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Third Quarter 2021 Financial and Operational Results
On November 10, 2021 Lipocine LPCN filed its Form 10-Q and posted its earnings release for the three month period ending September 30, 2021.
Highlights for the third quarter 2021 and to-date include:
➢ Settlement with Clarus Therapeutics - July 2021
➢ LPCN 1144 met NASH resolution regulatory endpoint in LiFT study - August 2021
➢ FDA affirms Class 1 NDA resubmission for TLANDO - September 2021
➢ TLANDO US commercialization licensing agreement with Antares Pharma - October 2021
➢ Multiple poster presentations at AASLD 1 - November 2021
➢ FDA grants Fast Track Designation to LPCN 1144 - November 2021
Lipocine generated $55,000 in license revenues versus nothing in the prior year period. It reported net loss of ($3.1) million, or ($0.03) per diluted share in 3Q:21 compared with net loss of ($4.3) million, or ($0.07) per diluted share for the prior year period.
For the quarter ending September 30, 2021 and versus the same ending September 30, 2020:
➢ Revenues of $55,000 were related to payments received from Spriaso under a license agreement in the cough and cold field;
➢ Research & Development expense totaled $2.4 million, down 5% from $2.5 million, driven primarily by a $819,000 decrease in contract research organization expense and outside consulting costs related to the LPCN 1144 LiFT Phase 2 clinical study in NASH subjects and a $466,000 decrease in costs associated with TLANDO, offset by a $806,000 increase in costs related to LPCN 1154, and a $384,000 increase in costs related to LPCN 1148;
➢ General & Administrative expenses were $1.2 million, decreasing 35% from $1.9 million primarily due to a $552,000 decrease in legal costs relating to the Clarus lawsuit, now resolved, the on-going class action lawsuit defense, and a $122,000 decrease in personnel costs, namely stock compensation expense;
➢ Net interest expense totaled $28,000, decreasing 65% from ($79,000) on lower loan and higher cash and marketable investment securities balances;
➢ Net loss was ($3.1) million or ($0.03) per diluted share compared with net loss of ($4.3) million or ($0.07) per diluted share.
As of September 30, 2021, marketable securities, cash and equivalents totaled $38.6 million, compared to $19.7 million at the end of 2020. Cash burn for the first nine months of 2021 was ($13.4) million, compared with ($11.6) million in the comparable 2020 period. In January 2021, Lipocine raised gross proceeds of $28.7 million through a public offering producing net cash from financing of $27.8 million.
TLANDO Licensing Agreement with Antares Pharma
On October 18th, Lipocine announced that it had entered into a licensing agreement with Antares Pharma. The agreement is for commercialization of TLANDO in the US and includes the following terms:
➢Up to $21 million in licensing fees;
o $11 million payable immediately;
o $10 million in future payments subject to certain conditions;
➢Commercial sales payments based on milestones up to $160 million;
➢Tiered royalties on net sales from mid-teens up to 20%;
➢Antares responsible for all commercialization, post-marketing studies, and sourcing of TLANDO in US;
➢Also included is Antares option to license TLANDO XR; if exercised
oAntares gains license to develop and commercialize TLANDO XR in the US;
o Lipocine would receive $4 million in license fees;
o Up to $35 million in clinical and regulatory milestone payments;
o Tiered royalties on net sales from mid-teens to 20%
o Antares responsible for all clinical development costs, regulatory filings, commercialization and post-marketing activities.
Lipocine retains all rights to rest of world and non-testosterone replacement therapy indications for both TLANDO and TLANDO XR. We update our model to reflect the terms of this arrangement and assume that Antares will exercise its option to advance TLANDO XR.
FDA Affirms Class 1 NDA Resubmission for TLANDO
On September 28, 2021, Lipocine announced that the FDA had affirmed TLANDO's NDA resubmission as a Class 1 resubmission. A Class 1 NDA resubmission has a two-month review goal. Resubmission of the NDA is a necessary requirement to receive final approval from the FDA and is expected to occur on January 28, 2022.
