-
Pharmaceuticals/Specialty
Ohr Pharmaceutical
Equity Research Initiating Coverage
www.cowen.com Please see addendum of this report for important
disclosures.
March 2, 2015
Price: $7.69 (02/27/2015)Price Target: $25.00
OUTPERFORM (1)
Initiation: OHR-102 Success In WetAMD Likely To Create
Tremendous Value
Tyler Van Buren, [email protected]
Ken [email protected]
Sal Rais, [email protected]
Key DataSymbol NASDAQ: OHRP52-Week Range: $20.00 - 6.01Market
Cap (MM): $195.3Net Debt (MM): $(13.2)Cash/Share: $0.52Dil. Shares
Out (MM): 33.5Enterprise Value (MM): $184.8ROIC: NAROE (LTM):
NABV/Share: $0.90Dividend: NA
FY (Sep) 2014A 2015E 2016EEarnings Per ShareYear $(0.41) $(1.00)
$(1.85)P/E NM NM NM
Revenue (MM)Year $0.0 $0.0 $0.0
The Cowen InsightWe are initiating on Ohr with an Outperform and
$25 PT. Our rating is predicatedon the potential for OHR-102 to be
successfully developed in wet AMD. If it has acompetitive efficacy
profile and is ultimately approved, our consultants suggest thatthe
vast majority of treated wet AMD patients will be on OHR-102
therapy as it has asuperior product profile relative to other
development candidates.
OHR-102 Could Become The First Eye Drop For The Treatment Of Wet
AMD
The Companys lead program is OHR-102, which is a first-in-class
anti-angiogeniccompound that inhibits growth factors VEGF, PDGF,
and bFGF, and is being developedas a combination therapy with
anti-VEGFs for wet AMD. OHR-102 is currently in aPhase II clinical
development program, which has already reported positive
interimvisual acuity data, and final data is expected to readout by
mid-to-late March. If thefinal data are positive which we and our
consultants believe has a good probabilityof occurring Ohr plans to
move OHR-102 into Phase III clinical trials in Q2:2015.Ultimately,
our consultants suggest that the vast majority of treated AMD
patients willwant better visual acuity and therefore go on PDGF
treatment.
Consultants Believe Early Visual Acuity Data Are Surprising And
Intriguing
The ongoing Phase II IMPACT study has enrolled 142 patients and
is designed tomeasure the impact of twice-daily OHR-102 on visual
acuity in combination withPRN Lucentis injections versus placebo
drops plus PRN Lucentis. At interim (n=62),the mean change in
visual acuity at the end of 9 months for OHR-102 eye dropsplus
Lucentis PRN was +10.4 letters versus +6.3 letters for placebo plus
LucentisPRN a mean +4.1 letter improvement in visual acuity
(p=0.18). Additionally, 48.3%of OHR-102-treated patients showed
BCVA gains of >3 lines (Phase III primaryendpoint confirmed with
the FDA) compared with 21.2% in the placebo arm, whichwas
statistically significant (p=0.025). This result simply needs to be
repeated to besuccessful. Overall, our consultants suggest that the
visual acuity results look verymuch like Ophthotech's and the
curves and outcomes look remarkably similar.
A Risk/Reward Play Skewed Towards The Upside
We assume a potential US OHR-102 approval and launch in early
2019 with a peakpenetration of treated wet AMD patients eligible
for anti-PDGF treatment just above35% by year 7, which assumes
other PDGF competition. This results in a peak USsales potential of
$1B+. Ex-US, we assume an early 2020 launch and an ultimate
peakpenetration of 25% by year 6-7 factoring in other PDGF
competition. This results ina peak Ex-US sales potential of
$750MM+. Providing a necessary high discount rategiven the still
early stage of development to these estimates yields an equity
value of$800MM+ or $25 per fully-diluted share, which is the basis
of our price target. If thefinal Phase II data are successful, our
discount rate would correspondingly decreaseresulting in a higher
equity value. Worth noting, our valuation does not give any
creditto OHR-102s follow-on indications of RVO, PVR, and DME, or
the Alcon-partneredsustained-release programs.
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At A GlanceOur Investment Thesis
We assume a potential US OHR-102 approval and launch in early
2019 with a peakpenetration of treated wet AMD patients eligible
for anti-PDGF treatment just above35% by year 7, which assumes
other PDGF competition. This results in a peak USsales potential of
$1B+. Ex-US, we assume an early 2020 launch and an ultimate
peakpenetration of 25% by year 6-7 factoring in other PDGF
competition. This results ina peak Ex-US sales potential of
$750MM+. Providing a necessary high discount rategiven the still
early stage of development to these estimates yields an equity
value of$800MM+ or $25 per fully-diluted share, which is the basis
of our price target. If thefinal Phase II data are successful, our
discount rate would correspondingly decreaseresulting in a higher
equity value. Worth noting, our valuation does not give any
creditto OHR-102s follow-on indications of RVO, PVR, and DME, or
the Alcon-partneredsustained-release programs.
Forthcoming Catalysts
Mid-to-late March Final toplinedata readout of the OHR-102 Phase
IIIMPACT study for wet AMD
Q2:2015 Potential Phase III globalprogram initiation for OHR-102
in wetAMD
H1:2015 Potential IND filing for oneof four sustained-release
programspartnered with Alcon
2015 (potentially by the end of H1) OHR-102 RVO and PVR data
readouts
Base Case Assumptions
$25 on positive OHR-102 Phase IIIMPACT data
Upside Scenario
$40 on better than expected IMPACTdata and potential buyout or
licensingdeal
Downside Scenario
$2-3 on Phase II IMPACT failure
Price Performance
Feb-15Nov-14Aug-14May-14
$20
18
16
14
12
10
8
6
Source: Bloomberg
Company Description
Ohr Pharma is a development-stage specialty pharmaceutical
company with multipleprograms in development for various ophthalmic
indications. The Companys leadprogram is OHR-102, which is in Phase
II and being developed as a combinationtherapy with anti-VEGFs for
wet AMD.
Analyst Top Picks
Ticker Price (02/27/2015) Price Target RatingOhr Pharmaceutical
OHRP $7.69 $25.00 Outperform
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Investment Thesis: OHR-102 Success In Wet AMD Likely To Create
Tremendous Value
Ohr Pharma is a development-stage specialty pharmaceutical
company with multiple
programs in development for various ophthalmic indications. The
Companys lead
program is OHR-102, which is being developed as a combination
therapy with anti-
VEGFs for wet AMD. OHR-102 is currently in a Phase II clinical
development program,
which has already reported positive interim visual acuity data,
and final data is
expected to readout by mid-to-late March. If the final data are
positive, which we and
our consultants believe has a good probability of occurring, Ohr
plans to move OHR-
102 into Phase III clinical trials in Q2:2015. Follow-on
indications of PVR, RVO, and
DME are anticipated next for OHR-102 and the approach appears
logical given the
success of on-market wet AMD treatments in these areas. For RVO
and PVR, OHR-
102 is being tested in investigator-sponsored studies with Phase
II data to readout
later this year potentially by the end of H1:2015. For DME, the
Company is running
its own Phase II study with a final data to readout around
mid-2016. OHR-102 has a
composition of matter patent on OHR-102 lactate salt to 2029 and
an additional
broad-base formulation patent to 2030 that is still pending. A
couple new filings are
expected and we would also note that these expirations do not
consider any potential
extensions from Hatch-Waxman. Nonetheless, OHR-102 appears to be
a long-duration
drug. Additionally, the Company has a research agreement with
Alcon a Novartis
company which is one of the largest ophthalmology players in the
world with over
$10B in annual revenues. Clearly, this provides a source of
validation for Ohrs
programs and expertise in ophthalmology. This collaboration is
testing Ohrs
sustained-release hydrogel platform technology and encompasses
four active
research programs in glaucoma, steroid-induced glaucoma, eye
allergy, and retinal
disease. Depending on the outcome of these early programs with
partner Alcon, Ohr
anticipates potentially filing an IND for one program by the end
of H1:2015. Finally, we
believe Ohr has assembled an impressive management team and
group of experts.
Both Dr. Jason Slakter, the CMO, and Dr. Peter Kaiser, the SVP
of product
development, are world-renowned retinal specialists. Dr. Avner
Ingerman, another
accomplished ophthalmologist who ran the Eylea clinical
development program at
Regeneron, just joined as the Companys Chief Clinical Officer.
Ohr also has several
other thought leaders involved and consulting on the program
including Dr. David
Boyer who presented the recent abicipar pegol/DARPin data and
Dr. Jeff Heier, who
has presented PDGF data from the Regeneron and Ophthotech
programs, among
others. Needless to say, this is an impressive group of
individuals.
One consultant believes that despite previous topical failed
programs for wet AMD, it
will only be a matter of time before an eye drop potent enough
is found with the right
dosage that reaches the retina. We believe Ohrs OHR-102
(squalamine) might be the
one. OHR-102 is a first-in-class anti-angiogenic compound that
inhibits multiple
growth factors: vascular endothelial growth factor (VEGF),
platelet-derived growth
factor (PDGF), and basic fibroblast growth factor (bFGF). VEGFs
have revolutionized
the treatment of wet AMD, but they produce most of their
improvement in about 4
months and then there is a plateau in efficacy. Moreover,
patients must be
continuously dosed with frequent anti-VEGF to maintain the
plateau; data from several
large trials were shown to suggest that switching from monthly
dosing to PRN results
in a loss of efficacy. The biological explanation for this may
be that anti-VEGFs cause
regression of tip cells at the distal end of neovascularization,
but the bulk of the
vessel outgrowths are protected from the anti-VEGF by a lining
of pericytes. Anti-
PDGF agents, in combination with the anti-VEGFs, denude the
overgrown vessels of
pericytes and cause regression of the outgrowth. Current
development of anti-VEGF
agents is aimed at extending the duration of treatment thereby
allowing for a fewer
OHR-102 is currently in Phase II development,
which has already reported positive interim data,
and final data is expected to readout by mid-to-
late March. If the final data are positive, which
we and our consultants believe has a good
probability of occurring, Ohr plans to move OHR-
102 into Phase III clinical trials in Q2:2015.
