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RVPH: FY:20 Financial Results & RVPH5063 Comparison

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By John Vandermosten, CFA

NASDAQ:RVPH

READ THE FULL RVPH RESEARCH REPORT

Full Year 2020 Financial and Operational Results

On March 22, 2021, Reviva Pharmaceutical Holdings, Inc. (NASDAQ:RVPH) announced full year 2020 financial and operational results and filed its form 10-K with the SEC. Reviva went public following a merger with Tenzing Acquisition Corp., a special purpose acquisition company, and commenced trading on the NASDAQ Capital Market under ticker symbol RVPH on December 15, 2020. On the clinical front, Reviva had already completed Phase II of lead candidate, Brilaroxazine (RP5063) and completed its End-of-Phase 2 meeting with the FDA, where the latter agreed to consider a “Superior Safety” label claim. Reviva is now planning a Phase III clinical trial for its lead candidate that is expected to commence mid-2021, pending funding. In this report we summarize recent financial results and provide an analysis of RP5063 in comparison with other antipsychotics in terms of safety and efficacy.

Reviva generated no revenues in 2020 and expended ($2.43) million in operational costs producing a net loss per share of ($1.24).

For the fiscal year ending December 31, 2020 and versus the fiscal year ending December 31, 2019:

➢ Research & development expenses totaled $295,000 up 51% from $196,000 with the increase due to higher salary expenditure and increased consulting and drug development costs;

➢ General & administrative expenses rose by over a factor of 10 to $2.1 million from $181 thousand driven by warrant expense of $1.12 million, $345 thousand attributable to accounting and legal consulting and $444 thousand in salary and related expenses;

➢ Interest expense was $1.45 million, up 210% from $470,000 due to investor notes issued in 2020 and beneficial conversion feature recognized on conversion of notes payable immediately prior to the merger, partially offset by interest income of $25 thousand related to the acquisition;

➢ Net loss was ($3.78) million, or ($1.24) per share, compared to ($847) thousand, or ($0.31) per share;

As of December 31, 2020, cash on the balance sheet was $8.76 million. During 2020, Reviva consumed $3.72 million in operations.

Reviva Pipeline (1)

Reviva Pharmaceuticals milestones:

➢ Orphan Designation for RP5063 in IPF - April 2018

➢ Narayan Prabhu appointed Chief Financial Officer - November 2020

➢ Tenzing Acquisition Corp. merger completed - December 2020

➢ Phase III trial design finalization with FDA - 1H:21

➢ Phase III RP5063 in acute and maintenance schizophrenia - 2H:21

RP5063: Retroactive Comparison Against 32 Antipsychotics

An estimated 0.25% to 1% of the global population suffers from schizophrenia. To address this estimated 20 million individuals with the chronic disorder there are numerous antipsychotics approved for use. However, a high discontinuation rate due to suboptimal efficacy and serious side effects reveal an unmet need. Commonly prescribed antipsychotics leave patients suffering from neuroleptic, endocrine and metabolic reactions that frequently lead to discontinuation. These therapies do not provide efficacy uniformly across the spectrum of symptoms. Many of these agents are prescribed at a lower than medically needed level in order to limit the severity of side effects but fail to provide a therapeutic effect at that dose leading patients to discontinue therapy.

RP5063 Receptor Binding Affinities (2)

RP5063, with its better balance of receptor activity, may allow for therapeutic doses to be used in difficult to treat patients while limiting the impact of the common neurological, metabolic and endocrine side effects associated with commonly prescribed agents. The drug offers a faster onset of action compared with alternatives, a feature that is expected to limit discontinuation by patients using alternatives that suffer weeks of side effects without therapeutic benefit.

Reviva will soon launch registrational studies addressing acute and maintenance treatment for schizophrenia that will be completed over the next few years. Although pivotal data has not been generated for RP5063, we analyze the candidate’s Phase II data against a comprehensive systematic review and network meta-analysis published in The Lancet, comparing 32 existing antipsychotics to reveal trends in line with RP5063’s efficacy and low intensity side effects.

