Swiss-Based ObsEva Gains In Women's Health

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Swiss-Based ObsEva Gains In Women’s Health

Women’s reproductive health is again in the news as President Trump seeks to fill the Supreme Court vacancy, created by the retirement of Justice Anthony Kennedy.

While it was once fertile ground for Big Pharma, investors are now realizing this huge market is more the domain of specialty biopharma companies, such as ObsEva SA (OBSV), a Swiss-based company listed on the Nasdaq stock exchange. 

Documenting Big Pharma’s shift away from women’s reproductive health is a scientific report, “Developing New Pharmaceutical Treatments for Obstetric Conditions,” published by the Royal College of Obstetricians and Gynecologists.

“(P)harmaceutical companies are increasingly concentrating their efforts on areas with a higher potential return on investment,” writes a medical team led by Dr. A.L. David.  

Though the peer-reviewed paper points to hurdles, such as costly drug development, protracted clinical trials and intense regulatory scrutiny, achieving a medical breakthrough in women’s reproductive health can lead to huge profits and higher stock prices. 

And all indications are that ObsEva has charted such a course.

In fact, its stock price is up over 10% since June 6, when this column cited ObsEva as a stock to watch.  Despite the recent price appreciation, Kennan MacKay of RBC Capital Markets continues to view ObsEva’s shares as “overlooked and undervalued.” 

Driving recent interest in the stock was the June 18 report of a successful phase 2 clinical trial for linzagolix, a treatment for endometriosis-associated pain.  Endometriosis is a disorder in which tissue that normally lines the uterus grows outside the uterus and can be found on the ovaries, fallopian tubes or the intestines. The most common symptoms are pain and menstrual irregularities.

The World Endometriosis Research Foundation estimates there are approximately 176 million women worldwide (one in 10) who suffer from the condition, and the healthcare costs are staggering.

In the U.S. alone, more than $80 billion is spent annually on surgeries, monitoring tests, hospitalization and doctor visits.  And the combined costs in Germany, the U.K., France and Italy are $60 billion.

ObsEva’s clinical trial for endometriosis, dubbed EDELWEISS, is being conducted in the U.S. and Eastern Europe. The June 18 news of the positive data results, which primarily tested the ability of the compound to reduce pain symptoms and minimize the effect of the treatment on bone mineral density, pushed up the stock price of ObsEva by as much as 33% on an intraday basis.

As a result of the trial’s success, RBC’s MacKay raised his price target on ObsEva to $34 a share.  The stock closed yesterday at XX.

Meanwhile, ObsEva’s clinical trial pathway for uterine fibroids, known as PRIMROSE, is further along in the development process, with recruitment under way for a final stage Phase 3. This trial is designed to test drug safety and efficacy for reducing heavy bleeding associated with uterine fibroids. The study is expected to be completed in 2019.

Nearly 80% of women develop fibroids by the time they are 50 years old. In the U.S. alone, there are more than 200,000 hysterectomies performed annually to eliminate fibroids, with the associated health care costs estimated to be about $2.1 billion.

Though ObsEva has competition in the development of new therapies for uterine fibroids and endometriosis, its decided advantage is in designing treatments that provide more choices for women, including a variety of dose levels and the option of an additional compound to restore bone mineral.

The third offering in development is OBE022, which would be a first-in-class therapy for reducing inflammation, contractions, and other physical changes leading to pre-term labor. The treatment is going into a Phase 2a proof-of-concept trial.

Another important area of women’s reproductive health where ObsEva is advancing an improved therapy is in vitro fertilization (IVF).  In February, ObsEva released positive topline results from a Phase 3 clinical trial of Nolasiban, a therapy to improve pregnancy rates related to IVF procedures. Importantly, Nolasiban has no known competition.

The search for improved IVF pregnancy rates is generating an increased level of interest among women of childbearing age. The World Health Organization has identified infertility, which is clinically defined by an inability to conceive after 12 months, as a global health issue.  The primary cause in the rise of infertility is believed to be the decision of more women to postpone childbearing to their mid-thirties in favor of the pursuit of careers and active lifestyles.

The average cost in the U.S. of one IVF treatment cycle is about $12,000. Nearly 250,000 cycles of assisted reproductive technology are completed in the U.S. every year, and in Europe, that number is about 700,000. But not all cycles produce a pregnancy, leading to repeat IVF treatments.  Typically, success requires at least two and sometimes three cycles. 

