When it comes to biotechs, all it takes is a single spark to ignite the flame. For Lipocine (LPCN), which is focused on metabolic and endocrine disorders, this spark could be a fast-approach regulatory decision. The company is gearing up for Tlando’s PDUFA date, currently scheduled for August 28.
Writing for H.C. Wainwright, analyst Oren Livnat tells clients that Tlando, the company's oral testosterone replacement therapy (TRT), has had a “long regulatory saga” that features two complete response letters (CRLs).
That being said, based on multiple factors, Livnat is cautiously optimistic that the FDA will give the therapy its final stamp of approval. First and foremost, the analyst believes LPCN might be able to satisfy the PK excursion thresholds if it can convince the FDA “to accept a comparable PK analysis to that used by Clarus (private) for approved oral TRT Jatenzo, adjusting PK for different collection methods and ex-vivo testosterone conversion.” Additionally, in April, the FDA denied Clarus’ Citizens Petition which wanted to block Tlando approval and limit the agency’s flexibility around approval criteria.
“We believe Tlando has demonstrated a likely better blood pressure profile than approved Jatenzo, with a simpler dosing regimen to achieve efficacy, and that the FDA would likely rather avoid the headache of a Formal Dispute Resolution and just allow both products be approved with appropriate labeling,” Livnat explained. Therefore, he assumes the therapy will be approved on August 28, with commercial partnering and the launch coming in Q4 2020 and 2021, respectively.
Comparing Tlando to Jatenzo, Livnat argues that LPCN’s candidate is “favorably positioned” in the ongoing patent dispute with Clarus, with a jury trial slated for February 2021. He added, “While that could present some risk to getting a partnership done, we believe Lipocine is already favorably positioned there given its success in its USPTO interference case, already affirmed by the Court of Appeals. We believe Lipocine should be a more successful product than Jatenzo, in an enormous TRT market with plenty of room for both.”
As a result, Livnat thinks Tlando peak partner sales could clock in at over $275 million, with peak Lipocine royalties landing at around $50 million. If that wasn’t enough, oral-TRT data from the ongoing LiFT Phase 2 in NASH is set to read out by year-end. This data will be related to preliminary week-12 liver fat reduction, with 36-week biopsy data expected in Q2 2021.
“Clearly the NASH angle is so speculative at this point, in a crowded field and uncertain pathway, but we give a bit of credit given the 40% liver-fat reduction seen in prior proof-of-concept, and the differentiated mechanism vs. other candidates,” Livnat commented.
Everything that LPCN has going for it convinced Livnat to stay with the bulls. To this end, he reiterated a Buy rating and left the $3 price target as is. This target conveys his confidence in the stock’s ability to climb 47% higher in the next twelve months. (To watch Livnat’s track record, click here)
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