OHR-102 has a composition of matter patent on
OHR-102 lactate salt to 2029 and an additional
broad-base formulation patent to 2030 that is still
pending. A couple new filings are expected and
we would also note that these expirations do not
consider any potential extensions from Hatch-
Waxman. Nonetheless, OHR-102 appears to be a
long-duration drug.
OHR-102 is a first-in-class anti-angiogenic
compound that inhibits multiple growth factors:
vascular endothelial growth factor (VEGF),
platelet-derived growth factor (PDGF), and basic
fibroblast growth factor (bFGF).
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number of injections a year, or better compliance as recent
agents have largely failed
to meaningfully increase visual acuity in long-term studies.
However, this dogma
appears to be changing with advent of anti-PDGF agents. PDGF
agents in the case
of OHR-102 and Fovista have demonstrated significant visual
acuity gains on top of
anti-VEGF treatments when used in combination. We would remind
investors that for
wet AMD, a disease where patients ultimately lose their vision,
increased visual acuity
is paramount. Ultimately, our consultants suggest that the vast
majority of treated
AMD patients (2/3 and up) will want better visual acuity and
therefore go on PDGF
treatment. Lastly, our consultants note that as many as 10-20%
of their patients are
not adequately managed by the current anti-VEGF options, and
therefore there is also
a need for more potent alternatives to help better manage the
disease in refractory
patients
Consultants Believe Early OHR-102 Visual Acuity Data Are
Surprising And
Intriguing; Final Phase II Data Due Mid-to-Late March
In June 2014, Ohr announced positive interim topline clinical
results of a Phase II
study in wet AMD. Prior to the positive data release, few had
any expectations for the
program much less an observed visual acuity benefit. However,
since the data
which produced significant visual acuity benefits and our
consultants believe is very
surprising and intriguing that perception has changed and we now
approach the
final Phase II data readout in mid-to-late March with the
expectation of a visual acuity
benefit. While there is still substantial risk to any wet AMD
data readout, OHR-102
appears to have a strong possibility of repeating the interim
data. If this occurs, not
only would the perception of the program be strengthened even
more, but it would be
significantly de-risked as its head into Phase III with the
exact same clinical endpoint.
The ongoing Phase II IMPACT study has enrolled 142 patients
(completed in April
2014) and is designed to measure the impact of twice-daily
OHR-102 on visual acuity
in combination with PRN (as needed) Lucentis versus placebo
drops plus PRN
Lucentis. Per the study plan, a pre-specified interim analysis
was conducted with
~50% of the planned total patient enrollment completing the
study protocol. 62
patients 29 and 33 in the OHR-102 and placebo arms, respectively
completed the 9
month treatment period at interim. Not surprisingly, the primary
endpoint, the
difference in the frequency of Lucentis injections, did not meet
statistical significance
at interim. Given our knowledge of PRN studies (no difference in
year 2 of the VIEW
studies with Eylea/Lucentis) and the fact that no study has
shown the ability to reduce
Lucentis injections including Ophthotechs Phase II program we
were not
surprised by this result. Furthermore, the panelists at our
March 2014 Health Care
Conference stated that a fewer injections endpoint largely isnt
clinically relevant.
Thus, based on the data (6.2 Lucentis injections for the OHR-102
arm and 6.4 for the
placebo arm), we find it improbable that this endpoint will meet
statistical significance
in the final data set nor do we care. Sure a reduction in
injections would be an
improvement but ultimately what matters to clinicians is
improving visual acuity.
However, when analysis was conducted on the more clinically
relevant visual acuity
endpoints, the data suggested a strong visual acuity benefit
across the two most
common endpoints mean visual acuity and the proportion of >3
line gainers. The
mean change in visual acuity at the end of 9 months for OHR-102
eye drops plus
Lucentis PRN was +10.4 letters versus +6.3 letters for placebo
plus Lucentis PRN a
mean +4.1 letter improvement in visual acuity. Our consultants
note that this 65%
visual acuity benefit is impressive, especially considering the
potential ceiling effect for
enrolling a good amount of patients with relatively mild
disease. However, it was not
statistically significant (p=0.18) given the small study size.
With that in mind, our
However, this dogma appears to be changing
with advent of anti-PDGF agents. PDGF agents
in the case of OHR-102 and Fovista have
demonstrated significant visual acuity gains on
top of anti-VEGF treatments when used in
combination. We would remind investors that for
wet AMD, a disease where patients ultimately
lose their vision, increased visual acuity is
paramount. Ultimately, our consultants suggest
that the vast majority of treated AMD patients
(2/3 and up) will want better visual acuity and
therefore go on PDGF treatment.
While there is still substantial risk to any wet
AMD data readout, OHR-102 appears to have a
strong possibility of repeating the interim data. If
this occurs, not only would the perception of the
program be strengthened even more, but it
would be significantly de-risked as its head into
Phase III with the same exact clinical endpoint.
However, when analysis was conducted on the
more clinically relevant visual acuity endpoints,
the data suggested a strong visual acuity benefit
across the two most common endpoints, mean
visual acuity and the proportion of >3 line
gainers. The mean change in visual acuity at the
end of 9 months for OHR-102 eye drops plus
Lucentis PRN was +10.4 letters versus +6.3
letters for placebo plus Lucentis PRN a mean
+4.1 letter improvement in visual acuity. Our
consultants note that this 65% visual acuity
benefit is impressive, especially considering the
potential ceiling effect for enrolling a good
amount of patients with relatively mild disease.
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consultants note that it is still too early and in too few
patients to believe that
OHR-102 wont reach statistical significance on visual acuity
once the final data reads
out. Additionally, 48.3% of OHR-102-treated patients showed BCVA
gains of >3 lines
(>15 letters) on a standard ETDRS eye chart compared with
21.2% in the placebo arm
(p=0.025) a statistically significant observation. Our
consultants view both the mean
visual acuity and >3 line gain results as impressive
particularly if they hold up when
the final data reads out in the second half of March.
Since the interim readout, Ohr has met with the FDA and received
confirmation that
the Phase III endpoint will be the proportion of patients with
>3 line visual acuity
gains, which was the exact secondary endpoint that hit
statistical significance at the
interim readout per above in only 62 patients. Moreover, our
consultants suggest that
this endpoint also has a good chance of reaching statistical
significance when the
larger, final 142-patient Phase II data set reads out by the end
of March 2015 as the
data in 62 patients gives us a good feel for OHR-102s efficacy.
One consultant
remarked that it would be shocking if the final data showed no
visual acuity benefit
as the first 62 patients are very typical looking and he would
put the odds of success
on the >3 line gainers endpoint pretty high. If it does, our
consultants would also
consider the final Phase III program employing the exact same
endpoint to be
significantly de-risked. In fact, they believe that upon a
successful readout, OHR-102
would have the same probability of success in Phase III as
Ophthotech which per
previous physician surveys has been pegged at around 75%. One
consultant
believes that successful Phase II wet AMD results tend to have
an 80% chance of
translating to Phase III. At the very least, we believe the
early interim results suggest
that OHR-102 treats the back of the eye and may cause a
significant increase in visual
acuity in wet AMD patients. Overall, our consultants suggest
that the mean change in
visual acuity and >3 line gainer results look very much like
Ophthotechs and the
curves and outcomes look remarkably similar. While some
skepticism will always
remain through the final Phase III data, consultants appear to
be looking at the
program very differently now following the interim data.
As we head towards the final results, it is also important to
consider that while 62
patients wasnt enough to hit on the mean visual acuity endpoint,
142 patients with
the observed +4.1 letter increase in visual acuity is just
reaching the boundary
where there might be enough powering to reach statistical
significance, per our
consultants. Of course, a 300-400 patient study would be ideally
powered, but the
potential to hit statistical significance on mean visual acuity
in the final dataset is a
source of additional upside and would further help to dispel any
skeptics. However, it
is important to keep in mind that even if mean visual acuity
doesnt hit which could
be a perceived negative all that matters is that the >3 line
gainers Phase III endpoint
hits.
Upon potential successful final Phase II data, Ohr has stated
that they would be able
to initiate the Phase III program by the end of Q2:2015. We
estimate that the time to
topline data could be 2-2.5 years accounting for 12-18 months of
enrollment and the 9
month primary endpoint. 2.5 years would put the topline data
readout at late 2017.
Since OHR-102 has Fast Track status, it could begin filing a
rolling NDA submission
during the trial and then submit the final topline 9 month
primary endpoint data last in
early 2018. In essence, Ohr could receive approval even before
the ultimate 2 year
study time point just like Eylea. This would allow for a
potential approval and launch
by early 2019. Lastly, we would note that this timeline could
potentially be conservative
by 6 months.
For Europe, Ohr plans to meet with regulators soon to nail down
the requirements for
the Phase III program. However, we would note that Ohr will be
measuring the primary
Our consultants suggest that this endpoint is also
has a good chance of reaching statistical
significance when the larger, final 142-patient
Phase II data set reads out by the end of March
2015 as the data in 62 patients gives us a good
feel for OHR-102s efficacy. One consultant
remarked that it would be shocking if the final
data showed no visual acuity benefit as the first
62 patients are very typical looking and he
would put the odds of success on the >3 line
gainers endpoint pretty high.
Additionally, 48.3% of OHR-102-treated patients
showed BCVA gains of >3 lines (>15 letters) on
a standard ETDRS eye chart compared with
21.2% in the placebo arm (p=0.025) a
statistically significant observation. Overall, our
consultants view both the mean visual acuity and
>3 line gain results as impressive particularly if
they hold up when the final data reads out in the
second half of March.
Upon potential successful final Phase II data, Ohr
has stated that they would be able to initiate the
Phase III program by the end of Q2:2015. We
estimate that the time to topline data could be 2-
2.5 years accounting for 12-18 months of
enrollment and the 9 month primary endpoint.
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endpoint out to 12 months in Phase III in case they require the
standard 12 month
endpoint. Additionally, it will be a global trial with clinical
sites in the US and EU. It is
quite possible that the EU submission could come shortly after
the US submission, but
we conservatively assume a year delay in the European
launch.