Due to the expense and failure rates, women often opt for multiple pregnancies.  But carrying more than one baby to term leads to heightened health risks such as premature birth.  The U.S. Institute of Medicine has calculated the annual costs associated with pre-term birth at more than $26 billion.  So improving success rates is a core goal of ObsEva’s IVF therapy.

And results from the trial, IMPLANT2, showed the treatment improved the 10-week pregnancy rate by 25%, with the data favoring an embryo transplantation on the fifth day after fertilization. Live birth data is expected to be announced in the final quarter of this year. And, in 2019, safety data from a six-month checkup of newborns, is expected.

Since the IMPLANT2 trial was conducted only in Europe, ObsEva plans to launch a similar Phase 3 trial for the therapy in the U.S., which is classified as IMPLANT3.  The Phase 3 U.S. trial will be restricted to Day 5 transplantation, conforming to the current standard of care.

Biren Amin, equity analyst at investment firm Jefferies, figures ObsEva could achieve peak combined annual sales of $1.1 billion for the treatment of uterine fibroids and endometriosis in the U.S. and European Union markets, and estimates another $58 million in revenues in the EU alone from Nolasiban.  Thus, Nolasiban U.S. sales as well as the treatment for pre-term labor “represents upside to the current estimate,” he notes.

ObsEva, which has established an encouraging pipeline of therapies, is led by a strong management headed by Dr. Ernest Loumaye, its CEO. With his medical and Ph.D. degrees, Dr. Loumaye ran the reproductive medicine unit at Universite catholique de Louvain (UCL) hospital in Brussels. In addition to a successful career as an OB/GYN medical doctor and professor, Dr. Loumaye brings to ObsEva a track record of a proven entrepreneur.

In 2006, he raised $75 million and founded Preglem SA, a Swiss specialty biopharmaceutical company, where he served as CEO from 2006 to 2012. The company’s lead drug to help women suffering from fibroids gained regulatory approval, and in 2010, Richter Gedeon of Hungary purchased Preglem for €337 million, or $465 million, providing investors with a 600% return on their investment.  

With Dr. Loumaye’s positive performance at ObsEva to date, it suggests that investors should never underestimate the importance of a proven management.

  

 

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Swiss-Based ObsEva Gains In Women’s Health

Women’s reproductive health is again in the news as President Trump seeks to fill the Supreme Court vacancy, created by the retirement of Justice Anthony Kennedy.

While it was once fertile ground for Big Pharma, investors are now realizing this huge market is more the domain of specialty biopharma companies, such as ObsEva SA (OBSV), a Swiss-based company listed on the Nasdaq stock exchange. 

Documenting Big Pharma’s shift away from women’s reproductive health is a scientific report, “Developing New Pharmaceutical Treatments for Obstetric Conditions,” published by the Royal College of Obstetricians and Gynecologists.

“(P)harmaceutical companies are increasingly concentrating their efforts on areas with a higher potential return on investment,” writes a medical team led by Dr. A.L. David.  

Though the peer-reviewed paper points to hurdles, such as costly drug development, protracted clinical trials and intense regulatory scrutiny, achieving a medical breakthrough in women’s reproductive health can lead to huge profits and higher stock prices. 

And all indications are that ObsEva has charted such a course.

In fact, its stock price is up over 10% since June 6, when this column cited ObsEva as a stock to watch.  Despite the recent price appreciation, Kennan MacKay of RBC Capital Markets continues to view ObsEva’s shares as “overlooked and undervalued.” 

Driving recent interest in the stock was the June 18 report of a successful phase 2 clinical trial for linzagolix, a treatment for endometriosis-associated pain.  Endometriosis is a disorder in which tissue that normally lines the uterus grows outside the uterus and can be found on the ovaries, fallopian tubes or the intestines. The most common symptoms are pain and menstrual irregularities.

The World Endometriosis Research Foundation estimates there are approximately 176 million women worldwide (one in 10) who suffer from the condition, and the healthcare costs are staggering.

In the U.S. alone, more than $80 billion is spent annually on surgeries, monitoring tests, hospitalization and doctor visits.  And the combined costs in Germany, the U.K., France and Italy are $60 billion.

ObsEva’s clinical trial for endometriosis, dubbed EDELWEISS, is being conducted in the U.S. and Eastern Europe. The June 18 news of the positive data results, which primarily tested the ability of the compound to reduce pain symptoms and minimize the effect of the treatment on bone mineral density, pushed up the stock price of ObsEva by as much as 33% on an intraday basis.

