Expert Financial Analysis and Reporting

Investment Opinion

Map Pharmaceuticals is poised to introduce its first commercial product, Levadex (inhaled dihydroergotamine) that is indicated for treating acute migraine attacks. I consider Levadex to be a very important new drug with significant commercial potential. The PDUFA date is March 26, 2012.

 

Triptans (Imitrex, Axert, Frova, Maxalt, Relpax, Treximet and Zomig) are the most widely used drugs used to treat acute migraine and account for around 10 million prescriptions written each year. Each prescription contains about 10 individual treatments for acute migraine attacks. This suggests that there are roughly 100 million doses of triptans sold each year. About 25% of patients do not respond to triptans and this is the market Levadex will initially address.

 

Physicians treating migraines generally prescribe a generic version of the original triptan drug Imitrex to each new acute migraine patient and if this doesn’t work, they will prescribe a second triptan and perhaps a third. The market for Levadex initially will be for patients who fail to respond to two or three triptan drugs. This is about 25% of triptan treated patients and represents an addressable market of roughly 2.5 million prescriptions or 25 million doses per year. Generic triptans are priced at about $10 per dose and branded triptans are priced at $25 per dose. I expect Levadex to be priced in line at least in line with the branded triptans and more likely at a premium so that its addressable market is roughly $625 million or more (25 million doses multiplied by $25+ per dose).

 

MAPP announced a partnering deal with Allergan in which both parties will market Levadex to neurologists and pain specialists. The partners will share costs and split profits 50/50 in this market segment. It is estimated that about 20% of annual triptan prescriptions are written by the physicians targeted by this collaboration. Allergan is already marketing Botox to this group of physicians and adding Levadex to treat acute attacks would be complimentary to Botox. Botox is used to treat chronic migraine patients who suffer 15 or more attacks per year. Even after Botox treatment these patients still suffer around 7 or 8 attacks per year so that Levadex should complement Botox very well.

 

MAPP has retained all marketing rights to Levadex for physicians (largely GPs) who write the remaining 80% of triptan prescriptions in the US. MAPP exclusively owns all foreign commercial rights with the exception of Canada where Allergan will also co-promote. I expect partnering deals for these two market segments could be consummated in 1H, 2012. I would expect upfront payments of $30 to $60 million and mid-teens royalties from these deals. If Levadex is approved in March 2012, MAPP will receive another $50 million milestone payment from Allergan upon first commercial sale and possibly $25 million more dependent on whether milestones related to labeling are achieved.

 

The anticipated cash inflow from Allergan and anticipated partnering milestones would bulwark an already strong balance sheet which had $111 million of cash at the end of 3Q, 2011. I estimate that the operational burn for 4Q, 2011 and the four quarters of 2012 will be about $55 million so that MAPP could end 2012 with $150 to $225 million of cash. My sales and earnings model projects a burn rate of about $21 million in 2013 and profitability in 2014. The company has an exceptionally strong financial position.

 

An already strong patent portfolio was bolstered by a recently issued pharmacokinetic profile patent that promises to provide protection from generics until 2028. Another important barrier to entry for a generic would probably be the difficulty in duplicating the action of the Tempo inhaler. It is likely that any company that wanted to market an inhaled dihydroergotamine inhaler would have to develop their own device and then do their own phase III trial. The resultant product could receive approval, but would not likely be interchangeable with Levadex. I think that Levadex holds the promise of an exceptionally long life cycle.

 

A summary of my estimates for Levadex sales and royalties and resultant EPS for the 2011 to 2016 period is as follows:

 

	Levadex Worldwide Sales and Royalties ($000)
	2012	2013	2014	2015	2016
US Levadex Sales
Allergan Map collaboration	13,000	32,000	60,000	100,000	135,000
Sales not covered by AGN collaboration	5,000	23,000	50,000	100,000	140,000
Sub-total	18,000	55,000	110,000	200,000	275,000
Foreign sales	0	9,750	24,000	45,000	75,000
Total worldwide sales	18,000	64,750	134,000	245,000	350,000
	Levadex Royalties ($000)
Royalties on
US sales not covered by collaboration	500	2,760	7,000	16,000	25,200
Foreign sales	0	1,170	3,360	7,200	13,500
Total worldwide royalties	500	3,930	10,360	23,200	38,700
Fully diluted EPS	$0.26	$2.67	($0.63)	$0.49	$2.52
Note: 2012 results include milestone payments of $120 million. Without these payment the loss per share would be $1.07
Source: SmithOnStocks

