BST Trade Alert: June 20, 2014
June 20, 2014
Recommendation:
Buy Regado Biosciences (NASDAQ: RGDO) up to $7.60
About the Company:
Regado Biosciences is a fascinating biotech. It’s pioneering the development of actively controllable antithrombotic drug systems for cardiovascular indications.
The company’s paired aptamer-active control agent technology is revolutionary. It’s designed to give physicians the ability to directly control the degree of antithrombotic activity in real time.
If successful, this technology could change the way certain cardiovascular procedures are performed worldwide.
Regado’s clinical programs are specifically concentrated on acute and sub-acute care injectable anticoagulants.
The company’s lead product candidate, the Revolixys Kit (formerly REG1), is currently in phase 3 clinical testing. And REG2, a subcutaneous formulation of pegnivacogin, has recently completed a phase 1 dose escalation trial.
Anticoagulants are an established multi-billion dollar worldwide market opportunity. But there’s a pressing need for therapeutics with improved safety and flexibility which optimize therapeutic outcomes.
In addition, Regado has an exciting pipeline of aptamer-control agent pairs against platelet adhesion and/or platelet aggregation targets. One product candidate, REG3, was recently selected for clinical development.
This small biotech owns or has pending patent protection for worldwide rights to all of its development products. For the anticoagulant systems, the Revolixys Kit and REG2, patent protection extends through 2025 and beyond.
In addition to a growing development pipeline, Regado boasts a solid financial condition…
After a recent public offering, the company’s cash hoard has grown to approximately $94 million. Management believes it has enough cash to fund the company’s operations and clinical testing program through the first quarter of 2015.
Let’s now take a closer look at the company’s leading product candidate…
About the Drug:
Management believes the Revolixys Kit has the potential to become the standard of care for anticoagulation therapy in percutaneous coronary intervention (PCI) and other cardiovascular procedures. If that were to happen, the product could become a blockbuster for Regado.
PCIs are a hospital-based procedures used to mechanically open or widen obstructed coronary arteries.
A deflated balloon on a catheter is inserted into an artery through an arterial sheath in the groin or wrist. It is then advanced to the site of the blockage and inflated.
Normalized blood flow is restored by opening or widening the artery. And a stent is often placed at the site of the blockage to permanently maintain blood flow.
As you might imagine, PCIs involve significant medical risks.
Blood clots may exist at the blockage or may result from arterial damage caused by the catheter. If blood clotting is not eliminated or controlled, ischemic events – including death, stroke, myocardial infarction or the need for revascularization of the artery- may occur.
Because of these risks, powerful anticoagulant drugs (blood thinners) are administered prior to and throughout the PCI procedure. However, anticoagulants create a significant risk of major bleeding events, such as bleeding into the heart, brain, or other organs, massive internal bleeding, and uncontrolled bleeding at the access site.
These major bleeding events can lead to the patient needing emergency surgery. And they increase the risk of myocardial infarction, stroke, other life-threatening complications, and death.
Another problematic characteristic of most anticoagulants is that their therapeutic effect persists until the drug has been metabolized by the patient. This means the risk of major bleeding events remains long after the PCI procedure is completed.
As a result, patients must wait up to six hours post-procedure before the arterial sheath can be safely removed. This waiting period often increases the patient’s discomfort and requires extended monitoring by medical staff.
Clearly, there’s a major unmet need for a safer and more effective anticoagulation therapy that can be used in PCIs and other cardiovascular procedures.
That’s where the Revolixys Kit comes into play.
The Revolixys Kit is a two-component system consisting of pegnivacogin, a potent anticoagulant, and its specific control agent, anivamersen. Both components are administered solely by IV bolus injection.
Here’s how it works…
Pegnivacogin is administered prior to the start of a PCI procedure and achieves its maximal anticoagulant effect within five minutes of injection. The anticoagulant effect lasts for 24 hours or more unless modulated or eliminated by the specific active control agent.
At the end of a PCI procedure, when the antithrombotic effect of the pegnivacogin is no longer needed, anivamersen is administered to the patient. By adjusting the dose of anivamersen relative to pegnivacogin, the anticoagulant effect can be precisely and rapidly controlled or eliminated.
