Summary
- Cidara Therapeutics is a biotechnology company developing rezafungin, a long-acting echinocandin antifungal drug, for the treatment of invasive candidiasis and candidemia.
- Rezafungin showed non-inferiority to caspofungin and could be an alternative to standard-of-care, but its market potential will likely be very limited.
- Cidara smartly out-licensed rezafungin, gaining non-dilutive capital at present and in the future to fund other prospects, such as their long-acting drug-Fc conjugates.
- If rezafungin receives FDA approval and Cidara receives the $60 million milestone payment, its enterprise value would be close to zero. Cidara has successfully shed the skin of "antibiotic biotech".
- Cidara's transition from antibiotics to immunotherapy without significant shareholder dilution is commendable, but the future prospects of the company remain uncertain and at an early stage. Therefore, I currently rate Cidara as a "Hold".
Introduction to Cidara
Cidara Therapeutics ( CDTX ) is a biotechnology company that aims to enhance patient care for serious diseases through the development of long-acting therapeutics. The company's Cloudbreak platform offers novel approaches to transform existing treatment and prevention methods, including drug-Fc conjugates [DFCs] that target viral and oncologic diseases. Additionally, their flagship product, rezafungin, is a once-weekly, long-acting echinocandin antifungal drug that is being developed for the treatment of invasive candidiasis [IC] and candidemia. The drug is currently under review by the FDA, with a PDUFA date of March 22, 2023.
Recent events: Cidara has had several recent corporate highlights. In July 2022, the company entered into a license agreement with Melinta Therapeutics for the exclusive commercialization of rezafungin in the U.S., receiving an upfront payment of $30 million and potential milestone payments and royalties. In September 2022, Cidara announced the initiation of a Phase 2a trial to evaluate CD388's prophylactic activity against influenza and the FDA's acceptance of the NDA for rezafungin with a PDUFA target action date of March 22, 2023. In October 2022, Cidara received an $11.1 million milestone payment from Mundipharma for the EMA acceptance of the MAA for rezafungin.
Financials
Cidara reported its financial results for the third quarter of 2022. The company's revenue for the quarter was $40.7 million, with $25.9 million from an intellectual property license transfer to Melinta. This is a significant increase compared to the same period in 2021, where the company generated revenue of $7.1 million. The company's cash and cash equivalents totaled $53.1 million as of September 30, 2022, down from $62.3 million as of December 31, 2021. The research and development expenses were $20.0 million, and general and administrative expenses were $5.8 million. The company reported net income of $15.0 million for the quarter, compared to a net loss of $18.1 million in the same period in 2021.
Cidara's License Agreements with Melinta Therapeutics and Mundipharma for Rezafungin Commercialization
Cidara has a license agreement with Melinta Therapeutics (July 2022) for the commercialization of rezafungin in the U.S. As per the terms of the agreement, Cidara received a $30.0 million upfront payment, and they are eligible to receive $60.0 million in regulatory milestone payments upon FDA approval. Additionally, they can receive up to $370.0 million in commercial milestone payments, resulting in a total potential transaction value of $460.0 million. Furthermore, they will receive tiered royalties on U.S. sales of rezafungin in the low double digits to mid-teens, subject to offset for certain expenses incurred by Melinta. While Cidara retains the rights to rezafungin in Japan, Mundipharma (September 2019) retains the commercial rights to rezafungin outside the U.S. and Japan. The total potential transaction value of the Mundipharma license agreement is $568.4 million, including an equity investment, global development funding, and certain development, regulatory, and commercial milestones. Cidara is also eligible for double-digit royalties in the teens on tiers of annual net sales.
Candidemia and Invasive Candidiasis: A Significant Healthcare Burden with High Mortality Rates
Invasive candidiasis and its subset, candidemia, are serious and life-threatening conditions caused by the overgrowth of the Candida fungus in the bloodstream, which can spread to other organs in the body. These conditions are a significant healthcare burden, with approximately 250,000 cases per year in the United States alone and mortality rates ranging from 30% to 60% , despite appropriate treatment. Rezafungin , a long-acting echinocandin antifungal drug, has potential as an alternative treatment option to standard-of-care caspofungin, another echinocandin antifungal, due to its once-weekly dosing regimen and demonstration of non-inferiority to caspofungin.