 

My 2015 target price for MAPP is based on applying a 20x P/E ratio to 2016 projected EPS. This results in a $50 price target for 2015. I think that the long term prospects for the stock are very appealing, but I am quite concerned about near term sales projections from Wall Street. My 2012 sales estimate for the Allergan-Map collaboration is $13 million. However, two highly respected Wall Street analysts are estimating $85 million and $143 million respectively. My conservatism is based on the slow uptake that has characterized most biotechnology launches over the last few years. Human Genome Science’s Benlysta, Cadence’s Ofirmev and Savient’s Krystexxa come to mind. Each of these launches was disappointing relative to Street expectations due to managed care hurdles and cautious physician adoption of new products.

 

This presents me with a quandary. I have owned the stock for nearly two years and will continue to do so. However, if my estimates on the Levadex launch are correct, the stock could react negatively in 2012, the first year of the launch, if sales fail to measure up to high expectations. I don’t quite know what to tell investors. I think that at a price of $13 to $14 per share that the stock is very attractive for the long term based on my analysis. And yet, the stock could be impacted if the launch of Levadex is in line with my projections and analysts have to bring down near term sales estimates. One possible approach would be to acquire a position over time spaced out from pre-approval to the point in time when the launch outcome can be better predicted. This is essentially an average in strategy.

 

Company Overview

MAP Pharmaceuticals (MAPP) is a specialty pharmaceutical company developing inhaled medications which can improve the therapeutic profile of both old and new drugs. Its lead product Levadex has been developed for the acute treatment of migraine attacks. It is an inhaled dosage form of dihydroergotamine mesylate (DHE), a generic drug which has been used for over 60 years to treat migraines. Because of poor bioavailability, DHE has primarily been administered with injections and this has limited its use largely to hospital emergency rooms. There is also an intranasal version of DHE called Migranal that has had limited usage due to poor bioavailability, side effect issues and interactions with other drugs.

 

A phase III trial of Levadex produced very positive results, so much so that the FDA notified the company that it would not require a second phase III trial for approval. MAPP also has successfully concluded a number of trials designed to address potential safety concerns. The NDA has been submitted, accepted by the FDA and Levadex has a PDUFA date of March 26, 2012.

MAPP signed a lucrative partnering agreement with Allergan to co-market Levadex to neurologists and pain specialists in the US and Canada; these targeted specialists account for around 20% of the prescriptions written for acute migraine. MAPP intends to build a 50 person specialized sales force to work alongside Allergan and is also evaluating options to commercialize Levadex in physician specialties beyond the Allergan agreement. It is in discussions with other companies to market to primary care and other physicians not included in the Allergan agreement in the United States. The company is also in discussions with potential partners about commercialization opportunities outside the US.

 

I believe that Levadex is an important new therapeutic option for migraine sufferers and has blockbuster commercial potential. I have heard key opinion leaders describe it as a therapeutic home run. Phase III trial results were very positive in meeting four primary endpoints required by the FDA and a number of safety studies have shown Levadex to have a clean side effect profile. This leads me to believe that there is a very high probability for approval on its March 26, 2012 PDUFA date. However, the FDA has become a highly risk adverse and erratic decision making agency and I cannot rule out the FDA coming up with some issue that I have not considered that could result in a Complete Response Letter. This is a small, but finite risk.

 

The use of an inhaled dose of DHE as is the case with Levadex allows the drug to be employed outside the hospital. Another very important point of Levadex is that it has altered the pharmacokinetic profile of DHE with the result that it has meaningfully improved the side effect profile. By averting the sharp spike in blood levels that occurs with intravenous or injectable formulations, Levadex has reduced the incidence of nausea that plagues these dosage forms of DHE from a 30% level to 2.0%. In fact, in the phase III clinical trial, the incidence of nausea with Levadex at 2.0% was less than the 4.5% seen with the placebo control.

 

MAPP’s Technology Platform

MAPP has a versatile and strong technology platform that is based on two key components. The first is the creation of drug particles and formulations that can be applied to small molecules like dihydroergotamine and potentially to peptides and proteins that allows them to be delivered through inhalation. The second is the development, engineering and manufacturing of aerosol delivery devices, such as the Tempo inhaler used with Levadex. Tempo is a proprietary, pressurized metered dose inhaler that dispenses drug automatically when the patient inhales.

