The Patent Cliff. It’s real. It’s big. And it’s a really big headache for Big Pharma.
Every year, drug patents expire on licensed pharmaceutical products with revenues in the billions of dollars. Losing patent protection can mean the instant loss of up to 80% of revenues for the patent holder.
However, going back now more than a decade, there has been a large wave of patent expirations covering drugs with total revenues in the $10’s of billions – each year. In 2012 alone, Big Pharma lost patent protection on licensed drugs with total revenues of $55 billion.
These are enormous holes to fill in the drug pipelines of Big Pharma, and this comes at a time when drug development has never been so time-consuming and never been so costly. Nash Pharmaceuticals, a wholly-owned subsidiary of Breathtec Biomedical Inc. (CSE: BTH, OTCQB: BTHCD, Forum), has created a business model that can open up new patent life on old drugs.
In Part 1 of this three-part series; Stockhouse readers learned how and why this junior pharma company sees itself as a significant cog in bringing drugs to a patent-ready stage (quickly and cost-effectively): drug repurposing. In an industry where even a single new patent can be worth $100’s of millions (or sometimes billions), this is a $12 million tech junior with home-run potential.
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A repurposed drug has already completed all of its preclinical work (for the original disease it was used to treat). Thus this drug repurposing business model could allow Nash to shave up to 8 years off the total time to market timeline. It can also save millions (or even tens of millions) of dollars on drug development costs.
In Part 2, readers will get specifics about the current focus of Nash’s R&D. As noted in Part 1, via years of prior research from Chief Scientific Officer, Dr. Mark Williams, the Company has already screened thirteen potential candidates in order to identify compounds that could be quickly moved through into a Phase II (human) clinical trial.
What is the significance of reaching Phase II clinical trials? For readers who haven’t read Part 1, a Phase II clinical trial is the stage of research where drug companies formally demonstrate the efficacy of the (potential) new drug. For this reason, being able to cross this Phase II threshold is where these drug discoveries start to achieve their commercial potential.
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As noted in Part 1, fast-tracking repurposed drugs to the point of human trials is a multi-stage process: identify drugs for screening (difficult/time-consuming), test in animals, file new patents, advance (directly) to Phase II human trials.
Of the original 13 candidates, and through its ongoing research programs, Nash has developed data that supports the advancement of up to 7 drug candidates into Phase II studies. In previous releases, Nash has already announced that a number of the candidates outperform current standard of care therapies when they were tested in animal models.
That’s 7 opportunities to swing for the fences right now. In addition to researching new candidates for repurposing, some of the 7 top performing candidates can be screened for additional disease indications.
At the top of the Company’s list in advancing repurposed drugs to Phase II trials are three candidates, representing new treatments for:
- Non-Alcoholic Steatohepatitis
- Inflammatory Bowel Disease
- Chronic Kidney Disease
Investors lacking a medical background will most likely be more familiar with the latter two medical conditions. However, it is actually Non-Alcoholic Steatohepatitis (or “NASH” disease) that is both the more urgent medical problem and the greatest economic opportunity.
What Inflammatory Bowel Disease and Chronic Kidney Disease share in common is that they have “orphan drug” potential. When pioneering drugs for medical conditions for which there is no existing therapeutic options, the U.S. Food and Drug Administration (FDA) will designate drug research into such conditions as “orphan drugs” which is often a less expensive and faster process for gaining regulatory approval.
This provides an avenue for additional fast-tracking of the costly/expensive clinical trials process. Call candidates for these two conditions, “fast-tracking squared”.
NASH opportunity: “large drugmakers with piles of cash”
Investors wanting to know why the Company is so excited about its “NASH” research need look no further than a Reuters article from April 2017:
Large drugmakers with piles of cash are on the hunt for promising medicines being developed by small companies to treat NASH, a progressive fatty liver disease poised to become the leading cause of liver transplants by 2020.
“On the hunt” with “piles of cash”. Investors will like the sound of that. Titled [t]he next untapped pharma market…, Nash is in the process of tapping this market. And the Reuters article estimates this as a USD$20 to $35 billion market.
Junior technology companies seeking larger partners to help commercialize new discoveries usually find themselves standing at the back of a long line. According to Reuters, with Nash’s “NASH” research it will be Big Pharma that is queued outside the Company’s door awaiting results.
Inflammatory Bowel Disease (IBD)
In aggregate, the global market to treat IBD was measured at USD$8.5 billion in 2016, estimated to reach USD$9.5 billion by 2020. For one particularly nasty form of IBD (Crohn’s Disease), orphan drug designation is also available – and this is the target of Nash.
Chronic Kidney Disease (CKD)
Last but not least in Nash’s lead R&D initiatives is its fast-tracking of a new treatment for CKD. The scenario here is similar to the IBD strategy. In aggregate, this is a USD$12.4 billion market globally, projected to grow to USD$17.4 billion by 2020. It’s also competitive, in terms of other pharmaceutical companies seeking to pioneer a new treatment.
Again, Nash’s strategy is to target a specific niche of the CKD disease (and CKD market): Focal Segmental Glomerulosclerosis (FSGS). The reason for this tactical approach is also similar: the opportunity for orphan drug designation.
Focusing on a smaller niche in these latter two markets means lesser overall revenue potential. However, the important trade-off is that if (when) orphan drug designation is obtained, the R&D is further expedited – improving the odds of getting to market first with a new treatment.
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In Parts 1 and 2, investors have been presented with the Nash Pharmaceutical business model in terms of what it is, how Nash plans on executing on this business plan, and where the Company currently sees its best opportunities to fast-track its pharmaceutical research.
In the concluding installment of this series, investors will have the opportunity to connect the dots. Stockhouse will take a look at some other success stories of smaller pharmaceutical companies that have “hit a home-run” with their own R&D. We’ll also examine the outlook for Nash and offer investors some clues on what to expect in the near future.
breathtecbiomedical.com
FULL DISCLOSURE: Breathtec Biomedical Inc. is a paid client of Stockhouse Publishing.