Coverage Indicates 3X Greater Revenue Potential

Coverage Indicates 3X Greater Revenue Potential for Brilacidin Oral Rinse

On Monday (December 2, 2019), Credit Suisse initiated coverage on Galera Therapeutics (NASDAQ: GRTX), the company that we view as our closest and most relevant competitor in developing a new treatment for chemoradiation-induced severe Oral Mucositis (OM). Galera is currently conducting a phase 3 trial for GC4419 for the indication. Upon review of the coverage, we noticed several important components of the analysis that, in our opinion, speak directly to the value of Brilacidin Oral Rinse, our defensin-mimetic drug candidate in development for severe OM.

Our previous estimate of the OM market opportunity for Brilacidin Oral Rinse was conservative. The Credit Suisse analysis reinforces both the tremendous opportunity and the fact that we were indeed conservative in our market projections. It also makes several other observations that we believe support our developmental pathway to build substantial value. (Note: all discussions going forward regarding commercialization of any drug candidates mentioned are assuming future health authority approvals.)

Most glaring was the analyst’s model projecting a course of treatment for Galera’s GC4419 at $15,400 (net). The price point is viewed as in-line with other supportive care treatments.

We conservatively modeled our Brilacidin Oral Rinse pricing at $5,000 for a course of treatment, leaving plenty of room for upward adjustment while providing the opportunity for a decisive pricing advantage.

Next, the analyst sees a larger patient population than what we indicated in our public estimates. Credit Suisse estimates that 65-75% of all Head and Neck Cancer (HNC) patients have treatment regimens that include Intensity-Modulated Radiation Therapy (IMRT) and that up to 70% of those patients receiving IMRT develop severe OM (WHO Grade 3-4).

Our estimates were held to the low end of 65% of HNC patients receiving IMRT.

When it comes to challenges, the analyst sees the IV administration of GC4419 as a major hurdle. This is due to the fact that GC4419 is administered via 60-minute IV infusion before every IMRT fraction. Furthermore, many radiology centers do not even have the infrastructure for the infusions, nor does it seem that they would be incentivized to make the investment to perform the infusions. We remind you that Soligenix’s OM drug candidate dusquetide (SGX942 – also in a Phase 3 trial) is also administered via IV infusion, albeit at a shorter infusion duration and infusion frequency. The analyst notes that patients may prefer less-invasive, self-administered treatments.

Brilacidin Oral Rinse is a “rinse and spit” administration that can be performed anywhere, which we believe will emerge as the preferred delivery method. Further, logistical concerns related to IV administration (a potential limiting issue with GC4419 and SGX942) are a non-factor with Brilacidin.

Logistical challenges are likely to mitigate market penetration for GC4419. Despite the dire need for drugs treating and preventing severe OM, the IV delivery method is expected to see GC4419 peaking at 33% penetration of the overall addressable market. Still, that equates to approximately 13,200 patients annually (~40,000 total market / 33%). In the U.S. alone – assuming FDA approval in 2023 – sales of GC4419 are forecast to peak at >$200 million annually in 2025 (13,200 x $15,400 = $203.3 million).

We assume that the delivery method of Brilacidin Oral Rinse would lead to far greater penetration of the addressable market. Peak sales could be significantly higher with greater market penetration, even with a slightly lower price point. We also believe that expansion into international markets, where total peak sales could then potentially exceed $500 million annually, is much easier for an oral rinse formulation versus IV.

The analyst notes the difference in the endpoints in the Phase 3 trials of Galera’s GC4419 and Soligenix’s SGX942. Soligenix is targeting “duration” of severe OM. Galera is targeting “reduction of incidence” of severe OM. We are of the same opinion as the analyst that reduction in severe OM incidence is clearly a differentiating factor. In other words, it is more valuable to prevent severe OM from occurring in the first place as compared to shortening how long it lasts after onset.

Our Brilacidin Oral Rinse is being developed to reduce the incidence of severe OM. Duration is a secondary endpoint for us. Data from our Phase 2 trial also showed on average a shorter duration.

We invite interested parties to see our review comparing clinical data of severe OM drugs in development at: http://www.ipharminc.com/new-blog/2018/9/24/b...l-om-drugs

In full disclosure, we note that our clinical trials of Brilacidin Oral Rinse have enrolled less patients than those enrolled in the trials of GC4419 and SGX942 by Galera and Soligenix, respectively. As mentioned, both of those drug candidates have advanced to phase 3 trials, which we hope to commence in 2020. While we are optimistic about the data collected to date on Brilacidin Oral Rinse, we recognize that larger, Phase 3 trials are necessary to further validate the safety and efficacy of the drug candidate.


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