ISEE - Iveric Bio: ACP Advances As GATHER Results Continue To Impress

2023-03-23 14:37:16 ET

Summary

• Iveric Bio has a promising pipeline of products, including its complement C5 inhibitor, avacincaptad pegol (ACP), which has achieved impressive results in phase 3 clinical trials.
• The company's recent post-hoc analysis from its GATHER clinical trial program signals up to a 59% reduction in vision loss with ACP compared to sham treatment.
• The market's current valuation of Iveric Bio may be short-sighted, given the company's innovative pipeline and potential for future growth.

Iveric Bio (ISEE) is a biotechnology company dedicated to developing novel treatments for retinal diseases, with a focus on Age-Related Macular Degeneration ((AMD)). With a pipeline of promising drug candidates, Iveric Bio has made significant progress toward delivering much-needed treatments to patients living with geographic atrophy ((GA)), a severe form of AMD that can lead to vision loss and irreversible blindness. However, the company's valuation metrics are admittedly unfavorable, leading some investors to question its long-term prospects. In this article, I will provide a growth-oriented investment thesis for Iveric Bio and explain why the technology makes the growth thesis valid.

Current Financial Position

Iveric Bio spent $117.0 million on research and development in 2022, compared to $85.1 million in 2021, primarily due to progress made in the company's GATHER2 trial, increased manufacturing activities for avacincaptad pegol ((ACP)), and additional research and development staffing. This increase in spending is indicative of a company that is investing in its future and committed to developing innovative treatments for ophthalmic diseases. It also shows that the company is making progress toward its goals, which is reflected in the positive results of the GATHER2 trial.

The company also spent $72.9 million on general and administrative expenses in 2022, compared to the previous year's figure of $29.7 million. This increase is primarily attributed to commercial preparation costs related to ACP and additional staff for this purpose, including share-based compensation.

Investing in personnel for commercial preparation exemplifies how motivated Iveric is about bringing its product to consumers and achieving long-term profitability. Many biotech companies place large emphasis on the product, but unfortunately neglect the fact that the product must eventually fit into a capitalist framework upon reaching market. A proactive approach to commercialization as in Iveric's case demonstrates that they are unlikely to fall victim to this common pitfall. However, this may come at a cost, as indicated by Iveric Bio's reported net loss of $185.2 million in the year ended December 31, 2022, compared to 2021's net loss of $114.5 million. Such investments can lead to significant near-term losses, but they should be accepted when it comes to companies invested in bringing development-intensive products to market.

Fortunately, Iveric Bio had a strong cash position of $646.8 million as of December 31, 2022. With regards to the remaining cash runway available, it appears that based on the rate of expenditure seen over the past year Iveric Bio's assets should be more than sufficient to cover its expenses over the next 4 quarters - even if we see the same type of growth in R&D and other expenses over the coming quarters. However, it's important to note that unexpected developments or changes in the business environment could impact the company's financial position, and investors should always be mindful of potential risks. With that being said, this liquidity provides them with much-needed financial flexibility, allowing them to sustain R&D expenses well into the future.

GA Therapeutics and Gene Therapy

Iveric Bio has developed a range of products , including ACP, an inhibitor of Complement C5, IC-500, an inhibitor of HtrA1, and gene therapy programs for orphan inherited retinal diseases (IRDs).

ACP is the company's leading product candidate , having displayed encouraging results in clinical trials. Iveric intends to pursue collaborations to commercialize ACP outside of the United States. The company is also working on developing IC-500, its HtrA1 inhibitor product candidate, for GA or any other associated retinal diseases. Additional preclinical studies are being conducted to optimize the formulation, dosage, and delivery of IC-500, and the company plans to undertake toxicology studies. The company aims to submit an investigational new drug application ((IND)) to the FDA during the first half of 2024.

Iveric Bio's programs for Leber's Congenital Amaurosis type 10 (CEP290), autosomal recessive Stargardt Disease (ABCA4), and Usher's Syndrome type 2A (USH2A) are also progressing. As these programs are still early-stage, there remains a lack of significant data that could lead to any conclusions being formed.

For Iveric Bio, the company's focus is on developing treatments for inherited retinal diseases, which include autosomal recessive diseases such as Stargardt Disease. The prevalence of these diseases varies across different populations, and calculating the TAM for this market is a complex task.

One study conducted on the prevalence of autosomal recessive inherited retinal diseases found that globally there are about 5.5 million people who are suffering from this disease. This gives an indication of the potential market size for Iveric Bio's products targeting these conditions.

However, it is also important to consider the number of unaffected carriers of mutations who could pass on the disease to their offspring. The study also found that about one-third of the global population or 2.7 billion people are unaffected carriers of a mutation. This highlights the potential for the market to expand further in the future.

FDA has Accepted NDA for ACP

Iveric has disclosed that the FDA accepted its new drug application (NDA) for ACP. The treatment is intended for patients with geographic atrophy that results from AMD. The NDA has obtained Priority Review and has a goal date of August 19, 2023, under the Prescription Drug User Fee Act. ACP achieved a significant milestone as the only investigational product that accomplished the pre-specified 12-month primary endpoint in two phase 3 pivotal trials, with observed efficacy rates of up to 35%.