 

In the case of Levadex, MAPP has been able to develop an inhaled dosage form that allows for easy self-administration by the patient as contrasted with the injectable formulations of DHE that are used in hospitals. It has also been able to improve the pharmacokinetic profile of dihydroergotamine so that it has retained the efficacy of injectable DHE while largely eliminating side effects, most notably nausea. In comparison to the nasally inhaled DHE product Migranal, Levadex’s superior pharmacokinetics has dramatically increased efficacy, significantly reduced side effects and nearly eliminated drug interactions that are a serious issue with Migranal.

 

This technology platform can be used to develop additional products, which like Levadex can meaningfully improve the delivery, efficacy and safety of older drugs. One of its most important aspects is that it is very hard for generic companies to challenge products developed by MAPP. Generics depend for success on a clear recipe for copying innovative drugs such as a small molecule with a known chemical composition. The technology of MAPP uses a great deal of art that is not readily available and is hard to duplicate. The engineering and art that goes into the inhalation device is similarly difficult to copy.

 

It is probably the case that companies trying to market an inhaled DHE product will not be able to follow the relatively simple process usually used in introducing generics which is based largely on showing comparable pharmacokinetics. Based on current state of the art regulatory practices, they may have to do clinical trials to gain approval and even with success they would not be deemed substitutable for Levadex. The bane of existence for many small, innovative drug companies is short product life cycles due to successful generic challenges. In this regard, MAPP is much more differentiated and more strongly positioned.

 

Background on Migraines

Migraine is a chronic condition characterized by recurring moderate to severe headaches. According to the National Headache Foundation, approximately 30 million people in the United States or roughly 1 in 10 Americans suffer from migraines. In terms of incidence, this disease is more prevalent than asthma and diabetes. The World Health Organization considers migraines as one of the world’s most disabling illnesses.

 

Migraines are more common in women, with about 18% affected versus 6% of men. Most migraines occur in the 25 to 55 age group. The causes are not well understood but it is generally believed that vascular and neural influences combine to cause migraines: (1) stress triggers changes in the brain, (2) causing serotonin and/or histamine to be released, (3) which leads to blood vessel constriction and (4) also results in the release of neurotransmitters causing inflammation and pain.

 

Most migraines occur as moderate to severe throbbing headaches that affect one side of the brain. The onset is usually gradual and the patient can often sense that a migraine is about to occur. About 30% of patients perceive a transient visual disturbance called an aura that is a signal that the migraine is imminent. The pain associated with an attack peaks and then subsides over a period that generally lasts from 4 to 72 hours. Frequency can range from a few attacks in a lifetime to several per week. The typical frequency of attacks is estimated to be 1 to 2 times per month with around 25% of migraine sufferers experiencing one or more attacks per week.

Migraine headaches vary in intensity from mild to severe. Nausea occurs in almost 90% of attacks and vomiting in about 30%. Patients also experience photophobia (increased sensitivity to light), and phonophobia (increased sensitivity to sound). Physical exertion can exacerbate attacks and sufferers often are forced to seek dark and quiet places until the episode passes; perhaps half need to go to bed. This leads to a meaningful impact on workplace productivity as the average migraine sufferer is estimated to miss 4 to 6 days of work each year.

 

Treatment of Acute Migraine Attacks

Migraines are treated in two ways: to relieve and shorten acute attacks and to prevent the occurrence of an attack. The goal of acute treatment is to stop an attack quickly and prevent recurrence. Over the counter drugs are often used when episodes are mild and infrequent. Patients with more frequent or severe migraines that require physician visits are usually prescribed triptans.

 

There are seven marketed triptans: Axert, Frova, Imitrex, Maxalt, Relpax, Treximet and Zomig. Although they are from the same chemical class of drugs, response can vary from one to another so that if a patient doesn’t respond to one triptan, they are generally switched to another. About 50% to 60% of patients respond consistently to triptan therapy within two hours, if they are administered early. Other patients achieve only partial relief.

 

Triptans come in a number of different dosage forms including oral, injection, nasal spray, rectal depositories and oral dissolving tablets. Because nausea and vomiting frequently occur with migraine attacks, alternative dosage forms to oral are necessary. Most side effects are mild such as flushing, but because they cause constriction of blood vessels, triptans have in rare cases been linked to heart attacks. They are non-addictive, but may cause headaches from medication overuse if used more than 10 days in a month.