Lancet Systematic Review and Network Meta-Analysis

Huhn et al. published in The Lancet, is the largest known, most comprehensive systematic review and network meta-analysis comparing the efficacy and side effects of 32 oral antipsychotics in acute treatment of adults with multi-episode schizophrenia (3). The publication was a comprehensive comparison of antipsychotic drugs, including first and second generation products. The meta-analysis evaluated each of the antipsychotics on measures of efficacy and side-effects. The study employed a meta-analysis that combined the results from 402 studies, including 53,463 participants and built on past efforts. The 32 drugs were compared, in terms of efficacy, by reduction in overall, positive, and negative symptoms. Dropout, depression, quality of life and functioning were also assessed. Side effects compared included use of antiparkinsonian drugs, extrapyramidal side effects, akathisia, weight gain, prolactin levels, sedation, QTc prolongation and anticholinergic side effects.

Comparison parameters included in the review were standardized to accommodate studies of varying measures. The studies’ results were standardized via Standardized Mean Difference (SMD), Risk Ratio (RR) and Mean Difference (MD) where appropriate. To facilitate our comparison, data from the Phase II study of RP5063 (brilaroxazine) (NCT01490086) was standardized in a similar manner, using SMD, RR and MD, to the extent the collected data was analogous (4) and the data compared against those published in the meta-analysis.

REFRESH: Phase II Evaluation of RP5063 in Schizophrenia

Phase II (REFRESH) was a randomized, double blind, placebo controlled, multi-center trial intended to assess safety and efficacy of RP-5063 in acute exacerbation of schizophrenia or schizoaffective disorder (5). 22 clinical sites located in the Philippines, India, Malaysia, Moldova and the United States participated in the trial. The primary endpoint for the study was reduction in total PANSS at end of treatment from baseline vs placebo. Secondary endpoints included change from baseline to day 4, 8 15, 22 and 28 on PANSS total, positive and negative subscales, 20% improvement in PANSS total and one-point improvement on the clinical global impressions scale severity (CGI-S) (6). 234 subjects were enrolled. Patients were randomized into five arms including 15 mg (n=60), 30 mg (n=60) and 50 mg (n=60) doses as well as placebo (n=40) and aripiprazole 15 mg (n=20). Approximately one week of screening was followed by 28 days of dosing and follow up afterward of one and two weeks for men and women, respectively. Pharmacokinetic analysis was also performed. 186 of 234 enrolled subjects completed the study.

Data Compilation and Presentation

Data from the REFRESH study was compared to the data presented in the meta-analysis. The meta-analysis compared 32 antipsychotics by their reduction in overall, positive, and negative symptoms, dropout, depression, quality of life and functioning. Side effects compared included use of antiparkinsonian drugs, extrapyramidal side effects, akathisia, weight gain, prolactin levels, sedation, QTc prolongation and anticholinergic side effects. Of these parameters, overall, positive and negative change in symptoms, dropout, akathisia, weight gain, change in prolactin levels and sedation were comparable based on data available from the REFRESH study publication. As positive and negative symptom reduction were endogenous to overall symptom reduction, reduction in overall symptoms was solely used as a measure of efficacy. Side-effects ultimately compared included akathisia, weight gain, change in prolactin levels and sedation. All-cause discontinuation is compared on its own to evaluate treatment adherence across the antipsychotics. As Reviva will proceed with the 15 mg dose of RP5063 in pivotal trials, our analysis is centered on data specific to the 15 mg dose. Furthermore, despite the Lancet review featuring 32 antipsychotics, our primary focus was on the ones most frequently used: olanzapine, risperidone, quetiapine, aripiprazole, cariprazine and brexpiprazole.