The FDA's acceptance of the company's NDA and Priority Review for ACP brings the firm closer to delivering a much-needed therapy for AMD patients dealing with GA. The fact that the FDA has not identified any potential review issues and does not plan to hold an Advisory Committee meeting for ACP is a positive development for the company, but further regulatory progression remains to be seen in the near future.

Additionally, ACP is the first and only investigational therapy to obtain Breakthrough Therapy designation for GA secondary to AMD, which indicates the drug's effectiveness and potential to address an unmet medical necessity. This designation could help accelerate the drug's regulatory approval process and bring it to market sooner.

GATHER 1 and 2 are Both Consistent

Iveric Bio has disclosed the findings of an exploratory analysis on the duration between events from the ACP GATHER clinical trial program. The clinical trials, GATHER1 and GATHER2, aimed to determine the rate of GA lesion growth in patients with GA linked to AMD. The post-hoc analysis conducted on vision loss in these pivotal studies revealed a potential decrease of up to 59% in the rate of vision loss with ACP 2 mg against the sham treatment within 12 months.

From my perspective, this discovery is a significant breakthrough for Iveric Bio and its product line. The post-hoc analysis results display promising efficacy rates for ACP in mitigating vision loss, a crucial endpoint for individuals with GA secondary to age-related macular degeneration. The fact that these results were consistent in both the GATHER1 and GATHER2 clinical trials further reinforces the drug's potential to address an unfulfilled medical need.

Additionally, the decrease of up to 59% in the rate of vision loss with ACP 2 mg in comparison to sham treatment at 12 months is a significant outcome that supports the relevance of the GATHER1 and GATHER2 primary endpoints that achieved statistical significance. This reduction in vision loss has the potential to change the trajectory of the disease for patients, considering that GA lesions usually take around 2.5 years to start impacting central vision.

Looking Ahead: Future Risks

One of the biggest risks facing Iveric Bio is the possibility of clinical trial failures. Despite promising results from preclinical studies in their early-stage pipeline candidates, there is always the chance that clinical trials may not produce the desired results or may be plagued by unforeseen complications. This can lead to delays in the development process, additional costs, and ultimately the failure of a drug to gain approval from regulatory agencies. Furthermore, even upon approval, any issues that may arise later on can lead to the drug immediately being dropped as an accepted treatment.

While this is a significant risk for Iveric Bio, the company has taken steps to mitigate this risk. Even after receiving solid clinical results throughout each trial stage, Iveric has not stopped there. For example, the company has initiated an open-label extension study for patients who completed their month 24 visits in the GATHER2 trial, to provide patients with longer-term access to ACP and collect additional safety data. By preemptively assessing long-term safety and viability of the treatment, Iveric is reducing the chance that any unexpected results, short-term or long, get in the way of their commercial plans for ACP.

Another significant risk facing Iveric Bio is regulatory hurdles. The drug approval process can be long and complicated, with regulatory agencies such as the FDA and European Medicines Agency ((EMA)) requiring extensive data on the safety and efficacy of new drugs. In addition, regulatory agencies may require additional clinical trials or other data, further delaying the approval process. Despite these challenges, Iveric Bio has made significant progress in gaining regulatory approval for its drugs. The combination of its NDA acceptance along with plans for marketing authorization application submissions to the European Medicines Agency demonstrates that the company is well along its way to surpassing any potential concerns relating to approval.

Intellectual property disputes are a potential risk for Iveric Bio, similar to any other biotechnology company. Proper protection of its intellectual property and prevention of infringement by competitors is important to the success of the company. However, navigating the patent landscape can be complex and legal challenges may arise that delay commercialization of drugs while also incurring significant legal costs.

Despite this risk, Iveric Bio has developed a strong portfolio of intellectual property and they have had success defending their patents. Recently, an asset purchase agreement was established with Opus Genetics Inc., which gave Opus rights to the preclinical product candidates IC-100 and IC-200. This shows the company's dedication to protecting its intellectual property and refocusing on its highest return offerings.

Finally, there are additional risks in terms of commercializing products; even if approval from regulatory agencies is obtained, it doesn't guarantee commercial success. Market forces such as competition, pricing, and reimbursement all play a role in determining whether or not a drug will succeed. That said, Iveric Bio has taken steps to mitigate this risk. The company has already initiated commercial preparation activities for ACP and is exploring collaboration opportunities for the further development and potential commercialization of ACP outside the United States.

Final Thoughts

In conclusion, Iveric Bio has shown strong potential for growth in the ophthalmology market with its innovative product pipeline. The company's focus on developing treatments for orphan inherited retinal diseases and its recent breakthrough therapy designation for ACP demonstrate its commitment to addressing unmet medical needs in this area. While the valuation metrics for the company may currently be unfavorable, the potential for successful FDA approval and commercialization of its products can drive significant revenue growth in the future.

Furthermore, the industry trends of an aging population and increasing prevalence of retinal diseases highlight the potential for growing market demand for Iveric Bio's products. In my opinion, Iveric Bio has a strong possibility of capturing a significant share of this growing market - investors looking for exposure to the ophthalmology space should consider a long-term bullish growth stance on the company.

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