Anticipated Upcoming Milestones For Ohr Pharma Are:
2015
Mid-to-late March Final topline data readout of the OHR-102
Phase II IMPACT study for wet AMD
Q2:2015 Potential Phase III global program initiation for
OHR-102 in wet AMD
H1:2015 Potential IND filing for one of four sustained-release
programs partnered with Alcon
2015 (potentially by the end of H1) OHR-102 RVO and PVR data
readouts from investigator-sponsored studies
2016
Mid-2016 OHR-102 Phase II DME study readout
2017
Late 2017 Potential OHR-102 Phase III program data readout
2018
Early 2018 Potential OHR-102 NDA filing for wet AMD
2019
Early 2019 Potential approval of OHR-102 for wet AMD
Valuation Analysis: A Risk/Reward Play Skewed Towards The
Upside
For our OHR-102 global market build, we assume that 2/3 of
treated wet AMD
patients will be eligible for anti-PDGF combination treatment,
which will most likely
prove to be conservative per our consultants. In the US, we
assume a per bottle net
price for OHR-102 of $750, which could also be conservative
considering that branded
wet AMD agents command just under $2,000 per injection over
either one or two
months. We are pricing OHR-102 to capture significant market
uptake and to
potentially be used prophylactically, or in the larger patient
population, since it is an
eye drop vs. an injection. We assume a potential US approval and
launch in early 2019
with a peak penetration of eligible patients just above 35% by
year 7, which assumes
other PDGF competition. This results in a peak US sales
potential of $1B+. Ex-US, we
assume an early 2020 launch. We were generally more conservative
for the EU and
assume a net price of $500 with an ultimate peak penetration of
25% by year 6-7 this
too assumes other PDGF competition. This results in a peak Ex-US
sales potential of
$750MM+.
On the following pages, we provide our US and Ex-US wet AMD
market models for
OHR-102.
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Figure 1 US Wet AMD Market Model
Source: Cowen and Company; PriceRx
2013A 2014A 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E
2023E 2024E 2025E 5Y CGR Comments
U.S. Wet AMD
Prevalence of moderate-advanced wet AMD pt.s ('000) 454 476 500
525 552 579 608 632 658 684 711 740 769
% diagnosed 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80%
80%
# diagnosed patients ('000) 361 381 400 420 441 463 486 506 526
547 569 592 615
% of diagnosed pt.s Tx with anti-VEGFs 95% 96% 96% 96% 96% 96%
96% 96% 96% 96% 96% 96% 96%
# treated patients ('000) 343 364 384 403 424 445 467 486 505
525 546 568 591
% growth +6% +6% +6% +5% +5% +5% +5% +4% +4% +4% +4% +4% +4%
Avastin
% Avastin patient penetration 26% 33% 37% 40% 40% 41% 42% 42%
42% 42% 42% 42% 42% - 4 week treatment duration; 5-6 weeks in
practice
# patients receiving Avastin each year ('000) 89 120 142 161 169
182 196 204 212 221 229 239 248 - Increased payor pressure to drive
growth
Average # vials per patient per year 5.6 5.5 5.5 5.5 5.5 5.5 5.5
5.5 5.5 5.5 5.5 5.5 5.5
Avastin price per dose $50 $50 $50 $50 $50 $50 $50 $50 $50 $50
$50 $50 $50 - Low cost due to compounding
U.S. Avast in Sa les In Wet AMD ($MM) $25 $35 $40 $45 $45 $50
$55 $55 $60 $60 $65 $65 $70 +7% - Recognized by compounders
% growth +757% +40% +14% +13% +0% +11% +10% +0% +9% +0% +8% +0%
+8%
Lucentis
% Lucentis patient penetration 35% 23% 17% 16% 15% 15% 15% 15%
15% 15% 15% 15% 15% - 4 week treatment duration; 6-7 weeks in
practice
# patients receiving Lucentis each year ('000) 120 84 65 65 64
67 70 73 76 79 82 85 89
Average # vials per patient per year 5.6 5.5 5.5 5.5 5.5 5.5 5.5
5.5 5.5 5.5 5.5 5.5 5.5
Lucentis price per dose $1,950 $1,950 $1,950 $1,950 $1,950
$1,950 $1,950 $1,950 $1,950 $1,950 $1,950 $1,950 $1,950
U.S. Lucentis Sa les In Wet AMD ($MM) $1 ,310 $900 $700 $690
$680 $715 $750 $780 $815 $845 $880 $915 $950 +2%
% growth +4% -31% -22% -1% -1% +5% +5% +4% +4% +4% +4% +4%
+4%
Eylea
% Eylea patient penetration 39% 44% 46% 45% 45% 44% 43% 43% 43%
43% 43% 43% 43% - 8 week treatment duration
% penetration of non-Avastin market 53% 66% 73% 74% 75% 75% 72%
66% 59% 53% 50% 48% 46% - Very rapid uptake upon launch
# patients receiving Eylea each year ('000) 134 160 177 182 191
196 201 209 217 226 235 244 254
Average # vials per patient per year 5.4 5.2 5.2 5.2 5.2 5.2 5.2
5.2 5.2 5.2 5.2 5.2 5.2
Eylea price per dose $1,850 $1,850 $1,850 $1,850 $1,850 $1,850
$1,850 $1,850 $1,850 $1,850 $1,850 $1,850 $1,850
U.S. Ey lea Sa les In Wet AMD ($MM) $1 ,334 $1 ,540 $1 ,700 $1
,745 $1 ,835 $1 ,880 $1 ,930 $2 ,010 $2 ,090 $2 ,175 $2 ,260 $2
,350 $2 ,445 +3% - Market leader
% growth +64% +15% +10% +3% +5% +2% +3% +4% +4% +4% +4% +4%
+4%
OHR-102
% treated patients eligible for anti-PDGF treatment 66% 66% 66%
66% 66% 66% 66% 66% 66% 66% 66% 66% 66% - Per consultants; most
will want better vision
# treated patients eligible for anti-PDGF treatment ('000) 226
240 254 266 280 294 308 321 333 347 361 375 390 - Potential launch
in early 2019
% OHR-102 patient penetration 2% 8% 15% 23% 28% 32% 36% -
Assumes PDGF competition
# patients receiving OHR-102 each year ('000) 6 24 50 78 99 120
140 - Assumes 2.5 years from start-finish for PIII
Average # bottles per patient per year 11.0 10.7 10.5 10.3 10.0
10.0 10.0 - Assume it stabilizes around 10 bottles per year
OHR-102 price per dose $750 $750 $750 $750 $750 $750 $750 -
Priced between $500-$1,000 for market uptake
U.S. OHR-102 Sa les In Wet AMD ($MM) $50 $195 $395 $600 $745
$900 $1 ,055 +78% - Should exper ience rapid uptake
% gr ow th +290% +103% +52% +24% +21% +17%
U.S. Wet AMD
Lucentis Sales ($MM) $1,310 $900 $700 $690 $680 $715 $750 $780
$815 $845 $880 $915 $950 +2%
% growth +4% -31% -22% -1% -1% +5% +5% +4% +4% +4% +4% +4%
+4%
Eylea Sales ($MM) $1,334 $1,540 $1,700 $1,745 $1,835 $1,880
$1,930 $2,010 $2,090 $2,175 $2,260 $2,350 $2,445 +3%
% growth +64% +15% +10% +3% +5% +2% +3% +4% +4% +4% +4% +4%
+4%
OHR-102 Sales ($MM) $50 $195 $395 $600 $745 $900 $1,055 +78% -
Assumes PDGF competition
% growth +290% +103% +52% +24% +21% +17%
TOTAL U.S. WET AMD SALES ($MM) $2 ,644 $2 ,440 $2 ,400 $2 ,435
$2 ,515 $2 ,595 $2 ,730 $2 ,985 $3 ,300 $3 ,620 $3 ,885 $4 ,165 $4
,450 +4%
% gr ow th +27% -8% -2% +1% +3% +3% +5% +9% +11% +10% +7% +7%
+7%
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Figure 2 Ex-US Wet AMD Market Model
Source: Cowen and Company; PriceRx
For our DCF valuation, we included the peak sales potentials
from above and assumed
gross margins of 90%+. We also assumed the Phase III program
will cost $75MM and
include SG&A expense within the range of normal industry
standards. We expect that
Ohr will begin hiring commercial employees in mid-2016 and hire
an initial OHR-102
US sales force of 50 reps upon approval, which will be later
expanded. Similar
assumptions are made for an EU launch, although we suspect that
Ohr may look to
partner Ex-US, similarly to the Fovista/Novartis deal, which
resulted in ~$1B in
potential milestones and royalties on Ex-US sales. Providing a
necessary high discount
rate given the still early stage of development to these
estimates yields in an equity
value of $800MM+ or $25 per fully-diluted share, which is the
basis of our price
target. If the final Phase II data are successful, our discount
rate would
correspondingly decrease resulting in a higher equity value.
Additionally, OHR-102 is
the only late-stage, unpartnered anti-PDGF program and we expect
it to receive a lot
of interest from large ophthalmology players if the results are
successful in March. Put
simply, as OHR-102 moves through the clinic, we expect the
valuation gap between
OHRP and OPHT (~$1.6B currently) will narrow. We also note that
our valuation does
not give any credit to OHR-102s follow-on indications of RVO,
PVR, or DME or the
Alcon-partnered sustained-release programs.
2013A 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E
2023E 2024E 2025E 5Y CGR Comments
Ex-U.S. Wet AMD
Prevalence of moderate-advanced wet AMD pt.s ('000) 681 715 750
788 827 869 912 949 986 1,026 1,067 1,110 1,154 - We estimate 50%
larger than U.S.