REFRESH study data was then standardized to be comparable with the meta-analysis data. Symptom reduction measures were standardized using Standardized Mean Difference (SMD), where the mean difference between symptom reduction in the 15 mg and placebo arms was determined, and the standard deviation (SD), derived from standard error (SE) of the placebo arm was used to standardize the therapeutic reduction. This number was then directly compared to the results presented in the Lancet meta-analysis review which were also presented in SMD. This was performed for change in total PANSS, which correlated with the meta-analysis’ change in overall symptoms parameter.

Other parameters, such as all-cause discontinuation, were presented as Risk Ratio (RR) in the meta-analysis, and REFRESH data was treated accordingly, taking the percentage discontinued in the 15 mg arm, and dividing by the same in the placebo arm. Akathisia and sedation parameters were processed in the same manner. We note that no placebo arm patients experienced akathisia in the REFRESH trial, rendering an error in the RR calculation. We used a surrogate datapoint for akathisia placebo prevalence of 3.7% (7). No patients experienced sedation in treated and placebo arms and the RR was taken to be one.

Finally, in cases where Mean Difference (MD) was compared, such as change in weight, the mean weight gain for the placebo arm was subtracted from the treatment arm. Change in prolactin, another factor compared using MD, was in mIU/L, or milli-international units per liter, in the REFRESH trial, and was converted at a rate of 21.2 μg per mIU to ng/mL, as presented in the meta-analysis.

Data was compiled from REFRESH and the meta-analysis, and percentile rankings were determined for each antipsychotic, for each parameter. Missing data was ignored. Again, efficacy axis comprised only the overall reduction in symptoms parameter to rank the antipsychotics, where no average was taken. Side-effect parameters were averaged with equal weighting. An equal weighting was determined to be best practice, in this application, as assigning weights to the side effects implied that one side effect was less desirable than another, which could rely, both in terms of sensitivity and severity, on the individual patient. The ranking and averaging also reconciled differences between the standardization measures and minimized distortion from missing data. The overall reduction in symptoms and average of side effect ranking were used to produce a two-dimensional projection of efficacy versus side effects. A higher efficacy ranking and lower side effect ranking are most desirable.

RP5063 vs Major Antipsychotics, Efficacy and Side Effects (8)

Based on the analysis, it appears that 15 mg brilaroxazine is differentiated among the major antipsychotics. Brilaroxazine efficacy is only above average compared with other treatments; however, the drug offers a class-leading lack of side-effects. Side effects are a material deterrent to treatment adherence and patients are forced to weigh the benefits against the side effects. Also noteworthy is that RP5063 is superior to aripiprazole in both efficacy and side effects. RP5063 is a chemical evolution of aripiprazole, sharing the same underlying structure but replacing a carbon atom with an oxygen atom in the quinoline ring, generating a benzoxazinone ring. RP5063 is also structurally similar to cariprazine and brexpiprazole. The attributes of above average efficacy combined with class-leading lack of side effects holds up when the analysis is extended to all 32 available antipsychotics included in the meta-analysis.

RP5063 vs 32 Antipsychotics (9)

Brilaroxazine differentiates itself from the cluster of the 32 antipsychotics in terms of its relatively low level of side effects while maintaining efficacy.

If approved, patients may finally have a therapeutic option that involves less of a trade-off between efficacy and side effects. Adherence to treatment and the benefits of doing so may be improved if the side effects are minimized. Below is an analysis of compiled discontinuation ranking showing brilaroxazine’s leading position. A lower risk ratio (RR) is better.

All-cause Discontinuation, RP5063 vs Major Antipsychotics (10)

RP5063 is ranked highest among major antipsychotics for lowest risk of discontinuation and also has the most favorable side effect ranking, consistent with the trends observed comparing against all 32 antipsychotics, reiterating the role of side effects as a cause of discontinuation.