Regado believes the Revolixys Kit offers major advantages over existing anticoagulation therapies like heparin and bivalirudin…
- Fewer Ischemic Events – Because the anticoagulant effect can be precisely controlled or eliminated, a higher level of anticoagulation can be used during PCI procedures. This should reduce the occurrence of ischemic events.
- Fewer Major Bleeding Events – Because the anticoagulant effect can be modulated or eliminated at the end of the PCI procedure, the risk of major bleeding events can be reduced.
- Lower Overall Treatment Costs – Overall treatment costs should drop due to fewer ischemic and major bleeding events, shorter procedure and recovery times, fewer re-hospitalizations due to complications, increased staff and facility efficiency, and improved patient outcomes.
If these advantages are borne out by clinical testing, there’s no question the Revolixys Kit has potential to be a game changer. And we’re not the only ones who think that’s the case.
In March 2014, the FDA designated the Revolixys Kit a Fast Track development program.
This process is designed to expedite the review of drugs to treat serious conditions that fill an unmet medical need. The overall goal is to get new drugs to patients faster.
We see the FastTrack designation as a good sign the FDA’s optimistic about Regado’s lead product.
The key for our trade, however, is how well the Revolixys Kit performs in its final clinical trial.
After several successful phase 1 and phase 2 studies, the Revolixys Kit is now undergoing a massive phase 3 trial involving more than 13,000 subjects. The study will compare the product to bivalirudin in subjects undergoing a PCI procedure.
The primary efficacy endpoint is a 20% reduction in the occurrence of ischemic events versus bivalirudin. The primary safety endpoint is non-inferiority to bivalirudin for the occurrence of major bleeding events.
Two interim analyses of data from this trial are expected between now and the end of 2014. We expect these to act as potential upside catalysts for the stock.
About the Market for This Drug:
The PCI market is a large and growing market.
The American Heart Association (AHA) reports that approximately 770,000 PCIs were performed in the US in 2013. And Regado estimates that in Europe and the rest of the world the number of PCIs performed last year is approximately 540,000 and 1.2 million respectively.
Now the number of PCIs performed in the US is expected to grow in line with the growth of the population over the age of 45. The US Census Bureau pegs that rate at 1.2% annually over the next decade.
However, PCI growth in emerging countries is expected to explode over that same timeframe.
The number of PCIs performed in China increased 26% annually from 2005 to 2009. And the National Intervention Council estimates that PCI procedures in India will grow at approximately 25% annually.
Based on similar information obtained from other countries, Regado believes comparable increases in PCI procedures are occurring throughout the developing world. And it makes sense when you think about it.
The expected worldwide growth in PCI procedures is due mainly to an expected rise in cardiovascular disease. But it also takes into account other factors like an aging population, increased clinical adoption of PCI procedures, and increasing PCI survival rates.
So, just how much is the market for anticoagulants used in PCI procedures worth?
Based on the estimated cost per procedure of branded anticoagulants, Regado believes this market opportunity is greater than $3 billion annually right now. And as the number of PCI procedures performed worldwide grows, so too will this massive market.
About the Potential Catalyst:
Results from the second of three interim analyses of data from the phase 3 trial of the Revolixys Kit are expected in the third quarter of 2014.
About the Shares:
RGDO was on fire to start the year. The stock soared from its December 31st closing price of $4.77 to a high of $14.10 by March 19th. It was an eye-popping gain of 196% in fairly short order.
But after hitting that high, RGDO fell victim to the sector-wide correction in biotech stocks. It plunged severely in April on exceptionally heavy volume. And by mid-May, the stock had dropped all the way down to a low of $4.95.
The good news is…
RGDO has been moving higher ever since it hit that low. In fact, the stock has traded up to a current price of $6.91 per share. That’s a 40% gain in just one month’s time.
And it looks like the uptrend will continue.
Investors realize that Regado’s product has potential to become the standard of care for anticoagulation therapy in PCI procedures. And based on past clinical trial results, many are expecting more good news from the upcoming interim analyses.
Grab your shares of RGDO as soon as possible. You don’t want to miss out on the potential rewards this biotech stock might provide.
Key Facts:
| Company: | Regado Biosciences |
| Ticker: | RGDO |
| Recent Price: | $6.91 |
| Market Cap: | $232 million |
| Avg. Daily Volume: | 305,661 shares |
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Category: BST Trade Alert