% diagnosed 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80%
80%
# diagnosed patients ('000) 541 572 600 630 662 695 730 759 789
821 854 888 923
% of diagnosed pt.s Tx with anti-VEGFs 95% 96% 96% 96% 96% 96%
96% 96% 96% 96% 96% 96% 96%
# treated patients ('000) 514 546 576 605 635 667 700 728 758
788 819 852 886
% growth +6% +6% +6% +5% +5% +5% +5% +4% +4% +4% +4% +4% +4%
Avastin
% Avastin patient penetration 55% 48% 44% 43% 43% 43% 43% 43%
43% 43% 43% 43% 43% - 4 week treatment duration; 5-6 weeks in
practice
# patients receiving Avastin each year ('000) 282 262 254 260
273 287 301 313 326 339 352 366 381 - Increased payor pressure to
drive growth
Average # vials per patient per year 5.6 5.5 5.5 5.5 5.5 5.5 5.5
5.5 5.5 5.5 5.5 5.5 5.5
Avastin price per dose $50 $50 $50 $50 $50 $50 $50 $50 $50 $50
$50 $50 $50 - Low cost due to compounding
Ex-U.S. Avast in Sa les In Wet AMD ($MM) $79 $70 $70 $70 $75 $80
$85 $85 $90 $95 $95 $100 $105 +4% - Recognized by compounders
% growth -11% -11% +0% +0% +7% +7% +6% +0% +6% +6% +0% +5%
+5%
Lucentis
% Lucentis patient penetration 38% 36% 34% 32% 30% 29% 28% 27%
26% 25% 24% 23% 22% - 4 week treatment duration; 6-7 weeks in
practice
# patients receiving Lucentis each year ('000) 195 197 196 194
191 193 196 197 197 197 197 196 195
Average # vials per patient per year 5.6 5.5 5.5 5.5 5.5 5.5 5.5
5.5 5.5 5.5 5.5 5.5 5.5
Lucentis price per dose $1,950 $1,950 $1,950 $1,950 $1,950
$1,950 $1,950 $1,950 $1,950 $1,950 $1,950 $1,950 $1,950
Ex-U.S. Lucentis Sa les In Wet AMD ($MM) $2 ,133 $2 ,110 $2 ,100
$2 ,075 $2 ,045 $2 ,075 $2 ,105 $2 ,110 $2 ,115 $2 ,115 $2 ,110 $2
,100 $2 ,090 +0% - Market leader
% growth +10% -1% -0% -1% -1% +1% +1% +0% +0% +0% -0% -0%
-0%
Eylea
% Eylea patient penetration 7% 16% 22% 25% 27% 28% 29% 30% 31%
32% 33% 34% 35% - 8 week treatment duration
% penetration of non-Avastin market 16% 31% 39% 44% 47% 49% 51%
52% 49% 46% 44% 43% 43% - Rapid uptake, but less so than the
U.S.
# patients receiving Eylea each year ('000) 37 87 127 151 172
187 203 219 235 252 270 290 310
Average # vials per patient per year 5.4 4.7 4.3 4.3 4.3 4.3 4.3
4.3 4.3 4.3 4.3 4.3 4.3
Eylea price per dose $1,850 $1,850 $1,850 $1,850 $1,850 $1,850
$1,850 $1,850 $1,850 $1,850 $1,850 $1,850 $1,850
Ex-U.S. Ey lea Sa les In Wet AMD ($MM) $370 $760 $1 ,010 $1 ,205
$1 ,365 $1 ,485 $1 ,615 $1 ,740 $1 ,870 $2 ,005 $2 ,150 $2 ,305 $2
,470 +11%
% growth +1847% +105% +33% +19% +13% +9% +9% +8% +7% +7% +7% +7%
+7%
OHR-102
% treated patients eligible for anti-PDGF treatment 66% 66% 66%
66% 66% 66% 66% 66% 66% 66% 66% 66% 66% - Per consultants; most
will want better vision
# treated patients eligible for anti-PDGF treatment ('000) 339
360 380 399 419 440 462 481 500 520 541 562 585 - Potential launch
in early 2020; could be conserv.
% OHR-102 patient penetration 1% 6% 13% 18% 22% 25% - Assumes
PDGF competition
# patients receiving OHR-102 each year ('000) 5 30 65 97 124 146
- Assumes 2.5 years from start-finish for PIII
Average # bottles per patient per year 11.0 10.8 10.5 10.3 10.0
10.0 - Assume it stabilizes around 10 bottles per year
OHR-102 price per dose $500 $500 $500 $500 $500 $500 - Assume
price 2/3 of U.S.
Ex-U.S.OHR-102 Sa les In Wet AMD ($MM) $25 $160 $340 $500 $620
$730 +96% - Quick uptake , but s lower than U.S.
% gr ow th +540% +113% +47% +24% +18%
Ex-U.S. Wet AMD
Lucentis Sales ($MM) $2,133 $2,110 $2,100 $2,075 $2,045 $2,075
$2,105 $2,110 $2,115 $2,115 $2,110 $2,100 $2,090 +0%
% growth +10% -1% -0% -1% -1% +1% +1% +0% +0% +0% -0% -0%
-0%
Eylea Sales ($MM) $370 $760 $1,010 $1,205 $1,365 $1,485 $1,615
$1,740 $1,870 $2,005 $2,150 $2,305 $2,470 +11%
% growth +1847% +105% +33% +19% +13% +9% +9% +8% +7% +7% +7% +7%
+7%
OHR-102 Sales ($MM) $25 $160 $340 $500 $620 $730 +96% - Assumes
PDGF competition
% growth +540% +113% +47% +24% +18%
TOTAL Ex-U.S. WET AMD SALES ($MM) $2 ,503 $2 ,870 $3 ,110 $3
,280 $3 ,410 $3 ,560 $3 ,720 $3 ,875 $4 ,145 $4 ,460 $4 ,760 $5
,025 $5 ,290 +4%
% gr ow th +27% +15% +8% +5% +4% +4% +4% +4% +7% +8% +7% +6%
+5%
W.W. Wet AMD
Lucentis Sales ($MM) $3,443 $3,010 $2,800 $2,765 $2,725 $2,790
$2,855 $2,890 $2,930 $2,960 $2,990 $3,015 $3,040 +1%
% growth +7% -13% -7% -1% -1% +2% +2% +1% +1% +1% +1% +1%
+1%
Eylea Sales ($MM) $1,704 $2,300 $2,710 $2,950 $3,200 $3,365
$3,545 $3,750 $3,960 $4,180 $4,410 $4,655 $4,915 +7%
% growth +105% +35% +18% +9% +8% +5% +5% +6% +6% +6% +6% +6%
+6%
OHR-102 Sales ($MM) $50 $220 $555 $940 $1,245 $1,520 $1,785 +98%
- Assumes PDGF competition
% growth +340% +152% +69% +32% +22% +17%
TOTAL W.W. WET AMD SALES ($MM) $5 ,147 $5 ,310 $5 ,510 $5 ,715
$5 ,925 $6 ,155 $6 ,450 $6 ,860 $7 ,445 $8 ,080 $8 ,645 $9 ,190 $9
,740 +4%
% gr ow th +27% +3% +4% +4% +4% +4% +5% +6% +9% +9% +7% +6%
+6%
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On the following pages, we provide our Ohr Pharma annual P&L
and DCF.
Figure 3 Ohr Pharma Annual P&L
Source: Cowen and Company
Fiscal Year E nded September 30 2014 2015E 2016E 2017E 2018E
2019E 2020E 2021E 2022E 2023E 2024E 2025E 5YR C GR C omments
O HR-102
U.S. Wet AMD Sales ($MM) $50.0 $195.0 $395.0 $600.0 $745.0
$900.0 $1,055.0 +78% - Topical anti-angiogenic eye drop for wet
AMD
% Growth +290% +103% +52% +24% +21% +17% - Currently being
tested in other retina disorders
Ex-U.S. Wet AMD Sales ($MM) $25.0 $160.0 $340.0 $500.0 $620.0
$730.0 +96% - COM patent to 2029; formulation to 2030
% Growth +540% +113% +47% +24% +18% - Final Phase II data by end
of March; Potential Q2:2015 Phase III start
Total O hr Rev enues $0.0 $0.0 $0.0 $0.0 $0.0 $50.0 $220.0
$555.0 $940.0 $1,245.0 $1,520.0 $1,785.0 +98% - Rapid uptake ex
pected; assumes PDGF compet it ion
% Growth NM NM NM NM NM +340% +152% +69% +32% +22% +17%
Cost of Goods $0.0 $0.0 $0.0 $0.0 $0.0 $5.0 $22.0 $50.0 $84.6
$99.6 $121.6 $125.0
Gross Profit $0.0 $0.0 $0.0 $0.0 $0.0 $45.0 $198.0 $505.1 $855.4
$1,145.4 $1,398.4 $1,660.1
Gross Margin NM NM NM NM NM 90.0% 90.0% 91.0% 91.0% 92.0% 92.0%
93.0% - 90%+ margins; easy to manufacture
SG&A $5.1 $7.5 $15.0 $20.0 $25.0 $50.0 $90.0 $150.0 $240.0
$290.0 $340.0 $390.0 +64% - Assumes an initial sales force of 50
reps
% of Revs NM NM NM NM NM 100.0% 40.9% 27.0% 25.5% 23.3% 22.4%
21.8% - Commercial hiring to begin in mid-2016
R&D $4.0 $20.0 $40.0 $30.0 $20.0 $15.0 $15.0 $10.0 $10.0
$10.0 $10.0 $10.0 -6% - Phase III wet AMD program expected to cost
$75MM; bell curve-like
% of Revs NM NM NM NM NM 30.0% 6.8% 1.8% 1.1% 0.8% 0.7% 0.6%
Operating Expenses $9.1 $27.5 $55.0 $50.0 $45.0 $65.0 $105.0
$160.0 $250.0 $300.0 $350.0 $400.0 +31%
% of Revs NM NM NM NM NM 130.0% 47.7% 28.8% 26.6% 24.1% 23.0%
22.4%
Operating Income ($9.1) ($27.5) ($55.0) ($50.0) ($45.0) ($20.0)
$93.0 $345.1 $605.4 $845.4 $1,048.4 $1,260.1 NM
% Operating Margin NM NM NM NM NM NM 42.3% 62.2% 64.4% 67.9%
69.0% 70.6%
Non-Operating Income
Interest Income $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0
$0.0 $0.0 $0.0
Interest Expense (0.0) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
0.0
Other Income (0.0) (2.0) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
0.0
Non-Operating Income ($0.0) ($2.0) $0.0 $0.0 $0.0 $0.0 $0.0 $0.0