 

The first triptan on the market was Imitrex (sumatriptan) which was introduced in the US in 1991 and is now generic. Before the triptans, the most important migraine therapies were based on ergotamine and related compounds. Ergotamine is natural product that was first isolated from a fungus in 1920. In 1946, a synthetic derivative of ergotamine, dihydroergotamine, was discovered. Dihydroergotamine was the primary acute treatment for migraines before the introduction of the triptans. It is currently available as a nasal spray and injectable forms. While these drugs are comparable in efficacy to the triptans, because of their poor oral bioavailability and side effect issues, particularly nausea, the triptans have become the standard of care for acute migraine therapy.

 

Therapies to Prevent Migraine Attacks

Preventative therapies are intended to reduce the frequency as well as the severity of migraine attacks and to make attacks more responsive to acute therapies. Most of the drugs used in preventative therapy have not been specifically developed for preventing migraines and are used off-label. The anti-seizure drug topiramate is probably the most widely used preventative agent followed by drugs from such classes as beta blockers, tricyclic antidepressants and calcium channel blockers. None are that effective. At best, they reduce the frequency of migraine attacks by around 50% so that patients usually require support from acute therapies. They also bring with them some troubling side effects so that use is generally limited to patients with frequent or severe headaches.

 

Botox is the latest major innovation for migraines and was approved for the treatment of chronic migraines in October of 2010. Chronic migraines are generally defined as 15 or more attacks per year. Based on clinical experience it is felt that Botox can reduce the number of headaches to 7 to 8 per year in this chronic population. Levadex has a complementary role to play in treating the residual attacks. Botox will probably be given as 3 to 4 treatments per year with perhaps 31 total injections per treatment at a cost of around $1000 per treatment.

 

Limitations of the Triptans

Even though triptans are generally safe and effective, there are still millions of patients who do not respond and turn to opioids, barbiturates or other drugs that relieve pain. Limitations of triptans are:

1. Approximately 30% to 40% of migraine patients do not fully respond to the first triptan prescribed.

2. Triptans should be given early as they are more effective when taken early in a migraine attack. If they are given late, they are often not effective.

3. The onset of pain relief can be somewhat slow and variable if given orally or intranasally due to inconsistent systemic absorption.

4. Migraine reoccurrence within 24 hours of treatment can be a problem as triptans have short half-lives.

5. Triptans are generally well tolerated and safe, but they can produce sensations of chest tightness, chest pressure and tingling because they constrict arteries and may raise blood pressure. They are contraindicated in most heart conditions. They are also contraindicated for use with SSRI anti-depressants.

6. During a migraine attack, many patients suffer gastric stasis in which the gut stops digesting or is inefficient in digesting. This results in inconsistent absorption of an oral drug. About 30% of patients vomit during an attack and 90% have nausea. Patients taking pills may not get consistent dosing.

 

Current Migraine Products Based on Dihydroergotamine

There are a number of generic and branded injectable dihydroergotamine products that have modest commercial importance. In the case of injectables, this is because of the availability of generics. Migranal is a nasal dosage form of dihydroergotamine which has had modest success in treating migraines. It is marketed by Valeant Pharmaceuticals (VRX) and its annual sales are about $28 million. Migranal achieves only 32% of the bioavailability of injectable DHE and produces some troubling side effects. Levadex appears markedly superior in terms of its bioavailability and side effect profile.

1. Migranal’s product label indicates that there was a 26% incidence of rhinitis in its clinical trials almost certainly owing to its intranasal administration; the incidence of respiratory side effects for Levadex in its clinical trials was less than for placebo.

2. Nausea occurred in 10% of patients on Migranal versus 7% on placebo; the incidence of nausea for Levadex in its clinical trials was less than placebo, 2.0% versus 4.5%,

3. There was also altered taste in 8% of Migranal patients versus 1% in placebo; this was not seen with Levadex,

4. There was also an application site reaction in 6% of Migranal patients versus 2% on placebo. This was not seen with Levadex.

 

Migranal carries a warning that it has been associated with life threatening peripheral ischemia when given with potent CYP 3A4 inhibitors such as protease inhibitors used in HCV and HIV, macrolide antibiotics such as erythromycin and a broad range of other widely prescribed drugs. The list of drugs that pose an interaction is very long and contains many commonly prescribed drugs of numerous therapeutic classes. When given at the same time as such drugs, the blood levels of DHE are significantly increased.

 

Levadex Offers Great Promise for Acute Treatment of Migraines

Levadex dramatically improves ease of dosing and side effects that have limited the use of other DHE products. It should replace much of their usage and is an attractive complement to the triptans and may be able to overcome some of their shortcomings. I expect that most physicians will start new patients on a generic triptan and if that fails will try a second or third triptan. If this still does not provide relief, Levadex may be used. Even though its use is primarily as a third or fourth line agent, Levadex will still address a very significant patient population.

