Cowen Report Eli Lilly Agreement a BIG PLUS
Here's some of the Cowen Report from March 14th/08.......
NOTE: That Jeff Goater's use of the word TT223 Monotherapy is not really correct .
Recall that Byetta is Approved for use ONLY in patients with TYPE2 Diabetes that have trouble controlling their Glucose Levels while using Metformin or a Sulfonylurea or a TZD (Thiazolidinedione) https://www.byetta.com/index.jsp It is therefore NOT Approved as a Monotherapy.
However Lilly has an 'Approvable Letter' for Byetta Monotherapy......meaning use in TYPE2 Diabetes for patients having trouble controlling their Glucose Levels with just Diet and Excercise could be Approved with another Trial run with patients not on ANY Other Diabetic Drugs.
The use of TT223 Stand Alone is closer to being correct......a TT223 Monotherapy would require a Trial run without the patients being on any Diabetic Drugs at all. Not in the cards folks.
ALSO NOTE: #4 below under Milestones. Although the early initiation of Phaselll certainly is a very very REAL Possibility after an interim 'Peek', many others think that actually ** Filing for Approval ** is just as likely as well after Phasell Top Line Data.
That would be c2010. If fully enrolled by July1/08 1st Quarter of calendar 2010
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Cowen & Co. Transition Therapeutics March 14/08
Investment Thesis
Transition Therapeutics (.Transition.) is an emerging pharmaceutical company focused on developing novel therapeutics for Alzheimer.s disease (AD) and diabetes.
Transition.s ELND-005 has a number of characteristics that could potentially position the product as a best in class treatment for AD, including: (1) disease modification potential via the targeting of beta-amyloid plaques; (2) it is orally bioavailable; (3) it readily crosses the blood-brain-barrier; and (4) it is derived from a naturally occurring compound and thus far appears to have a relatively benign safety profile. In September 2006, Transition signed a partnership deal with Elan to co-develop ELND-005. Enrollment in a Phase II (potentially pivotal) trial of ELND-005 is now ongoing. We project a F2013 (H2:2012) launch for ELND-005, and project peak world wide annual sales potential of $3B+.
Transition is also developing TT- 223 (gastrin) monotherapy and combination therapy (plus EGF, GLP-1 analog, DPP-IV inhibitor) for diabetes. Transition has generated encouraging preclinical and early clinical data with TT-223. Results from preclinical studies indicate that TT-223 therapy may stimulate beta cell (insulin-producing cells in the pancreas) regeneration.
Yesterday Transition announced that it partnered the TT-223 program with Eli Lilly. We believe TTHI shares will outperform the market by 30%+ over the next 18-24 months as visibility on the clinical profile and potential of ELND-005 and TT-223 improves. Upcoming milestones include:
(1) the initiation of a Phase II monotherapy trial of TT-223 in Q2:08;
(2) the initiation of a Phase II trial of ELND-005 in patients with mild cognitive impairment in late 2008;
(3) results from the TT-223 Phase II monotherapy trial in H1:09; and
(4) the potential advancement of ELND-005 directly into Phase III trials in mid-2009 post an interim look at the Phase II data.
Eli Lilly Partnership Agreement A Big Plus
Late yesterday Transition Therapeutics and Eli Lilly announced a license and collaboration agreement granting Lilly worldwide rights to Transitions. TT-223, a novel gastrin analog in Phase II development for diabetes. Transition reacquired full rights to the TT-223 program in November 2007 from former partner Novo Nordisk.
Transition management pushed to reacquire full rights from Novo because Novo was reluctant to commit to develop a TT-223/liraglutide (Novo.s GLP-1) combination product. Transition has seen robust efficacy in preclinical diabetes models when TT-223 is co-administered with a GLP-1 analog. Novo has a reputation as a relatively conservative company, and as we highlighted in our Transition initiation of coverage report (Dec 2007), we did not view Novo.s decision to walk away as a negative so far as the outlook for TT-223 was concerned.
Transition management had been targeting to re-partner the TT-223 program by mid-2008, so the deal arrived a few months ahead of expectations. We were hopeful that Transition would be able to strike a deal with a big pharma partner, but a deal with Lilly, a world leader in diabetes drug development and commercialization, exceeds even our most optimistic expectations. We view the deal with Lilly as validation of the potential of the TT-223 program. Lilly and Transition will both participate in the TT-223 monotherapy trial, which is expected to begin in Q2:08.
Thereafter, Lilly will be solely responsible for all future development and commercialization activities related to the TT-223 program. Transition now has partners for its two lead clinical programs (ELND-005 with Elan and TT-223 with Lilly) and each of its partners is viewed as a leader in the respective therapeutic area being targeted.
Deal Terms Reasonable, Likely Back End Loaded
Per the agreement, Transition will receive $7MM upfront, up to $130MM in development/sales milestones, and an undisclosed royalty. Some may focus on the relatively small upfront payment in an attempt to question the overall quality of the deal. Recall, Transition.s cash position (approx $60MM as of Dec 31, 2007) is relatively good for a company at its stage. Management has long indicated that they have enough cash on hand (plus anticipated milestones from Elan) to fund its portion (30%) of the ELND-005 Phase II trial and the TT-223 monotherapy trial. We believe Transition management likely negotiated for a higher royalty rate, taking less cash upfront. We assume Transition will receive a 15% royalty on TT-223 net sales.
To date, Transition has completed a couple of small Phase IIa trials (50 patients total) using TT-223 in combination with EGF. Because of longer-term safety concerns related to EGF, the development of the TT-223/EGF combo was been put on hold in favor of pursuing TT-223 as monotherapy and a TT-223/GLP-1 combo. Lilly has rights to the only GLP-1 analog currently on the market (Byetta w/ Amylin) and also has its own GLP-1 analog in Phase I testing. We expect Lilly will investigate TT- 223 in combination with Byetta and/or its early stage GLP-1 analog in development. Transition management indicates there is no reason why Byetta (or any other GLP-1) couldn.t be co-formulated with TT-223 into a single injection. Lilly may be looking for a means to differentiate Byetta/LAR, as additional GLP-1.s are expected to hit the market over the next few years.
Next TT-223 Trial To Start In Q2:08
Transition/Lilly plan to test TT-223 monotherapy in patients with type 2 diabetes, who are poorly controlled on metformin +/- a thiazolidinedione. Prior to the deal, Transition had expected the Phase II trial to begin in Q2:08. No other details have been provided. Before the Phase II trial begins, Transition planned on completing two additional Phase I studies to expand the dosage ranges of TT-223 that will be tested; a single ascending dose study and a multiple ascending dose study.
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TT223 Supporting SAD & MAD Study's COMPLETED. Partnership COMPLETED.
TT223 Stand Alone is a Collaboration Phasell Trial with Both Transition & Eli Lilly running it and sharing the costs estimated by Elie Farah as being "South of $10 Million"..........ALL Development Costs after that are fully paid by Lilly.
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