$0.0 $0.0 $0.0 $0.0
Pretax Income ($9.1) ($29.5) ($55.0) ($50.0) ($45.0) ($20.0)
$93.0 $345.1 $605.4 $845.4 $1,048.4 $1,260.1 NM
% of Revs NM NM NM NM NM NM 42.3% 62.2% 64.4% 67.9% 69.0%
70.6%
Income Taxes $32.6 $120.8 $211.9 $295.9 $366.9 $441.0 NM -
Assumes no NOLs
Income Tax Rate 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% - Standard
U.S. corporate tax rate
Net Income - Operations ($9.1) ($29.5) ($55.0) ($50.0) ($45.0)
($20.0) $60.5 $224.3 $393.5 $549.5 $681.5 $819.0 NM
% Net Margin NM NM NM NM NM NM 27.5% 40.4% 41.9% 44.1% 44.8%
45.9%
Extraordinary Items
Adjusted Net Income ($9.1) ($29.5) ($55.0) ($50.0) ($45.0)
($20.0) $60.5 $224.3 $393.5 $549.5 $681.5 $819.0 NM
Interest Add-Back $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0
$0.0 $0.0 $0.0
E PS (Non-GAAP) - B efore E x . It ems ($0.41) ($1.00) ($1.85)
($1.60) ($1.40) ($0.60) $1.80 $6.40 $10.95 $14.85 $17.95 $21.00 NM
- True prof it abilit y reached in 2020
% Growth NM NM NM NM NM NM NM +256% +71% 36% 21% 17%
EPS - Extraordinary Items $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
$0.00 $0.00 $0.00 $0.00 $0.00 $0.00
EPS - Adjusted ($0.41) ($1.00) ($1.85) ($1.60) ($1.40) ($0.60)
$1.80 $6.40 $10.95 $14.85 $17.95 $21.00 NM
Shares Outstanding (MM) 22.1 29.0 30.0 31.0 32.0 33.0 34.0 35.0
36.0 37.0 38.0 39.0 +3% - Aassuming some onward dilution from
options
OHR PHARMA - 2015-2025 EST IMATED ANNUAL EPS BUILDUP ($MM)
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Figure 4 Ohr Pharma DCF Suggests $25 Per Share
Source: Cowen and Company
Assumptions: Output:
Increase in WC 5.0% Equity Value $829.1
Discount Rate 19.5% Est. Sha re Pr i ce $25 .0
Fully Diluted Shares 33.5 Debt $0.0 Notes:
Cash $35.0 Netted $26-27MM from Feb 11 offering
Enterprise Value $794.1 Burned ~$2.8MM Q1; expected to be higher
in Q2
2014 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E
2025E 2026E 2027E 2028E 2029E 2030E 2031E 2032E 2033E 2034E
2035E
Total Revenues $0.0 $0.0 $0.0 $0.0 $0.0 $50.0 $220.0 $555.0
$940.0 $1,245.0 $1,520.0 $1,785.0 $2,040.0 $2,275.0 $2,500.0
$2,140.0 $1,250.0 $550.0 $200.0 $100.0 $100.0 $100.0
% Change NM NM NM NM NM NM +340% +152% +69% +32% +22% +17% +14%
+12% +10% -14% -42% -56% -64% -50% +0% +0%
Cost of Goods $0.0 $0.0 $0.0 $0.0 $0.0 $5.0 $22.0 $50.0 $84.6
$99.6 $121.6 $125.0 $142.8 $159.3 $175.0 $149.8 $87.5 $38.5 $14.0
$7.0 $7.0 $7.0
Gross Profit $0.0 $0.0 $0.0 $0.0 $0.0 $45.0 $198.0 $505.1 $855.4
$1,145.4 $1,398.4 $1,660.1 $1,897.2 $2,115.8 $2,325.0 $1,990.2
$1,162.5 $511.5 $186.0 $93.0 $93.0 $93.0
Gross Margin - Total NM NM NM NM NM 90.0% 90.0% 91.0% 91.0%
92.0% 92.0% 93.0% 93.0% 93.0% 93.0% 93.0% 93.0% 93.0% 93.0% 93.0%
93.0% 93.0%
SG&A $5.1 $7.5 $15.0 $20.0 $25.0 $50.0 $90.0 $150.0 $240.0
$290.0 $340.0 $390.0 $430.0 $475.0 $500.0 $450.0 $250.0 $125.0
$50.0 $25.0 $20.0 $20.0
% of Revs NM NM NM NM NM 100.0% 40.9% 27.0% 25.5% 23.3% 22.4%
21.8% 21.1% 20.9% 20.0% 21.0% 20.0% 22.7% 25.0% 25.0% 20.0%
20.0%
R&D $4.0 $20.0 $40.0 $30.0 $20.0 $15.0 $15.0 $10.0 $10.0
$10.0 $10.0 $10.0 $10.0 $10.0 $10.0 $10.0 $10.0 $7.5 $5.0 $5.0 $5.0
$5.0
% of Revs NM NM NM NM NM 30.0% 6.8% 1.8% 1.1% 0.8% 0.7% 0.6%
0.5% 0.4% 0.4% 0.5% 0.8% 1.4% 2.5% 5.0% 5.0% 5.0%
Operating Expenses $9.1 $27.5 $55.0 $50.0 $45.0 $65.0 $105.0
$160.0 $250.0 $300.0 $350.0 $400.0 $440.0 $485.0 $510.0 $460.0
$260.0 $132.5 $55.0 $30.0 $25.0 $25.0
% of Revenues NM NM NM NM NM 130.0% 47.7% 28.8% 26.6% 24.1%
23.0% 22.4% 21.6% 21.3% 20.4% 21.5% 20.8% 24.1% 27.5% 30.0% 25.0%
25.0%
Operating Income ($9.1) ($27.5) ($55.0) ($50.0) ($45.0) ($20.0)
$93.0 $345.1 $605.4 $845.4 $1,048.4 $1,260.1 $1,457.2 $1,630.8
$1,815.0 $1,530.2 $902.5 $379.0 $131.0 $63.0 $68.0 $68.0
% Operating Margin NM NM NM NM NM NM 42.3% 62.2% 64.4% 67.9%
69.0% 70.6% 71.4% 71.7% 72.6% 71.5% 72.2% 68.9% 65.5% 63.0% 68.0%
68.0%
Other Income (0.0) (2.0) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Adjusted EBIT ($9.1) ($29.5) ($55.0) ($50.0) ($45.0) ($20.0)
$93.0 $345.1 $605.4 $845.4 $1,048.4 $1,260.1 $1,457.2 $1,630.8
$1,815.0 $1,530.2 $902.5 $379.0 $131.0 $63.0 $68.0 $68.0
% of Revs NM NM NM NM NM NM 42.3% 62.2% 64.4% 67.9% 69.0% 70.6%
71.4% 71.7% 72.6% 71.5% 72.2% 68.9% 65.5% 63.0% 68.0% 68.0%
Taxes $32.6 $120.8 $211.9 $295.9 $366.9 $441.0 $510.0 $570.8
$635.3 $535.6 $315.9 $132.7 $45.9 $22.1 $23.8 $23.8
Income Tax Rate 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0%
35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0%
NOPAT ($9.1) ($29.5) ($55.0) ($50.0) ($45.0) ($20.0) $60.5
$224.3 $393.5 $549.5 $681.5 $819.0 $947.2 $1,060.0 $1,179.8 $994.6
$586.6 $246.4 $85.2 $41.0 $44.2 $44.2
Adjustments: Terminal
Capex ($0.1) ($0.3) ($0.5) ($1.0) ($2.0) ($3.0) ($3.0) ($3.0)
($3.0) ($3.0) ($3.0) ($3.0) ($3.0) ($3.0) ($3.0) ($3.0) ($3.0)
($3.0) ($3.0) ($3.0) ($3.0) ($3.0)
Depreciation & Amortization ($0.5) ($1.0) ($1.0) ($1.0)
($1.0) ($1.0) ($1.0) ($1.0) ($1.0) ($1.0) ($1.0) ($1.0) ($1.0)
($1.0) ($1.0) ($1.0) ($1.0) ($1.0) ($1.0) ($1.0) ($1.0) ($1.0)
Change In Working Capital $3.4 $5.0 $2.5 $0.0 ($5.0) ($10.0)
($10.5) ($11.0) ($11.6) ($12.2) ($12.8) ($13.4) ($14.1) ($14.8)
($15.5) ($16.3) ($17.1) ($18.0) ($18.9) ($19.8) ($20.8) ($21.8)
Free Cash Flow ($6.3) ($25.8) ($54.0) ($52.0) ($53.0) ($34.0)
$46.0 $209.3 $377.9 $533.4 $664.7 $801.6 $929.1 $1,041.2 $1,160.2
$974.3 $565.5 $224.4 $62.3 $17.2 $19.4 $18.4 $94.21
OHR PHARMA DCF
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Ohr Pharma Is Going All In On Ophthalmology
The Companys lead program is OHR-102, which is being developed
as a combination
therapy with anti-VEGFs for wet AMD. OHR-102 is currently in a
Phase II clinical
development program, which has already reported positive interim
data, and final data
is expected to readout by mid-to-late March. If the final data
is positive, which we and
our consultants believe has a good probability of occurring, Ohr
plans to move OHR-
102 into Phase III clinical trials in Q2:2015. Worth noting, Ohr
has already met with the
FDA and confirmed potential Phase III plans for the program.
Follow-on indications of
PVR, RVO, and DME are anticipated next for OHR-102 and the
approach appears
logical given the success of on-market wet AMD treatments in
these areas. For RVO
and PVR, OHR-102 is being tested in investigator-sponsored
studies with Phase II data
to readout later this year, potentially by the end of H1:2015.
For DME, the Company is
running its own Phase II study with a final data to readout
around mid-2016.
Additionally, the Company has a research agreement with Alcon a
Novartis company
which is one of the largest ophthalmology players in the world
with over $10B in
annual revenues. Clearly, this provides a source of validation
for Ohrs programs and
expertise in ophthalmology. This collaboration is testing Ohrs
sustained-release
hydrogel platform technology and encompasses four active
research programs in
glaucoma, steroid-induced glaucoma, eye allergy, and retinal
disease. Depending on
the outcome of these early programs with partner Alcon, Ohr
anticipates potentially
filing an IND for one program by the end of H1:2015.