All-cause Discontinuation, RP5063 vs Best of 32 Antipsychotics (11, 12)

Antipsychotic Comparison Summary

Our analysis compared data provided in the Huhn et al. meta-analysis and standardized the data presented in Reviva’s Phase II trial of brilaroxazine (RP5063) in acute exacerbation of schizophrenia or schizoaffective disorder (13). The standardized data was compared directly, where possible, to the data in the meta-analysis. Rankings were established for overall reduction in symptoms, our measure of efficacy. Side-effects that were comparable from the Reviva study were standardized, ranked, and averaged to project the side effect data in one dimension. Together, the data could be displayed in two dimensions, evaluating Reviva’s candidate against major antipsychotics in terms of efficacy and side effects. Analysis was also conducted for all-cause discontinuation, a major hindrance in schizophrenia treatment. Patients often must weigh and evaluate the tradeoff of efficacy and side effects. Based on our analysis, brilaroxazine appears to offer above average efficacy with class-leading lack of side effects, in line with the pharmaco-engineering that led to RP5063 as a candidate. If approved, brilaroxazine should offer patients an option with less of a compromise. A standalone version of this analysis is available here.

Initiating on Reviva

We initiated on Reviva on January 13, 2021 with a valuation of $21.00 per share. This present value is based on our estimates for successful Phase III trials in schizophrenia and subsequent approval by the FDA of brilaroxazine (RP5063). We anticipate that the required trials can be complete by 2024 and receive regulatory approval in the US by 2025. In parallel with regulatory submission in the US, we also see similar efforts in other selected geographies. Reviva’s lead indication targets schizophrenia, a serious mental disorder characterized by the subject suffering hallucinations, delusions and disordered thinking and behavior that impairs normal function.

An estimated 0.25% to 1% of the global population suffers from schizophrenia. Other sources, such as the World Health Organization, estimate there to be 20 million persons with the chronic disorder.

Reviva plans Phase II work in several indications associated with schizophrenia including bipolar disorder, depression, ADHD and psychosis related to neurodegenerative disease. Two orphan conditions may also be pursued in pulmonary arterial hypertension and idiopathic pulmonary fibrosis. These indications are amenable to RP5063’s mechanism of action which relies on various states of binding to and modulation of multiple serotonin, dopamine and nicotinic receptors where it has antagonist and partial agonist activity.

There are numerous antipsychotics approved for use; however, a high discontinuation rate due to suboptimal efficacy and serious side effects reveal an unmet need. Commonly prescribed antipsychotics leave many patients suffering from neuroleptic, endocrine and metabolic side effects that frequently lead to discontinuation. These therapies do not provide efficacy uniformly across the spectrum of symptoms. Many of these agents are prescribed at a lower than medically needed level in order to limit the severity of side effects but fail to provide a therapeutic effect at that dose leading patients to discontinue therapy.

RP5063, with its better balance of receptor activity, may allow for therapeutic doses to be used in difficult to treat patients while limiting the impact of the common neurological, metabolic and endocrine side effects associated with commonly prescribed agents.

Reviva will soon launch registrational studies addressing acute and maintenance treatment for schizophrenia that will be completed over the next few years. Pivotal studies are expected to be complete by 2024, after which a new drug application (NDA) is expected to be filed in the United States and other geographies. Assuming customary review periods, approval is anticipated in 2025 followed by near immediate commercialization in the United States and following a short delay in other areas. Pricing is forecast to be in line with other newly launched branded antipsychotics and penetration is modeled to be in the low single digit range of the addressable market. If the drug profile is better than expected, we anticipate higher penetration levels to occur.

As of December 2020, Reviva holds approximately $9 million in cash and will target the raise of additional funds to support its development projects. The once private firm combined with the special purpose acquisition company Tenzing Acquisition Corp. on December 14, 2020. The merger is expected to provide the capital necessary to advance its development programs. With no debt on balance sheet and a capital raise planned for the near term, we expect Reviva to launch the first of its schizophrenia programs in mid-2021 which include two $20 million Phase III trials, one $25 million maintenance study and a $10 million safety study.