 

DHE works through the 5HT receptors like the triptans, but has additional effects which differentiate its mechanism of action. It works somewhat faster, is longer lasting and is effective in certain migraine sub-populations in which triptans are not. A subset of patients given Levadex experienced significant pain relief in ten minutes. Across the whole phase III population there was statistically significant pain relief at 30 minutes. In 60% of patients, there was pain relief in two to four hours and pain relief was sustained out to 48 hours. There was only 6% recurrence of migraines on the first day and 10% on the second. All of these results are somewhat, but not dramatically better than expected for triptans

 

There are subsets of migraine in which triptans do not work well. These include menstrually related migraines which last a long time. With Levadex patients can treat quickly and then continue treatment to control the migraine over the menstrual period. Allodynia is a painful response to stimuli such as normal touching and when this occurs in a migraine patient, most physicians feel that triptans will not be that effective. Levadex works as well in allodynia patients as in non-allodynia patients.

 

One of the big issues of triptans is finding a window for treatment. If the drug is taken too early, it tends to be ineffective because the patient is not far enough into the migraine cascade. If the patient waits too long, it also may not work. Levadex works both early and late. It can be taken a few minutes after an attack or hours later.

 

Levadex given via the lung may retain the efficacy attributes seen with injectable DHE while minimizing the potential side effects. Some limitations of current DHE injectable and nasal formulations are as follows:

1. Intravenous administration limits DHE use to a clinic or healthcare setting.

2. Absorption of DHE via the nasal pathway can lead to inconsistent dosing and slow onset of action generally taking 30 to 60 minutes to provide significant pain relief. Bioavailability is only 32% of that of the injectable.

3. Unlike IV administration of DHE, Levadex does not cause significant treatment related nausea because the maximum drug concentration is approximately 40 fold lower. DHE administered intravenously often requires the prior use of an anti-nausea medication.

4. Nasal administration of DHE may result in unpleasant taste, and can cause congestion or irritation of the nasal membrane. Nasal delivery may lead to inconsistent dosing relating to difficulties in administration and poor absorption.

 

Levadex Phase III Clinical Trial Results

The company conducted the Freedom-301 phase III trial of Levadex in 792 patients in which Levadex was compared to placebo. MAPP had anticipated that it would need to perform a second phase III trial, but surprisingly the FDA informed the company in January 2010 that a second phase III trial would not be necessary.

 

Levadex achieved statistical significance on all four primary endpoints in the trial as required by the FDA: (1) improvement in pain relief, (2) freedom from phonophobia (sensitivity to sound), (3) freedom from photophobia (sensitivity to light) and (4) freedom from nausea. The results in nausea were particularly interesting as injectable DHE causes nausea in perhaps 30% of patients and is often given with an anti-emetic to control nausea. Results for each of the four components of the primary endpoint of the Freedom-301 trial are shown below:

 

   

Four Primary Endpoints of Freedom 301 Phase III Trial
	Percentage of Patients
	Levadex	Placebo	p value
Pain relief	58.7%	34.5%	p < 0.0001
Phonophobia free	52.9%	33.8%	p < 0.0001
Photophobia free	46.6%	27.2%	p < 0.0001
Nausea free	67.1%	58.7%	p = 0.02

 

        

 

     

 

Levadex was well tolerated with the most common side effects as shown in the following table.

 

 

Levadex Side Effect Profile (% of Patients)
	Levadex	Placebo
Gastrointestinal
Nausea	2.0%	4.5%
Vomiting	0.7%	2.0%
Respiratory
Cough	1.2%	2.5%
Cardiovascular*
Chest discomfort	1.0%	1.0%
Chest pain	0.0%	0.0%
Other
Taste disturbance	1.7%	6.4%
* Troubling side effect of triptans

              

 

                

Results from additional pre-defined analyses relating to onset of pain relief and duration of effect for Levadex were also favorable:

1. Statistically significant onset of pain relief at 30 minutes after dosing (p=0.03);

2. Statistically significant sustained pain relief from two to 24 hours (p<0.0001), as well as two to 48 hours (p<0.0001, when unadjusted for multiplicity);

3. Statistically significant pain freedom (pain symptom score = 0) as early as 30 minutes (p=0.002, when unadjusted for multiplicity);

 

Supporting Safety Studies for Levadex

MAPP is seeking regulatory approval for Levadex through the 505 (b) 2 regulatory pathway which allows referencing data that has accumulated from six decades of clinical use of DHE. Nevertheless, FDA required a comprehensive clinical development program with an emphasis on cardiovascular and pulmonary safety. Cardiovascular safety is a concern for all drugs, but because DHE shares some of the mechanisms of action of the triptans and the triptans do have some cardiovascular issues, the FDA wanted clarity.