Figure 5 Ohr Pharmaceuticals Clinical Development Pipeline
Source: Ohr Pharma
OHR-102 Has The Potential To Be The First Topical Eye Drop For
Retinal Disease
Our consultants believe that despite previous topical failed
programs for wet AMD, it
will only be a matter of time before an eye drop potent enough
is found with the right
dosage that reaches the retina. We believe Ohrs OHR-102
(squalamine) might be the
one. OHR-102 is a first-in-class molecule anti-angiogenic
compound that inhibits
multiple growth factors: vascular endothelial growth factor
(VEGF), platelet-derived
growth factor (PDGF), and basic fibroblast growth factor (bFGF).
VEGF is a signaling
If the final data is positive, which we and our
consultants believe has a good probability of
occurring, Ohr plans to move OHR-102 into
Phase III clinical trials in Q2:2015. Worth noting,
Ohr has already met with the FDA and confirmed
potential Phase III plans for the program.
Our consultants believe that despite previous
topical failed programs for wet AMD, it will only
be a matter of time before a drop potent enough
is found with the right dosage that reaches the
retina. We believe Ohrs OHR-102 (squalamine)
might be the one.
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protein that stimulates vasculogenesis and angiogenesis. In
other words, VEGF
promotes the growth and formation of blood vessels. PDGF has a
similar function in
blood vessel formation as it helps regulate cell growth and
division. bFGF is present in
basement membranes and in the subendothelial extracellular
matrix of blood vessels
and when activated, it is thought to also aid in the formation
of new blood vessels.
Thus, OHR-102 has a three-pronged anti-angiogenic
approach/mechanism. Inhibiting
VEGF has been well-validated by the market leading treatments
for retinal disease,
Eylea, Lucentis, and Avastin. Targeting PDGF has largely gained
credibility over the
past few years as Ophthotech and now Ohr has reported
significant visual acuity
benefits in Phase II. Also, several large players in the
ophthalmology space, such as
Regeneron and Allergan have early PDGF programs earlier in
clinical development.
Interestingly, elevated bFGF has been implicated in the
pathophysiology of
proliferative diabetic retinopathy (PVR) and retinal vein
occlusions (RVO). Additionally,
Eylea, Lucentis, Avastin, and Fovista are all large biologic
molecules (recombinant
proteins; monoclonal antibodies; aptamers) and are therefore too
large to enter the
cell. They remain in the extracellular space and work by
neutralizing freely diffusible
proteins. Alternatively, OHR-102 is a small molecule and it
therefore is able to enter
the intracellular space of vascular endothelial cells. Our
consultants note that steroids
work by an intracellular mechanism and are of course, very
effective. Not only do
intracellular drugs tend to work well, but our consultants note
that they also tend to
have a longer duration of effect well beyond what the kinetics
suggest.
Figure 6 Mechanism Comparison Of Wet AMD Agents
Source: Ohr Pharma
The OHR-102 eye drop formulation 0.2% squalamine lactate has
emollient
properties to soothe the ocular surface, which results in
increased comfort for
Alternatively, OHR-102 is a small molecule and it
therefore is able to enter the intracellular space
of vascular endothelial cells. Our consultants
note that steroids work by an intracellular
mechanism and are of course, very effective. Not
only do intracellular drugs tend to work well, but
our consultants note that they also tend to have a
longer duration of effect well beyond what the
kinetics suggest.
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patients, particularly in the elderly patient population which
is the vast majority of wet
AMD patients. Moreover, OHR-102 has been shown to have improved
residence time
on the ocular surface along with minimized uptake into the
aqueous humor.
Additionally, OHR-102 has demonstrated trans-scleral
permeability into the choroid
with increased retention time in the posterior sclera/choroid.
The sclera is known as
the white of the eye and it is the opaque, fibrous, protective
outer layer of the eye. Just
inside that is the choroid, which is the vascular layer of the
eye, contains connective
tissue, and lies between the retina and the sclera. Hence,
OHR-102 has been shown
penetrate the tissue immediate to the retina, which is the
primary target of treatment
for wet AMD and other retinal diseases.
Figure 7 OHR-102 Reaches The Posterior
Sclera/Choroid
Source: Ohr Pharma
Per below and as presented at ARVO 2012, a preclinical
single-dose biodistribution
study was conducted by administering OHR-102 to the front of the
eye in Dutch
belted rabbits. We would note that all the large ophthalmology
players depend on
these standardized preclinical models and our consultants
believe results in these
models to be fairly predictive of drug effects in the human eye.
In this study, OHR-102
was shown to achieve supratherapeutic levels of ~90ng/g in
sclera/choroid tissue. Of
note, Ohr estimates that approximate levels of 12ng/g in the
sclera/chroid tissue are
the threshold drug concentration required to inhibit
neovascularization. Interestingly,
these supratherapeutic levels of OHR-102 are reached rapidly in
15 minutes after
administration and maintained up to 24 hours resulting in
significant residence time.
We would note that this is just a single dose, not the BID
dosing regimen that is being
tested in clinical trials. Therefore, BID dosing of OHR-102
appears to deliver more than
sufficient drug levels to the eye.
OHR-102 has been shown to have improved
residence time on the ocular surface along with
minimized uptake into the aqueous humor.
Additionally, OHR-102 has demonstrated trans-
scleral permeability into the choroid with
increased retention time in the posterior
sclera/choroid.
Interestingly, these supratherapeutic levels of
OHR-102 are reached rapidly in 15 minutes after
administration and maintained up to 24 hours
resulting in significant residence time.
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Figure 8 Single Dose Biodistribution: OHR-102 Concentrations In
The
Sclera/Choroid
Source: Ohr Pharma
Ohr also measured multi-dose biodistribution of OHR-102 in
rabbit posterior
sclera/choroid tissue. Trough level drug concentrations of
OHR-102 were measured
over 14 days and the data was presented at ARVO 2012. Both
once-daily and twice-
daily dosing regimens were employed. At day 7, supratherapeutic
and statistically
significant (p
-
We acknowledge that despite this data, many are still skeptical
on the ability for drops
to get to the back of the eye. We believe this is largely
because previous topical wet
AMD eye drop programs including GSKs pazopanib or Votrient have
failed.
Additionally, there was an old IV formulation of squalamine that
was terminated in wet
AMD, but this was due to its short half-life, which didnt
provide adequate coverage
when dosed weekly, and the systemic dosing, which led to
subtherapeutic drug levels
in the eye and systemic safety concerns. With that said, the IV
formulation did show a
dose response and positive visual and anatomical benefits. Per
the data above, OHR-
102 is clearly not systemic and certainly has an adequate
coverage of 24 hours.
Whether or not investors believe eye drops can reach the back of
the eye, the clinical
data with OHR-102 should ultimately win out and put this
controversy to bed and we
believe that the interim data was a solid start in the right
direction.
AMD Is The Leading Cause Of Blindness In People Over 55
Age-related Macular Degeneration (AMD) is the leading cause of
blindness in people
over the age of 55. Legal blindness is defined as a person who
is only able to see
20/200 or less with glasses. According to the National Eye
Institute, more than 1MM
people are diagnosed with AMD annually and the incidence is
expected to grow as
the population ages. Approximately 15M people in the U.S. have
macular
degeneration, of which 10-15% have active blood vessel growth
and leakage (wet
AMD). The medical literature suggests there are approximately
1.5M people with wet
AMD in the U.S., although Roche/Genentech estimates the size of
the treatable
market is at least a third of that. We estimate the U.S. AMD
market opportunity at
$3B+, with a similar opportunity ex-U.S. The market opportunity
for AMD drugs may
be further expanded by penetration into other back-of-the-eye
conditions such as
retinal vein occlusion or diabetic retinopathy and
adjuncts/improvement to existing
therapies such as the new PDGF drugs in development.
What Is AMD?
AMD is subdivided into wet lesions (characterized by excessive
new blood vessel
formation in the retina and fluid buildup) and dry AMD (a
precursor of the wet form;
thinning of the macular tissues and disturbances in its
pigmentation). AMD gradually
destroys a persons central vision function. The early stages of
the disease may be
barely noticeable to some, but symptoms can vary. Sometimes only
one eye loses
vision and the other maintains good vision for many years. Some
patients have milder
symptoms in both eyes that may not impair vision significantly
for many years. Other
frequent symptoms include distortion, or when straight lines
look wavy, such as the
lines on an Amsler grid (an ophthalmic diagnostic tool in the
picture below) or if a
doorframe or blinds look bent. Sometimes colors don't look quite
right or there may be
a purple or gray spot in the center vision. (See picture
below.)
According to the National Eye Institute, more
than 1MM people are diagnosed with AMD
annually and the incidence is expected to grow
as the population ages. Approximately 15M
people in the U.S. have macular degeneration, of
which 10-15% have active blood vessel growth
and leakage (wet AMD). The medical literature
suggests there are approximately 1.5M people
with wet AMD in the U.S., although
Roche/Genentech estimates the size of the
treatable market is at least a third of that.
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Figure 10 AMD & Amsler Grid Diagnostic Tool
Source: Cowen and Company; Macular Degeneration Foundation
Upon onset of macular degeneration, many people have trouble
adjusting quickly
between bright sunlight or dim light or shadows. This may be
especially dangerous
when driving in bright sunlight and then entering the shade or
vice versa. Whereas a
normal retina takes 3-5 minutes to adjust from bright light to
dim (when entering a
movie theater, for example), a person with macular degeneration
may take 8-12
minutes or longer.
Figure 11 The Progression Of Wet AMD
Source: Molecular Partners
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Etiology Of AMD Not Well Understood, But VEGF Is Clearly An
Important Player
Any number of factors, including genetics, age, race, gender,
menopause, nutrition,
smoking, and exposure to sunlight, may cause AMD. Based on the
original striking
results from pan-VEGF inhibition therapy with Roches Lucentis,
it is clear that VEGF is
an important driver of new blood vessel formation in the retina
and conversion from
dry to wet AMD. Research is ongoing to identify additional
molecules that drive the
wet AMD process and to better understand the pathophysiologic
processes that result
in VEGF overexpression.
