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Mapi Pharma Needs A Successful IPO For Ambitious Blockbuster Plans



February 10, 2016 – Comments (0) | RELATED TICKERS: TEVA , NVS , MNTA

A number of companies in the biotech space have struggled to realize IPO plans over the last twelve months, but none more so than Mapi Pharma. The company tried for a NASDAQ listing as early as Summer 2014, but dropped out of a crowded IPO market on fears it wouldn’t meet its target raise. Another attempt soon followed, and a third in September last year, but as of today, the company remains in private hands. Two weeks ago we learnt that Mapi is gearing up for a fourth run at the NASDAQ, and this time around it needs to see it through.

Despite a couple of successful funding rounds, the company doesn’t have the cash to fund a pivotal phase III for its lead candidate. It’s targeting a $50 million raise, and if it meets this target and funds a successful phase III, it could be targeting a blockbuster market with just one element of its pipeline. Here’s a look at what a NASDAQ listing really means for Mapi.

Readers may be familiar with generic behemoth Teva Pharmaceutical Industries’ (NYSE:TEVA) multiple sclerosis (MS) blockbuster, Copaxone. Mapi’s lead, which is yet to be commercially named but goes by the tag Glatiramer Acetate Depot, is a reformulation of Copaxone, with one major difference, which we’ll get to shortly, just to build up tension.

The biological background is that in patients with MS, T cells cross through the blood-brain barrier and attack the myelin that surrounds and insulates neurons. This breakdown causes inflammation, which leads to further blood-brain barrier damage, an increase in T cells crossing through to the brain, which then attack more myelin, and the cycle continues. Glatiramer acetate, for reasons nobody really understands yet, shifts the balance of T cells that cross into the brain from a type called TH1 to one called TH2. TH1 are inflammatory while TH2 are not, so the shift reduces inflammation and helps to counter the damage.

Copaxone is the most widely used version of this treatment, and has become the standard of care for a large portion of MS sufferers. It generates a sizeable piece of Teva’s annual revenues. So much so, that last year Novartis AG (NYSE:NVS), via its subsidiary Sandoz, and in partnership with Momenta Pharmaceuticals Inc. (NASDAQ:MNTA) spent hundreds of millions creating a generic version, which is now approved and costs far less than Teva’s formulation.

So if Teva already has Copaxone on the market, and Novartis has its own generic approved, why is Mapi raising money to trial and commercialize its own brand? Well, there is that one major difference – administration frequency. All three treatments require intravenous administration, and a large portion of patients suffer from severe site adverse events – they just put up with it because they are an improvement on the MS symptoms the drug depletes. Copaxone used to be a daily administration, but Teva introduced a three times weekly administration while it was entrenched in legal battles to stop Novartis getting the green light. Novartis’ generic remains a once daily therapy. Mapi’s candidate is an extended release formulation. If approved, patients will only need to get the injection once a month – the benefits of this from a market perspective are obvious.

The market potential if approved is a multi-billion dollar one. Teva generated $4.2 billion during 2014 from Copaxone. Novartis’s drug isn’t eating away at that $4.2 billion figure to the extent at which analysts expected it might. Third quarter sales of Copaxone came in just 2% lower than they did across the same period a year earlier, which is a good thing for Mapi. Why? Because it shows that the MS population is willing to forego extra cost to reap the benefits of a reduced administration schedule, and that’s just from daily to three days a week. If approved, Mapi could price its version on par with Copaxone, and offer patients a one in thirty-day regimen. The company has stated, however, that it expects to price its version below Copaxone, which only adds to its allure.

It’s important to remember these are still early days. The only data we’ve gotten to rely on is preclinical. Mapi demonstrated a 90.6% release rate across a 30 day period in an in-vitro study.

The company is running a small phase II that is investigating safety and efficacy across two doses, 40mg and 80mg, and as yet we’ve not gotten any results. In its F1, filed January 22, 2015, the company outlined its intentions to submit an IND to the FDA this quarter, and kick off a phase III to run concurrently with the ongoing phase II. Mapi also expects to report interim analysis from the phase II sometime during the second half of this year.

Safety and tolerability will also play into the equation of course, but as long as we see nothing serious, the benefit profile of the once monthly dosing should have more weight than site adverse events associated with injection, even if they are more serious than those associated with Copaxone. A preliminary study conducted by Mapi supports this hypothesis, reporting that 76% of such patients would be willing to switch to Glatiramer Acetate Depot even if the drug may cause increased injection site adverse events. It’s only a small study (n=37), but it bodes well for the drug’s chances if it gets a nod from the FDA. Beyond that, the company has slated 2019 as a preliminary commercialization timeframe.

As of September 30, 2015, Mapi held $3.69 million in cash and equivalents, and the company reported a net loss across the nine months ended September 30 of $3.88 million, down YoY from $5.39 million, with the 30% decline attributable to a narrowed focus on its lead candidates.

The conclusion being that Mapi is in a precarious yet exciting position. Biotech is being slaughtered now, which is not so great for an IPO but good for those interested in buying some shares cheaper than they otherwise would be. Mapi needs a successful IPO to remain a going concern, never mind fund a phase III to commercialization. Having said this, it’s lead candidate has the potential to disrupt a $4-billion-dollar market by significantly improving upon the dosing regimen of current offerings marketed by industry giants. The interim phase II release will be crucial to market sentiment, and if the company can demonstrate equivalency in the phase 2, expect some immediate upside post release. It’s a medium term play that likely won’t bear fruit until the end of the decade, but assuming the IPO goes ahead, one that’s well worth a look.

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