rest of the year and we continue to believe that full-year revenues for NARCAN® Nasal Spray will be approximately $250 million.
Based on $250 million in NARCAN® sales, we estimate Opiant will receive approximately $15.4 million in net royalties 2019. In addition, Opiant will receive a $13.5 million net milestone payment due to the company upon sales exceeding $200 million for the first time in a calendar. We believe that payment would be received in the first quarter of 2020. Opiant owes $8.1 million due to a third-party license agreement entered into between Adapt and another company, with $5.4 million to be deducted from royalties over the next three quarters and the remaining $2.7 million deducted from the $13.5 million milestone payment. Our $15.4 million in estimated royalties for 2019 takes into account the $5.4 million deduction for the license fee.
Net loss for the first quarter of 2019 was $1.7 million, or $0.44 per share. R&D expenses in the first quarter of 2019 were $3.6 million compared to $2.4 million in the first quarter of 2018. The increase was due to an increase in third party clinical trial and development expenses and an increase in personnel and related expenses. G&A expenses in the first quarter of 2019 were $3.7 million compared to $3.0 million for the first quarter of 2018. The increase was primarily due to an increase in legal, accounting, and professional fees, an increase in personnel expenses, and an increase in royalty expenses partially offset by a decrease in stock-based compensation.
Opiant exited the first quarter of 2019 with approximately $23.8 million in cash and cash equivalents, which does not include the remaining amounts due from the NIDA grant and the BARDA contract. We forecast that the company will have approximately $17-$20 million in cash and cash equivalents at the end of 2019.
OPNT003 Pharmacokinetic Data Presented
On April 8, 2019, Opiant Pharmaceuticals, Inc. announced the publication of clinical pharmacokinetic (PK) data for OPNT003, an intranasal (IN) formulation of nalmafene (a naltrexone derivative) that is being developed as a long-lasting opioid antagonist for the treatment of opioid overdose. The data was presented at the American Society for Pharmacology and Experimental Therapeutics 2019 Annual Meeting. The study was conducted in healthy volunteers and consisted of examining PK parameters for IN nalmafene, IN nalmafene formulated with the absorption enhancer dodecyl maltoside (Intravail®), and intramuscular (IM) nalmafene. IN nalmafene was absorbed slowly with a median Tmax of two hours. Addition of Intravail® to IN nalmafene decreased Tmax to 0.25 hours and increased Cmax by approximately 2.2-fold. These results were comparable to IM nalmafene (1.5 mg) and Cmax was approximately 3-fold higher through IN administration than through IM administration.
Opiant will be conducting a pivotal PK study for OPNT003 later in 2019 and we anticipate a New Drug Application (NDA) filing in 2020.
The development of OPNT003 is being supported by a $7.4 million grant from the National Institute on Drug Abuse (NIDA) and a $4.6 million contract with the Biomedical Advanced Research and Development Authority (BARDA), which is part of the U.S. Health and Human Services Office of the Assistant Secretary for Preparedness and Response. The company recently announced receipt of the second tranche of approximately $3.0 million from the NIDA grant. The grant and contract for OPNT003 are intended to support its development through the NDA filing.
OPNT002 Pharmacokinetic Data Published
On April 3, 2019, Opiant announced the publication of PK data for OPNT002, nasal naltrexone containing Intravail®, in The Journal of Clinical Pharmacology. The study involved 14 subjects who were each administered 4 mg IN naltrexone, 4 mg IN naltrexone with Intravail®, 2 mg IM naltrexone, or 50 mg oral naltrexone on different days. The following table shows PK results from the study. The addition of Intravail® to IN naltrexone resulted in an approximately 3-fold increase in Cmax and a decrease in Tmax, however the half-life of IN naltrexone was only 2.2 – 2.5 hours, which is very similar to naloxone (used in NARCAN® Nasal Spray), thus limiting the potential usefulness of IN naltrexone against longer-lived synthetic opioids such as fentanyl.
View Exhibit I
While IN naltrexone is likely not a good candidate to treat overdose from synthetic opioids, it is well-suited for “on demand” dosing to treat alcohol use disorder (AUD). Multiple studies show that alcohol consumption results in release of endogenous opioids that bind to δ-opioid receptors with high affinities (Weerts et al., 2008; Mitchell et al., 2012). Since naltrexone is a high-affinity opioid antagonist, the ability to achieve high plasma concentrations of naltrexone through IN administration while an individual is craving alcohol may increase its efficacy compared to the oral or injectable form, for which it is currently approved to treat AUD.
Opiant will be conducting a formulation selection study for OPNT002 in the second quarter of 2019 and we anticipate a Phase 2 clinical trial initiating later in the year.
In December 2018, Opiant announced the acquisition of drinabant, a novel CB-1 receptor antagonist, for the treatment of acute cannabinoid overdose (ACO). Opiant paid Sanofi an upfront payment of $500,000 and will be responsible for all development and commercialization activities.
ACO in adults, which typically occurs from the ingestion of marijuana edibles or the use of synthetic cannabinoids, can result in anxiety, nausea, agitation, and hallucinations. In children, in which the cause is almost always accidental ingestion of edibles, ACO can be more serious and present as lethargy, ataxia, hypoventilation, and possibly vomiting and seizures (Richards et al., 2017). ACO from edible marijuana is typically more pronounced due to the delayed onset from oral absorption, which can lead novice users to take additional edible products before the effects are felt. This can ultimately result in severe effects if left untreated, including reports of suicide from marijuana-induced psychosis. Synthetic cannabinoids (“spice” or “K2”) present a unique challenge due to their potency and the potential for neuropsychiatric and cardiovascular symptoms (Monte et al., 2014) along with the potential for death (Shanks et al., 2015).
Due to the legalization of marijuana in an increasing number of states, the rate of ACO is expected to rise from an estimated one million visits to the ER in 2016. In addition, there is evidence to suggest that ACO from the use of synthetic cannabinoids is increasing (Trecki et al., 2015).
Drinabant is one of a number of CB-1 receptor antagonists developed by pharmaceutical companies in the 2000’s. These compounds were tested for a number of indications, including obesity, schizophrenia, Alzheimer’s, and smoking cessation. Sanofi conducted multiple Phase 1 and 2 clinical trials with drinabant and has an extensive safety database on the oral administration of the drug. A study by the Center for Human Drug Research showed that orally administered drinabant inhibits the effect of Δ-9-tetrahydrocannabinol (THC), the major psychoactive component of cannabis (Zuurman et al., 2010). Although effective when administered orally, Opiant will be developing an injectable form of drinabant for use in treating ACO such that it can rapidly reverse the symptoms of the condition, which may not be possible with oral administration due to the drug’s prolonged onset of action. Following reformulation of the drug in 2019, we anticipate clinical studies commencing in 2020.
Opiant is in a strong financial position with the incoming royalties from the sale of NARCAN® Nasal Spray, particularly since Emergent reaffirmed guidance for 2019 sales of NARCAN® and stated that results are likely to come in at the top of that guidance. For the remainder of 2019, we anticipate the pivotal PK study for OPNT003 and the Phase 2 study for OPNT002 to initiate. Our valuation remains at $44 and we continue to see the potential for significant upside for investors as the stock continues to trade at a significant discount to that valuation.
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