FDA's Draft Guidance for Antibacterial Therapies
The FDA states that non-inferiority trials can establish efficacy of an investigational drug for serious bacterial diseases where existing treatment options are available. The trial should use an active comparator that is effective for the enrolled patient population, and the trial population should reflect patients with unmet medical needs. Randomized trial design is required for both safety and efficacy evaluations, with confirmatory evidence from nonclinical studies demonstrating activity against resistant phenotypes. In cases where the drug would only be used for patients with limited treatment options, a larger non-inferiority margin may be acceptable, but acceptance would depend on the degree of unmet need. Trials should exclude subjects with baseline pathogens resistant to the control drug, and can be enriched to enroll subjects with the pathogen or pathogens of interest.
Phase 3 ReSTORE Trial Shows Non-Inferiority and Safety of Rezafungin in Treatment of IC and Candidemia with All-Cause Mortality at Day 30 as Primary Endpoint
The Phase 3 ReSTORE trial evaluated the safety and efficacy of rezafungin in the treatment of IC and candidemia. 199 patients were randomized to receive either rezafungin or caspofungin. The primary endpoint of the trial was all-cause mortality at Day 30. Rezafungin demonstrated non-inferiority to caspofungin in the modified intent-to-treat population with a 20% non-inferiority margin. The trial also showed a similar safety profile to caspofungin. The primary endpoint was designed to be minimally sufficient for regulatory approval.
ADCOM's Favorable Vote for Rezafungin Indicates Likely FDA Approval for Limited Patient Population
The Antimicrobial Drugs Advisory Committee's vote of 14-1 in favor of rezafungin use "in adult patients with limited or no alternative treatment options" carries considerable weight in the FDA's decision on approval and label specifics. The FDA often takes the ADCOM's advice into account when making regulatory decisions, although it is not required to do so. Therefore, the positive vote for rezafungin suggests that the FDA is likely to approve the drug for use in this patient population.
The FDA's draft guidance and ADCOM's specific language regarding "limited or no alternative treatment options" may affect the drug's label. The FDA may approve the drug with a limited use statement, restricting its use to only those patients who have failed or are intolerant to other antifungal therapies. This could impact the drug's market potential, as it may limit its use in the broader population of patients with candidemia and invasive candidiasis who have other treatment options available. Nevertheless, the positive ADCOM vote is a critical step in the approval process for rezafungin and suggests that it may provide a meaningful treatment option for those patients who have limited or no alternative treatment options.
Proposed Indication Label
Based on my analysis of the disease, available treatments, clinical trial data, as well as the FDA briefing document and draft guidance, I have developed a proposed indication label for rezafungin.
Rezafungin is indicated in adult patients with limited or no alternative treatment options for the treatment of candidemia and invasive candidiasis caused by susceptible Candida species. Approval of this indication is based on the results of a Phase 3 randomized controlled trial, which demonstrated non-inferiority to caspofungin in Day 30 all-cause mortality in the modified intent-to-treat population with a 20% non-inferiority margin. However, given the small sample size and differences observed in subgroups, including potential differences in efficacy among patients over 65 years old, rezafungin should be used with caution in this population. Liver function tests should be monitored frequently during therapy. The optimal duration of treatment with rezafungin has not been established, and treatment should be based on the individual patient's clinical response.
Here is a step-by-step explanation of how I arrived at the proposed label for rezafungin:
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Rezafungin is an antifungal drug that has been studied in clinical trials for the treatment of candidemia and invasive candidiasis. These are serious infections caused by a type of fungus called Candida.
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Candidemia and invasive candidiasis are associated with high mortality rates, especially in patients who are critically ill or have weakened immune systems. Treatment options are limited, and there is a need for new therapies that can improve outcomes for these patients.
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According to FDA draft guidance, non-inferiority trials can demonstrate the efficacy of an investigational drug for serious bacterial diseases when existing treatment options are available, potentially leading to a limited use label.