There Are Three Categories Of Wet AMD: Occult, Minimally
Classic, and Classic
Based on the appearance of the blood vessels at the back of the
eye when visualized
using fluorescein angiography, wet AMD can be subdivided into
predominantly classic
(25%), minimally classic (35%) and occult (40%). In
predominantly classic choroidal
neovascularization (CNV), greater than 50% of the neovascular
AMD lesions can be
clearly defined, and this is generally regarded as the most
aggressive subtype. In
minimally classic choroidal neovascularization, 1% to 50% of the
neovascular AMD
lesions can be clearly defined, and this is generally regarded
as the intermediate
subtype in terms of progression. In occult choroidal
neovascularization, none of the
neovascular lesions can be clearly defined, and this is
generally regarded as being the
least aggressive subtype. It is helpful to think of the AMD
lesion as an expanding
vascular membrane which penetrates into an area underneath the
retina. Angiography
lights up the blood vessels in this membrane, and physicians use
the angiogram to
discern the outline of the membrane. However, leakage of dye
from these blood
vessels can obscure a physicians ability to clearly see the
membrane, and the extent
to which this visibility is obscured determines its
classification. While it is important to
identify lesion subtypes to determine potential eligibility for
photodynamic therapy
with Visudyne, the intra-vitreous anti-VEGF therapies have
utility across wet AMD
subtypes, making differentiation less critical.
The Wet AMD Treatment Paradigm Has And Is Expected To Continue
To Evolve
Rapidly
Current treatment methodologies for wet AMD include three
options: anti-VEGF
therapy, photodynamic therapy (PDT), and laser photocoagulation.
Retina specialists
are quick to adopt new therapies, often before they have
undergone rigorous clinical
testing or have received FDA approval. The wet AMD treatment
paradigm therefore
evolves rapidly and sometimes unexpectedly.
The First Wave Of AMD Treatment Used Lasers
Until March 2000, the only primary treatment for neovascular wet
AMD was laser
coagulation. This technique involves the use of a strong light
source targeted on
extrafoveal and juxtafoveal CNV lesions to coagulate the
diseased tissue. The laser
produces a thermal effect within the lesion that causes necrosis
of its cellular
components. In the 1980s, the National Eye Institute conducted
the Macular
Degeneration Photocoagulation Studies (MPS), and the results
demonstrated that
photocoagulation of well-demarcated CNV membranes effectively
prevented large
decreases in visual acuity compared with observation for CNV.
However, the thermal
effect of the laser can damage viable photoreceptor cells,
resulting in retinal scarring
and loss of visual acuity. As such, use of laser coagulation in
the current practice
setting is rare, as superior treatment options discussed below
have emerged.
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Visudyne: An Outdated Procedure For Wet AMD
Visudyne was originally approved in 2000 and was most recently
acquired by Valeant
(from QLT) in September 2012 for $125MM suggesting that its use
is very limited.
Visudyne is a photosensitizer that attaches to lipoproteins,
which tend to accumulate
in rapidly proliferating cells. Visudyne traps energy from light
and converts oxygen in
cells to a highly energized state that results in cell death.
Visudyne therefore must be
activated at the site of desired effect by light. Photodynamic
therapy (PDT) with
Visudyne consists of administering the light-activated drug by
intravenous infusion
and then shining a light to the back of the eye to activate
Visudyne in the retina.
Clinicians must therefore purchase the machinery to administer
the light (up to $40K
in fixed costs), and hire personnel to administer the
intravenous infusion. Therapy is
repeated every three months if patients continue to have active
lesions, and our
consultants estimate that, on average, patients receive three to
four treatments before
the CNV lesion is converted to a quiescent scar. Side effects of
Visudyne include
transient skin sensitivity to bright light, acute onset and
transient back pain, and
rarely, acute visual deterioration, which may not be reversible.
Successful pan-VEGF
therapies Lucentis, Avastin, and Eylea have since significantly
eroded Visudynes
commercial presence.
Anti-Angiogenesis Treatments Dominate The Wet AMD Market
Eyetechs Macugen, the first anti-VEGF therapy, was approved for
wet AMD in 2004
and rapidly gained widespread adoption with an outstanding
commercial launch.
Macugen is an aptamer that binds to and inhibits activity of the
VEGF165 isoform and
was shown to decrease the rate of visual acuity loss in wet AMD
patients versus
placebo in the Phase II/III VISION trials. Macugen revenue
plummeted in 2005-2007 as
pan-VEGF antibodies emerged as a superior treatment option for
preserving or
restoring vision of wet AMD patients. Roches/Novartiss Lucentis
is a monoclonal
antibody fragment targeting all VEGF isoforms and has set a new
bar for wet AMD
therapies. Data from the Phase II/III MARINA trial of Lucentis
demonstrated an
impressive ability to improve visual acuity in wet AMD patients,
a goal never before
achieved in advanced clinical trials for this indication.
Lucentis secured U.S. approval
in June 2006 and EMEA approval in January 2007. The drugs U.S.
launch was very
impressive (Roche/Genentech estimated that Lucentis achieved 55%
penetration of
the wet AMD market just 6 months after FDA approval), relegating
Macugen and
photodynamic therapy to niche market roles. While waiting for
Lucentis to reach the
market, retina specialists began to use off-label, compounded
intravitreous Avastin, a
cheap and commercially available anti-VEGF option. Even before
there was Phase III
data to support its use, intravitreous Avastin nonetheless
captured the majority of the
remaining (non-Lucentis treated) market and is the most commonly
used anti-VEGF
for the treatment of wet AMD.
In June 2011, the FDAs Dermatologic and Ophthalmic Drugs
Advisory Committee
voted unanimously in favor of approving Eylea for wet AMD at a
dose of 2mg Q8W,
following three initial doses given monthly. The panel was
benign with no real points
of contention. After a minor hiccup in which the PDUFA date was
pushed back due to
clarifying questions from the FDA regarding the CMC section,
Eylea was FDA
approved in November 2011. In line with the panels conclusions,
Eyleas
recommended dose is 2mg Q8W, following three initial loading
doses given monthly.
In turn, the growth of Regenerons Eylea is the most recent
example of the rapid
market transformation in this market and has expanded upon
advances made by the
earlier agents by offering a less frequent injection schedule
(every 8 weeks vs. every 4
weeks). Following the success of anti-VEGF therapies Lucentis,
Eylea, and Avastin, the
most effective treatment for wet AMD is acknowledged to be
angiogenesis inhibition.
Given its vascular and progressive nature, AMD thrives on new
blood vessel growth.
In turn, the growth of Regenerons Eylea is the
most recent example of the rapid market
transformation in this market and has expanded
upon advances made by the earlier agents by
offering a less frequent injection schedule (every
8 weeks vs. every 4 weeks).
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By blocking the development of new blood vessels, supply of
oxygen and nutrients is
cut off and, therefore, the diseases proliferation throughout
the back of the eye.
Over the past 1-2 years, surveyed physicians believe that the
number of wet AMD
patients in their practice has grown modestly by 5-10% and that
approximately 50% of
patients are treated with Roches Avastin. The physician
panelists believe that the slow
increase in wet AMD patients is due to the chronic nature of the
disease. Additionally,
the amount of Avastin use depends on the size of the practice as
larger groups are
more familiar with billing and will therefore use more Avastin
(perhaps more than
50%), while smaller private groups may be closer to using
Avastin in 25% of patients.
Avastin substitution has and continues to be a barrier to
Lucentiss commercial
success in the U.S. Compounding pharmacies reconstitute the
significantly cheaper
Avastin ($50 versus just under $2000 a dose) for intraocular
injection despite its lack
of FDA approval for AMD. However, the current main competition
is from Eylea, which
our Biotech team estimates will reach approximately $2.2B and
$2.8B in 2015 and 2019
U.S. sales, respectively. In the U.S., our Pharma team estimates
Lucentis sales of $1.7B
in 2015, decreasing to $1.5B in 2019 due to increased
competition and as U.S. patents
begin to expire. Our Pharma team estimates ex-U.S. Lucentis
sales of $2.5B in 2015,
declining to $1.8B in 2019 as the ex-US patents expire and
competition continues to
increase.
Combination Therapy With Anti-PDGFs To Come Next For Retinal
Disease
Fovista, an anti-PDGF aptamer, is the PDGF program that is
furthest along in clinical
development. It is used in combination with anti-VEGF therapy
(rather than in place of
it). OHR-102 due to potentially enter Phase III by the end of
H1:2015 upon successful
final Phase II data is the second drug furthest along in
clinical development and is
catching up to Fovista quickly. Allergan/Molecular Partners and
Regeneron also have
PDGF programs, but they are much earlier-stage than Fovista and
OHR-102. Anti-
VEGFs have revolutionized the treatment of wet AMD, but they
produce most of their
improvement in about 4 months and then there is a plateau in
efficacy. Moreover,
patients must be continuously dosed with frequent anti-VEGF to
maintain the plateau;
data from several large trials were shown to suggest that
switching from monthly
dosing to PRN results in a loss of efficacy. The biological
explanation for this may be
that anti-VEGFs cause regression of tip cells at the distal end
of neovascularization,
but the bulk of the vessel outgrowths are protected from the
anti-VEGF by a lining of
pericytes. Anti-PDGF agents, in combination with the anti-VEGFs,
denude the
overgrown vessels of pericytes and cause regression of the
outgrowth. Current
development of anti-VEGF agents is aimed at extending the
duration of treatment
thereby allowing for a fewer number of injections a year, or
better compliance as
recent agents have largely failed to meaningfully increase
visual acuity in long-term
studies. However, this dogma appears to be changing with advent
of anti-PDGF
agents. PDGF agents in the case of Fovista and OHR-102 have
demonstrated
significant visual acuity gains on top of anti-VEGF treatments
when used in
combination. For wet AMD, a disease where patients ultimately
lose their vision,
increased visual acuity is paramount. Ultimately, our
consultants suggest that the vast
majority of treated AMD patients (2/3 and up) will want better
visual acuity and
therefore go on PDGF treatment. Lastly, our consultants note
that as many as 10-20%
of their patients are not adequately managed by the current
anti-VEGF options, and
therefore there is also a need for more potent alternatives to
help better manage the
disease in refractory patients.