We anticipate that pivotal data will be available for the schizophrenia indication by 2024 followed shortly after by a new drug application (NDA) to the FDA and other regulatory agencies. Approval in the US and other regions is anticipated in 2025 and 2026 respectively followed by commercial launch. If successful, RP5063 or brilaroxazine will address several shortcomings of approved schizophrenia treatments and expand the therapeutic armamentarium for this chronic and debilitating mental disorder.

Key reasons to own Reviva Pharmaceuticals shares:

➢ RP5063 Phase III asset may address an unmet need in schizophrenia and other mental disorders vs. existing therapies

◦ Greater degree of efficacy

◦ Lower level of side effects

◦ Improved discontinuation rate

◦ Addresses negative symptoms

◦ Improved social functioning

◦ Opportunity for approval in multiple mental disorders

◦ Faster onset of action vs. standard of care

◦ Binding to multiple serotonin and dopamine receptors implicated in schizophrenia

➢ Additional RP5063 Phase II ready programs in multiple indications

◦ Bipolar Disorder

◦ Depression

◦ Attention Deficit Hyperactivity Disorder (ADHD)

◦ Alzheimer’s Psychosis/Behavior

◦ Parkinson’s Psychosis

◦ Pulmonary Arterial Hypertension (Group 1)

◦ Idiopathic Pulmonary Fibrosis

➢ RP1208 preclinical programs in development

◦ Depression

◦ Obesity

➢ Potential for intellectual property protection until 2037 for RP5063

Summary

Reviva files its first Form 10-K and highlights its recent transition to a public company. Now that the public listing is complete, efforts are underway to raise additional funds to support the Phase III study in schizophrenia. We complement this periodic update with an analysis of brilaroxazine’s safety and efficacy in comparison with 32 other antipsychotics. The results of our comparison is very favorable to Reviva’s candidate; a graphical plot shows above average efficacy and lower side effects compared with other antipsychotics. As many patients discontinue their medication due to side effects, remaining on treatment is key to ensuring a benefit. RP5063 may address an unmet need for patients with schizophrenia and other mental disorders, providing a safer, more tolerable and more effective treatment than what is now available.

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1. Source: Reviva Pharmaceuticals January 2020 Corporate Presentation.

2. Rajagopal L, Kwon S, Huang M, Michael E, Bhat L, Cantillon M, Meltzer H. RP5063, an atypical antipsychotic drug with a unique pharmacologic profile, improves declarative memory and psychosis in mouse models of schizophrenia. 2017. Behavioral Brain Research

3. Huhn, M., Nikolakopoulou, A., Schneider-Thoma, J., Krause, M., Samara, M., Peter, N., ... & Leucht, S. (2019). Comparative efficacy and tolerability of 32 oral antipsychotics for the acute treatment of adults with multi-episode schizophrenia: a systematic review and network meta-analysis. The Lancet, 394(10202), 939-951.

4. Cantillon, M., Prakash, A., Alexander, A., Ings, R., Sweitzer, D., & Bhat, L. (2017). Dopamine serotonin stabilizer RP5063: a randomized, double-blind, placebo-controlled multicenter trial of safety and efficacy in exacerbation of schizophrenia or schizoaffective disorder. Schizophrenia research, 189, 126-133.

5. Schizoaffective disorder is a combination of schizophrenia symptoms and mood disorder symptoms

6. The CGI-S is a measure of clinician’s view of patient’s global functioning

7. Chow, C. L., Kadouh, N. K., Bostwick, J. R., & VandenBerg, A. M. (2020). Akathisia and Newer Second‐Generation Antipsychotic Drugs: A Review of Current Evidence. Pharmacotherapy: The Journal of Human Pharmacology and Drug Therapy, 40(6), 565-574.

8. Compiled by Zacks Analyst Research

9. Compiled by Zacks Analyst Research

10. Compiled by Zacks Analyst Research

11. Compiled by Zacks Analyst Research

12. Legend for antipsychotics abbreviations can be found in the Huhn et al. meta-analysis.

13. Schizoaffective disorder is a combination of schizophrenia symptoms and mood disorder symptoms