Investor-pleasing news from the FDA regarding Dublin-based Avadel Pharmaceuticals plc's pivotal phase III trial testing once-nightly sodium oxybate (FT-218) for narcolepsy sparked Wall Street speculation regarding what the update might mean for Jazz Pharmaceuticals plc, also of Dublin, which markets twice-nightly Xyrem (sodium oxybate) in the space.

Shares of Avadel (NASDAQ:AVDL) enjoyed an upward ride to close Monday at $4.47, up $1.10, or 32.6%, on word that the FDA agreed to the company's proposed amendments to the statistical analysis plan and protocol by way of the special protocol assessment (SPA) pact between the company and regulators. That means Avadel can use a lower sample size to prove significance in treating excessive daytime sleepiness and cataplexy in narcolepsy patients. Specifically, the sample size was reduced by about 20%, which trims by as much as 12 months the estimated time to finishing the trial. Avadel expects the pivotal data to read out in the second quarter of 2020.

"The same assumptions that we made previously, we're making now," Avadel's chief medical officer, Jordan Dubow, said during a short and sweet conference call with Avadel backers that lasted fewer than 20 minutes. No modifications have been made to the fundamental design of the study, including the primary or secondary endpoints, dosing scheme or duration of the study, and the SPA remains intact.

Called Rest-On, the study will now target enrolling 205 patients (previously 264). Based on the updated goal and with enrollment already at 193 patients, Avadel expects to complete recruiting by the end of this year. Even with the change, Rest-On is one of the larger experiments conducted to date for the indication.

FT-218 uses Avadel's Micropump technology, a microparticulate system that allows the development of modified and/or controlled release of solid, oral dosage formulations of drugs. It's also part of London-based Glaxosmithkline plc's Coreg CR (carvedilol), an alpha/beta adrenergic-blocking agent approved in October 2006 and indicated for mild to severe chronic heart failure, left ventricular dysfunction following myocardial infarction in clinically stable patients, and hypertension.

What does the FT-218 trial speed-up mean for Jazz with Xyrem? Maybe that the firm will need to get cracking on plans to switch patients to its low-sodium version (92% less than Xyrem), JZP-258. Positive phase III data rolled out in March with the compound. Top-line data from the phase III experiment plus interim data from a 24-week open-label safety study will form the basis for the NDA, which could be filed this year.

Cowen analyst Ken Cacciatore, however, sounded unworried. "Despite this accelerated timing, we remain unconcerned given Jazz's intellectual property protection around its Xyrem franchise," he wrote in a report, reminding investors that "Xyrem revenues are secured until the lead generic challenger [Hikma Pharmaceuticals plc] is allowed (via a controlled launch, with meaningful economics to Jazz) on the market in 2023. Even if Avadel is ultimately successful in its development, [the company] would have to certify to Jazz's Xyrem patents at the time of filing, which would be unlikely to occur until late 2020, at which point Jazz would initiate litigation that would carry a 30-month stay." The lawsuit would probably prevent the ability for a launch until closer to 2023, "which would be at or near the same time of the Hikma generic introduction, and this timing would still assume that Avadel could invalidate what our consultants believe is a very strong combination-use patent."

What's more, Cacciatore said he believes that the pharmacokinetic (PK) data that Avadel has offered suggest the drug is "not competitive, and in our view, there remains a likelihood that Avadel's formulation does not appropriately match the current Xyrem twice-nightly dosing profile, and therefore may not provide the same therapeutic benefit."

Takeda talking big

Leerink's Ami Fadia was less optimistic for Jazz and modeled FT-218 taking 30% of the market share long-term. "We continue to believe the convenience offered by the once-nightly version of sodium oxybate will resonate well with the patients, although the payers' preference will still likely be driven by pricing," she said in a report, pointing out that the would-be early 2021 launch puts FT-218 only about six months behind JZP-258, "which will leave a much shorter time window for Jazz to launch JZP-258 and switch as many patients from Xyrem to JZP-258 as possible. This new scenario may also have more profound implication on Jazz's settlements with the generic Xyrem sponsors," in her view. At the same time, "it will not be an easy task for Avadel to enter this market by going it alone, given the complexity of the risk evaluation and mitigation strategy [REMS] system and the required physician education," she said, recalling that "even Jazz experienced sales disruption when it made changes to Xyrem's REMS a few years back" and predicting that FT-218 will face a slow launch.

Shares of Jazz (NASDAQ:JAZZ) ended Monday at $129.23, up 2 cents.

Also in the mix is once-daily Wakix (pitolisant) from Harmony Biosciences LLC, of Plymouth Meeting, Pa. Cleared by the FDA in August for excessive daytime sleepiness (EDS), the histamine receptor antagonist/inverse agonist was licensed from Bioprojet Societe Civile de Recherche in France. Fadia said at the time that she saw little threat from Wakix to Jazz's recently approved EDS drug, Sunosi (solriamfetol), but did see prospects for Wakix to "expand the treated patient pool" in light of good tolerability and minimal interaction with the current standard of care for EDS, modafinil and Xyrem. (See BioWorld, Aug. 16, 2019.)

In play, too – more so lately – is Tokyo-based Takeda Pharmaceutical Co. Ltd.'s TAK-925, a small-molecule orexin 2 receptor agonist for narcolepsy. The drug won Sakigake designation in Japan, which is reserved for Japan-developed drugs which offer a "radical improvement to existing therapy." Evercore ISI's Umer Raffat noted in a video for investors that "it's very unusual for a company the size of Takeda to talk up a phase I program. The words they are using are along the lines of 'number-one corporate priority' and 'unprecedented.' If you look at the early data on this drug, its utility is well beyond just EDS. It could have activity in cataplexy" and other indications, he said.

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