As a result of the trial’s success, RBC’s MacKay raised his price target on ObsEva to $34 a share.  The stock closed yesterday at XX.

Meanwhile, ObsEva’s clinical trial pathway for uterine fibroids, known as PRIMROSE, is further along in the development process, with recruitment under way for a final stage Phase 3. This trial is designed to test drug safety and efficacy for reducing heavy bleeding associated with uterine fibroids. The study is expected to be completed in 2019.

Nearly 80% of women develop fibroids by the time they are 50 years old. In the U.S. alone, there are more than 200,000 hysterectomies performed annually to eliminate fibroids, with the associated health care costs estimated to be about $2.1 billion.

Though ObsEva has competition in the development of new therapies for uterine fibroids and endometriosis, its decided advantage is in designing treatments that provide more choices for women, including a variety of dose levels and the option of an additional compound to restore bone mineral.

The third offering in development is OBE022, which would be a first-in-class therapy for reducing inflammation, contractions, and other physical changes leading to pre-term labor. The treatment is going into a Phase 2a proof-of-concept trial.

Another important area of women’s reproductive health where ObsEva is advancing an improved therapy is in vitro fertilization (IVF).  In February, ObsEva released positive topline results from a Phase 3 clinical trial of Nolasiban, a therapy to improve pregnancy rates related to IVF procedures. Importantly, Nolasiban has no known competition.

The search for improved IVF pregnancy rates is generating an increased level of interest among women of childbearing age. The World Health Organization has identified infertility, which is clinically defined by an inability to conceive after 12 months, as a global health issue.  The primary cause in the rise of infertility is believed to be the decision of more women to postpone childbearing to their mid-thirties in favor of the pursuit of careers and active lifestyles.

The average cost in the U.S. of one IVF treatment cycle is about $12,000. Nearly 250,000 cycles of assisted reproductive technology are completed in the U.S. every year, and in Europe, that number is about 700,000. But not all cycles produce a pregnancy, leading to repeat IVF treatments.  Typically, success requires at least two and sometimes three cycles. 

Due to the expense and failure rates, women often opt for multiple pregnancies.  But carrying more than one baby to term leads to heightened health risks such as premature birth.  The U.S. Institute of Medicine has calculated the annual costs associated with pre-term birth at more than $26 billion.  So improving success rates is a core goal of ObsEva’s IVF therapy.

And results from the trial, IMPLANT2, showed the treatment improved the 10-week pregnancy rate by 25%, with the data favoring an embryo transplantation on the fifth day after fertilization. Live birth data is expected to be announced in the final quarter of this year. And, in 2019, safety data from a six-month checkup of newborns, is expected.

Since the IMPLANT2 trial was conducted only in Europe, ObsEva plans to launch a similar Phase 3 trial for the therapy in the U.S., which is classified as IMPLANT3.  The Phase 3 U.S. trial will be restricted to Day 5 transplantation, conforming to the current standard of care.

Biren Amin, equity analyst at investment firm Jefferies, figures ObsEva could achieve peak combined annual sales of $1.1 billion for the treatment of uterine fibroids and endometriosis in the U.S. and European Union markets, and estimates another $58 million in revenues in the EU alone from Nolasiban.  Thus, Nolasiban U.S. sales as well as the treatment for pre-term labor “represents upside to the current estimate,” he notes.

ObsEva, which has established an encouraging pipeline of therapies, is led by a strong management headed by Dr. Ernest Loumaye, its CEO. With his medical and Ph.D. degrees, Dr. Loumaye ran the reproductive medicine unit at Universite catholique de Louvain (UCL) hospital in Brussels. In addition to a successful career as an OB/GYN medical doctor and professor, Dr. Loumaye brings to ObsEva a track record of a proven entrepreneur.

In 2006, he raised $75 million and founded Preglem SA, a Swiss specialty biopharmaceutical company, where he served as CEO from 2006 to 2012. The company’s lead drug to help women suffering from fibroids gained regulatory approval, and in 2010, Richter Gedeon of Hungary purchased Preglem for €337 million, or $465 million, providing investors with a 600% return on their investment.  

With Dr. Loumaye’s positive performance at ObsEva to date, it suggests that investors should never underestimate the importance of a proven management.

  

 



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