Over the past 1-2 years, surveyed physicians
believe that the number of wet AMD patients in
their practice has grown modestly by 5-10% and
that approximately 50% of patients are treated
with Roches Avastin. The physician panelists
believe that the slow increase in wet AMD
patients is due to the chronic nature of the
disease.
For wet AMD, a disease where patients ultimately
lose their vision, increased visual acuity is
paramount. Ultimately, our consultants suggest
that the vast majority of treated AMD patients
(2/3 and up) will want better visual acuity and
therefore go on PDGF treatment. Lastly, our
consultants note that as many as 10-20% of their
patients are not adequately managed by the
current anti-VEGF options, and therefore there is
also a need for more potent alternatives to help
better manage the disease in refractory patients
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Consultants Believe Early OHR-102 Visual Acuity Data Are
Surprising And Intriguing; Final Phase II Data Due Mid-to-Late
March
In June 2014, Ohr announced positive interim topline clinical
results of a Phase II
study in wet AMD. Prior to the positive data release, few had
any expectations for the
program much less an observed visual acuity benefit. However,
since the data
which produced significant visual acuity benefits and our
consultants believe is very
surprising and intriguing that perception has changed and we now
approach the
final Phase II data readout in mid-to-late March with
expectations of a visual acuity
benefit. While there is still substantial risk to any wet AMD
data readout, OHR-102
appears to have a strong possibility of repeating the interim
data. If this occurs, not
only would the perception of the program be strengthened even
more, but it would be
significantly de-risked as it heads into Phase III with the same
exact clinical endpoint.
Upon potential successful final Phase II data, Ohr has stated
that they would be able
to initiate the Phase III program by the end of Q2:2015. We
estimate that the time to
topline data could be 2-2.5 years accounting for 12-18 months of
enrollment and the 9
month primary endpoint. 2.5 years would put the topline data
readout at late 2017.
Since Ohr has Fast Track status, it could begin filing a rolling
NDA submission during
the trial and then submit the final topline 9 month primary
endpoint data in early 2018.
In essence, Ohr could receive approval even before the final
2-year study time point
just like Eylea. This would allow for a potential approval and
launch by early 2019.
Lastly, we would note that this timeline could potentially be
conservative by 6 months.
For Europe, Ohr plans to meet with regulators soon to nail down
the requirements for
the Phase III program. However, we would note that Ohr will be
measuring the primary
endpoint out to 12 months in case they require the standard 12
month endpoint.
Additionally, it will be a global program with clinical sites in
the US and EU. It is quite
possible that the EU submission could come shortly after the US
submission, but we
conservatively assume a year delay in the European launch.
The ongoing Phase II IMPACT study has enrolled 142 patients
(completed in April
2014) and is designed to measure the impact of twice-daily
OHR-102 on visual acuity
in combination with PRN (as needed) Lucentis versus placebo
drops plus PRN
Lucentis. Lucentis retreatment is mandated if any of the
following present on SD-OCT:
retinal cystic changes, retinal fluid, subretinal fluid, or
meaningful RPE elevation. The
primary endpoint was the reduction in frequency of Lucentis
injections at 9 months.
Secondary visual acuity endpoints included mean visual acuity
and the proportion of
patients gaining >3 lines (>15 letters; >3 line
gainers) of vision acuity at 9 months.
The study was randomized, double-masked, and placebo controlled
and enrolled
patients at 23 sites across the US. Enrollment criteria allowed
for treatment nave wet
AMD patients with all lesion compositions (classic and
occult),
-
strip pericytes, which can cause serious health consequences. We
wonder if Ohrs
topical formulation as opposed to Ophthotechs intravitreal
injection may have a
less destructive effect on pericytes and ultimately be safer for
diabetic patients. This
could have significant implications for the DME indication for
which Ohr has a Phase
II program ongoing and is arguably the largest follow-on
indication.
Figure 12 Phase II IMPACT Study Design
Source: Ohr Pharma
The baseline demographics for the IMPACT study were consistent
with the enrollment
criteria described above, which called for enrollment of a wide
swath of patients with
varying disease severity mild, moderate, and severe patients.
Most importantly, the
mean baseline vision of the overall study patient population was
7-10 letters better
than most other wet AMD programs, including the Fovista Phase II
program. In
general, this means that Ohr enrolled relatively healthier
patients with better vision.
Again, this could have provided a ceiling effect. Similarly, 47%
of patients had occult
CNV, which is more moderate disease, while Ophthotechs Phase II
studies enrolled
patients with only classic CNV or more aggressive disease.
Average lesion size was
also on the larger end of the spectrum for the population and
16% of patients were
diabetic.
Most importantly, the mean baseline vision of the
overall study patient population was 7-10 letters
better than most other wet AMD programs,
including the Fovista Phase II program. In
general, this means that Ohr enrolled relatively
healthier patients with better vision. Again, this
could have provided a ceiling effect.
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Figure 13 Baseline Demographics Of Phase II Impact Study
Source: Ohr Pharma; modified by Cowen and Company
The Reduction Of Lucentis Injection Frequency Endpoint Is Not A
Point Of Focus For
Us
Per the study plan, a pre-specified interim analysis was
conducted with ~50% of the
planned total patient enrollment completing the study protocol.
62 patients 29 and
33 in the OHR-102 and placebo arms, respectively completed the 9
month treatment
period at interim. Not surprisingly, the primary endpoint, the
difference in the
frequency of Lucentis injections, did not meet statistical
significance at interim. Given
our knowledge of PRN studies (no difference in year 2 of the
VIEW studies with
Eylea/Lucentis) and the fact that no study has shown the ability
to reduce Lucentis
injections including Ophthotechs Phase II program we were not
surprised by this
result. Furthermore, our panelists at our March 2014 Health Care
Conference stated
that a fewer injections endpoint largely isnt clinically
relevant. Thus, based on the
data (6.2 Lucentis injections for the OHR-102 arm and 6.4 for
the placebo arm), we
find it improbable that this endpoint will meet statistical
significance in the final data
set nor do we care. Sure a reduction in injections would be a
positive outcome, but
ultimately what matters to clinicians is improving visual
acuity. To Ohrs defense, this
primary endpoint was picked almost 4 years ago, where the role
of anti-PDGFs in wet
AMD was significantly less defined. This will not be the primary
endpoint in Phase III.
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Visual Acuity Endpoints Are All That Matter
When analysis was conducted on secondary, more clinically
relevant visual acuity
endpoints, the data suggested a strong visual acuity benefit
across the two most
common endpoints, mean visual acuity and the proportion of >3
line gainers. The
mean change in visual acuity at the end of 9 months for OHR-102
eye drops plus
Lucentis PRN was +10.4 letters versus +6.3 letters for placebo
plus Lucentis PRN a
mean +4.1 letter improvement in visual acuity. Our consultants
note that this 65%
visual acuity benefit is impressive, especially considering the
potential ceiling effect,
described previously. However, it was not statistically
significant (p=0.18) given the
small study size. With that in mind, our consultants note that
it is too early and in too
few patients to believe that OHR-102 wont reach statistical
significance on visual
acuity once the final data reads out. Ohr notes that meaningful
visual acuity
improvements were seen as early as four weeks and the relative
difference in visual
acuity appeared to increase throughout the study as depicted by
the figure below. At
all times points evaluated from 4 to 38 weeks, visual acuity
gains in the OHR-102
group relative to placebo were observed.
Figure 14 Mean Change In Visual Acuity For OHR-102 +Lucentis vs.
Placebo + Lucentis
Source: Ohr Pharma
OHR-102 Hit On The Planned Phase III Primary Endpoint In Few
Patients
Additionally, 48.3% of OHR-102-treated patients showed BCVA
gains of >3 lines (>15
letters) on a standard ETDRS eye chart compared with 21.2% in
the placebo arm
(p=0.025) a statistically significant observation. Additionally,
the effect was
sustained throughout the end of the study with no saw tooth-like
effects that can be
observed with anti-VEGF agent like Lucentis. Overall, our
consultants view both the
mean visual acuity and >3 line gain results as impressive
particularly if they hold up
when the final data reads out in the second half of March. Since
the interim readout,
Ohr has met with the FDA and received confirmation that the
Phase III endpoint will
be the proportion of patients with >3 line visual acuity
gains, which was the exact
secondary endpoint that hit statistical significance at the
interim readout per above in
The mean change in visual acuity at the end of 9
months for OHR-102 eye drops plus Lucentis
PRN was +10.4 letters versus +6.3 letters for
placebo plus Lucentis PRN a mean +4.1 letter
improvement in visual acuity. Our consultants
note that this 65% visual acuity benefit is
impressive, especially considering the potential
ceiling effect, described previously.
Additionally, 48.3% of OHR-102-treated patients
showed BCVA gains of >3 lines (>15 letters) on
a standard ETDRS eye chart compared with
21.2% in the placebo arm (p=0.025) a
statistically significant observation. Additionally,
the effect was sustained throughout the end of
the study with no saw tooth-like effects that
can be observed with anti-VEGF agent like
Lucentis. Overall, our consultants view both the
mean visual acuity and >3 line gain results as
impressive particularly if they hold up when the
final data reads out in the second half of March.
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only 62 patients. Moreover, our consultants suggest that this
endpoint also has a good
chance of reaching statistical significance when the larger,
final 142-patient Phase II
data set reads out by the end of March 2015 as the data in 62
patients gives us a
good feel for OHR-102s efficacy. One consultant remarked that it
would be
shocking if the final data showed no visual acuity benefit as
the first 62 patients are
very typical looking and he would put the odds of success on the
>3 line gainers
endpoint pretty high. If it does, our consultants would also
consider the final Phase
III program employing the exact same endpoint and study design
to be
significantly de-risked. In fact, they believe that upon a
successful readout, OHR-102
would have the same probability of success in Phase III as
Ophthotech which per
previous physician surveys has been pegged at around 75%. One
consultant