LPCN 1144 for Treatment of Non-Cirrhotic NASH
With the recent grant of Fast Track from the FDA and terms for the commercialization of TLANDO settled, LPCN 1144 moves into pole position at Lipocine. Now that responsibilities for commercializing TLANDO have been assigned, we expect Lipocine to shift its primary attention towards LPCN 1144 and an anticipated upcoming meeting with the FDA to determine trial design. We anticipate that a clear path forward for LPCN 1144 will be provided to stakeholders in early 2022.
Fast Track Designation
In a November 4th press release, Lipocine shared its success in obtaining the FDA's Fast Track Designation for LPCN 1144 for treatment of non-cirrhotic NASH. The designation is requested by a sponsor company for drug candidates that treat serious conditions and fill an unmet medical need. As no other NASH treatments have been approved and results from the LiFT trial were positive, the designation is welcome and not a surprise. The status should help Lipocine more efficiently design the Phase III program with closer guidance by the regulatory agency. It will also confer several benefits including more frequent interaction with the FDA, eligibility for accelerated approval, priority review and rolling review. Rolling review will allow Lipocine to submit portions of its new drug application (NDA) as they become ready rather than waiting until the entire package is ready thereby speeding the review process.
Next Steps
Now that selected 36-week biopsy data has been presented to stakeholders and with the Fast Track Designation in its back pocket, Lipocine's next steps are to schedule an End-of-Phase II meeting with the FDA, prepare a presentation for a scientific and medical conference and complete the extension study. Results from the Phase II are positive and can lead down several pathways depending upon the FDA's guidance following the anticipated meeting. A Phase IIb study may be launched, or if data appears to provide sufficient proof of concept, a Phase III may be more appropriate. We think it is likely that Lipocine will seek a partner to advance LPCN 1144 into a registrational study.
Milestones
➢ NDA filed for TLANDO - February 2020
➢ IND clearance for Phase II study of LPCN 1148 - May 2020
➢ Tentative approval of TLANDO - December 2020
➢ LiFT Study
o Primary endpoint - January 2021
o Last patient, last visit for biopsy data - June 2021
o Presentation of 36-week, biopsy data to investors - August 2021
o End of Phase II meeting with FDA - 2H:21
o Presentation of study data at conference - 4Q:21
➢ Abstract presentation at EASL - June 2021
➢ TLANDO licensing agreement with Antares - October 2021
➢ Grant of Fast Track Designation for LPCN 1144 - November 2021
➢ Topline announcement for PK study for LPCN 1154 - 4Q:21/1Q:22
➢ Launch of Phase IIa proof of concept PPD trial - 4Q:21
➢ Male cirrhosis trial first subject dosed for LPCN 1148 - 4Q:21
➢ TLANDO final approval from FDA - March 2022
➢ Results from LiFT Extension Study - Mid-2022
Summary
Lipocine's licensing agreement with Antares Pharma for the US market marks the end of the research and development stage for TLANDO and passes on the mantle of commercialization to Antares. The deal represents $11 million in immediate upfronts and up to an additional $10 million in licensing fees, as well as commercial sales milestone payments up to $160 million, with tiered royalties ranging from mid-teens to 20%. The deal also includes the option for Antares to secure rights to TLANDO XR for up to $4 million as well as future milestones and royalties.
As TLANDO's future becomes more evident, attention turns to the other assets in the company's portfolio, particularly LPCN 1144. Lipocine's Phase II biopsy data for LPCN 1144 yielded positive results, with agreement across multiple measures of NASH and statistical significance in a small patient group, as well as positive liver marker, body composition and safety results. While fibrosis improved more in the placebo arm vs. the treatment group under the NASH CRN guidelines, other techniques for measuring fibrosis showed favorable conclusions, indicating that a larger study is needed to validate the results. A trial in a larger patient population is expected, which will be under consideration as Lipocine prepares to meet with the FDA. Interactions with the agency will be enhanced with the recent grant of Fast Track and we expect to hear additional details regarding the design and scope of the anticipated Phase III trial after the meetings. We recently updated our valuation to reflect the current portfolio of programs, size of likely end markets and the reasonable expectations for their success.
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1. American Association for the Study of Liver Diseases
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