Concert Pharmaceuticals (CNCE) is looking to have a good 2019 if things go well for its phase 2 study using CTP-543 to treat patients with alopecia areata. Here is the kicker: the 8 mg dose has already achieved the primary endpoint needed to advance to the next study. However, results from the 12 mg dose of CTP-543 are expected in Q3 of 2019, and that will be a major catalyst for the stock. That’s because it’s possible the 12 mg dose could be a significant improvement over the 8 mg dose of CTP-543. The higher dose is not necessary, but it would definitely be an improvement regardless.
Phase 2 Alopecia Areata Program
Interim data for the phase 2 study using the lower doses were released back in November 12, 2018. However, the data released was only for the 4 mg and 8 mg versions of CTP-543. The upcoming data presentation is the 4 mg/8 mg version of the drug, which was accepted as a late-breaking oral presentation. It is expected to be shown on Saturday, March 2, 2019. It’s hard to say whether or not the 12 mg dose will be an improvement over the 4 mg and, especially, the 8 mg dose. Either way, the 8 mg dose shown in the prior results already released proved that CTP-543 works in treating patients with alopecia areata. Specifically, it was the 8 mg version of the drug that had met the primary endpoint of the phase 2 interim data that was released. The phase 2a study recruited adult patients with moderate to severe alopecia areata.
Alopecia areata is characterized as sudden hair loss beginning with a bald patch on the head. Some treatment options can help contain the condition, but there are no FDA-approved products to treat it. This is a large market opportunity with not many treatment options. It is estimated that the global market opportunity for alopecia areata is going to be $11.8 billion by 2024. The primary endpoint of the study evaluated patients with alopecia areata by using a specific measurement tool. The measurement tool that was used to determine this specific issue is known as the severity of alopecia tool (SALT) after 24 weeks of dosing with CTP-543. It was shown that patients treated with the 8 mg dose of CTP-543 (twice daily) were able to achieve the primary endpoint of the study compared to placebo with statistical significance. Statistical significance was achieved with a p-value of p<0.001. Specifically, 47% of patients that took 8 mg of CTP-543 achieved a ≥ 50% relative reduction in their overall SALT score from baseline compared to placebo. That’s impressive enough, but even better, this statistical significance was observed after only 12 weeks of treatment with the 8 mg version of the drug.
Unfortunately, the 4 mg version of CTP-543 was not enough to meet on the primary endpoint. That doesn’t matter, though, considering that the 8 mg version did meet the primary endpoint. But wait, because there is additional opportunity for this program. The phase 2a study is ongoing with a 12 mg dose of CTP-543. Data from this dose version of the drug is expected in Q3 of 2019 (in essence anytime between July and September of 2019). The thing is that if the 12 mg dose is significantly better, then that works out for Concert Pharmaceuticals. That’s because it improves upon efficacy for these patients and has a better shot at penetrating the market. However, it is not necessary for FDA approval. The 8 mg dose of CTP-543 has already achieved the primary endpoint to continue on to the next study (which is likely to be a pivotal study). In essence, the 12 mg dose should be considered as icing on the cake if it is successful or improves upon those who only took the 8 mg dose.
One thing to note is that if the 12 mg dose disappoints, I still expect the stock to possibly trade lower on such news but not by much. That’s because the company can still move on to a phase 3 study even with the 8 mg dose. That will give investors a good entry point if they have not yet vested into this biotech. The final item to note is that treatment with CTP-543 only displayed common side effects like cough, acne, nausea and headache. These are still side effects, but they are not serious adverse events.
If the FDA approves CTP-543, it would become the first oral drug to be approved for the treatment of alopecia areata. The biotech is also expecting to initiate a long-term extension study in 2019. The reason for doing so is to determine the long-term effects of this drug in this patient population.
Financials
According to the 10-Q SEC filing, Concert Pharmaceuticals has $168.5 million in cash as of September 30, 2018. This may seem like a small amount of cash, but the biotech, in my opinion, is in good shape in terms of funding for quite some time. That’s because it expects that the current cash on hand will be enough to fund its operations into 2021 under the current pipeline. That means as long as the company doesn’t initiate any new large studies, it should be good for the next 2 years. However, I would keep an eye on any new pivotal studies that may need to be initiated. That may end up moving up the time table of a potential cash raise. For now, Concert has a few catalysts in 2019 that could possibly cause the stock to trade higher.
Conclusion
The alopecia areata market is going to be a huge market opportunity for Concert Pharmaceuticals. It has already met the primary endpoint in a phase 2 study using 8 mg of CTP-543. There is potential for the 12 mg dose of the drug to achieve a superior clinical outcome. However, this also poses a risk – that’s because if the 12 mg dose of CTP-543 doesn’t improve upon the 8 mg dose, then it could possibly be seen as a negative. In that case, the stock may trade lower by 15% or 20%. Even if that happens, it would create a great buying opportunity because Concert can still move onto a late-stage study with the lower dose regardless.
This article is published by Terry Chrisomalis, who runs the Biotech Analysis Central pharmaceutical service on Seeking Alpha Marketplace. If you like what you read here and would like to subscribe to, I’m currently offering a two-week free trial period for subscribers to take advantage of. My service offers deep dive analysis of many pharmaceutical companies. The Biotech Analysis Central SA marketplace is $49 per month, but for those who sign up for the yearly plan will be able to take advantage of a 33.50% discount price of $399 per year.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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