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In a Phase 3 clinical trial, rezafungin demonstrated non-inferiority to caspofungin in Day 30 all-cause mortality in the modified intent-to-treat population with a 20% non-inferiority margin. This means that rezafungin was shown to be as effective as caspofungin in reducing all-cause mortality at Day 30.
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However, the sample size of the trial was relatively small, and differences were observed in subgroups, including potential differences in efficacy among patients over 65 years old. As a result, caution should be exercised when using rezafungin in this population.
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Furthermore, it is worth noting that echinocandin antifungals have been associated with hepatotoxicity. Therefore, during rezafungin treatment, it is advisable to regularly monitor liver function tests to detect any potential liver damage caused by the drug.
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Finally, the optimal duration of treatment with rezafungin has not been established, and treatment should be based on the individual patient's clinical response. This means that healthcare providers should monitor patients closely and adjust their treatment regimen as needed based on their individual circumstances.
The Market Potential of Rezafungin: A Comparison with Caspofungin and Consideration of Limited Use Label Impact
Caspofungin generates approximately $700 million in global sales each year , but its approval for indications beyond IC and candidemia makes it difficult to compare its sales to the potential market for rezafungin. Additionally, the limited use label for rezafungin may impact its market share. However, the need for effective alternatives to the current standard-of-care for IC and candidemia in patients with limited or no alternative treatment options is significant. This need is reflected by the FDA's requirement of non-inferiority for approval. However, as an alternative to standard-of-care with limited use, rezafungin is unlikely to capture a significant portion of the market. Rezafungin's potential revenue is unlikely to surpass $250 million annually, which is one-third of caspofungin's global sales.
Cidara's Smart Move: Securing Non-Dilutive Capital for Rezafungin through License Agreements to Advance its Pipeline
Cidara's decision to secure non-dilutive upfront and future capital through license agreements with Mundipharma and Melinta for rezafungin was a smart move. While the estimates for rezafungin were low, the company was able to secure a substantial amount of capital that can be used to forward their other prospects, such as its long-acting drug-Fc conjugates from its proprietary Cloudbreak platform .
By securing this capital, Cidara can now allocate resources towards advancing its other drug candidates without having to divert significant capital expenditure to marketing rezafungin. This allows the company to maintain its focus on developing its pipeline and potentially brings new therapies to the market, which could significantly benefit patients with viral and oncology diseases.
The license agreements with Mundipharma and Melinta not only provided upfront capital but also include future payments, which could be significant for Cidara's financial health in the long run. Additionally, these agreements also reduce the financial risks associated with developing and commercializing rezafungin, as the licensing partners will be responsible for the drug's commercialization and marketing.
Cloudbreak Platform Lead Candidate
Cidara, in collaboration with Janssen, has initiated a Phase 2a trial in September 2022 to evaluate CD388's pre-exposure prophylactic activity against influenza virus. The trial is designed as a single-center, randomized, double-blind, placebo-controlled, proof-of-concept study to assess the prophylactic antiviral activity, safety, tolerability, and pharmacokinetics of CD388 in a human viral challenge model. The trial is expected to enroll up to 168 healthy adults, and results are anticipated in the first half of 2023. The trial is being conducted under an exclusive worldwide license and collaboration agreement with Janssen. CD388 is the lead candidate from the Cloudbreak platform.
Conclusion
Assuming FDA-approval of rezafungin with a limited use label indication, Cidara is poised to earn $60 million in regulatory milestone payments, bringing its enterprise value close to zero. Though investors may experience some volatility leading up to the event, approval is unlikely to significantly impact Cidara's valuation. However, a Complete Response Letter (e.g. Chemistry Manufacturing and Controls deficiencies) or an unexpected limited use label could result in a sharp drop in share price. With rezafungin outlicensed, Cidara can focus on its long-acting drug-Fc conjugates and is no longer solely an "antibiotic biotech". While their future prospects remain uncertain, they are worth monitoring as they evolve. Cidara is a "Hold".
For further details see:
Cidara Therapeutics Sheds Skin, Shifts To Immunotherapy