 

Because of the inhalation dosage form, there was also an emphasis on determining if there was any effect on lung function. Even though DHE has been around for six decades no one had ever done a formal QTc study. MAPP performed a study which showed that there was no effect on QTC when Levadex was dosed at three times normal levels. Another study studied pulmonary arterial pressure and showed no difference from placebo. Unlike the triptans, there was no chest discomfort.

 

Another study looked at patients with compromised lung function such as asthmatics. There was no effect on lung function either acutely or over the course of a year. A study also looked at smokers to make sure that there was not differentiated absorption in patients with damaged lungs that might result in more systemic absorption that could lead to side effects.

 

Long term safety is less of an issue for acute therapies like Levadex than with chronic use drugs, but it is still an issue. The FDA asked that MAPP follow 150 Levadex treated patients from the pivotal trial for one year. The company was actually able to follow 250 patients who stayed on drug after the phase III trial. The side effect profile was clean. There were few side effects and there have been no serious drug related side effects.

 

From a safety standpoint, the company has studied over 1,000 patients with Levadex. This is in addition to six decades of clinical use of DHE which is referenced under their 505 (b) 2 application. There have not been any serious drug related adverse events in the trials. They have treated about 10,000 headaches and about 250 patients have been on the drug for at least a year.

 

In the safety trial, at six months 80% of the Levadex patients were still on treatment indicating that it is effective and well tolerated. When the trial started, the baseline for patients entering the trial was 2 to 8 headaches per month. At six months, a high percentage of patients were no longer having 2 or more headaches per month suggesting that Levadex reduces frequency over time. Of the patients who continued to have two or more headaches at six months, 90% remained in the trial and continued on therapy through 12 months suggesting satisfaction with the drug.

 

Co-administration with a potent CYP3A4 inhibitor showed no effects on the plasma levels of DHE or its elimination. This suggests limited potential for drug interactions with potent CYP3A4 inhibitors. This is markedly different from the long list of drug interactions that can occur with Migranal. This is the result of Levadex’s superior pharmacokinetics. A pooled analyses assessing the clinical pharmacokinetics of Levadex and its primary metabolite across three recent clinical studies showed consistent pharmacokinetic results and rapid absorption via the pulmonary route of administration.

 

The Likely Promotional Message for Levadex Versus Triptans

Assuming FDA agreement, the key aspects of the promotional message for Levadex intended to differentiate it from the triptans are likely to be:

1. Rapid onset: Levadex provides significant pain relief at 30 minutes and sometimes as early as 10 minutes.

2. Less risk of migraine recurrence:

3. Sustained pain relief through 48 hours.

4. Efficacy at any time after the start of migraine: treatment can begin at any time during the first hour of the migraine attack and even eight hours from the start of migraine.

5. Broadly efficacious: Levadex may provide a higher response rate and has the potential to treat patients who have not previously responded to other therapies, such as triptans.

6. Applications in other areas of migraine: Levadex may also have better outcomes in difficult to treat migraine subpopulations such as menstrual migraine, morning migraine, migraine with allodynia, migraine associated with severe pain and migraine with nausea and vomiting.

7.Low incidence of side effects: As was previously shown, serious side effects are rare and common side effects are mild and not markedly different than placebo. Importantly, there do not seem to be any incidence of the troublesome triptan side effects of chest discomfort or chest pain.

8.Convenient and consistent delivery: Levadex can be used in the home without the need for medical supervision.

 

Allergan Co-Promotion Agreement

MAPP announced collaboration with Allergan on January 31, 2011 in which the two companies will co-promote Levadex to neurologists and pain specialists in the United States. One of the attractions of Allergan for MAPP is that Allergan will be marketing Botox for prevention of migraines and it can leverage its dedicated headache specialty sales force to concurrently promote Levadex for acute pain.

 

Migraine patients are usually first diagnosed and treated by primary care physicians and internists. Referral to a neurologist or headache specialist can occur if the patient suffers more frequent, severe and disabling migraines. There are approximately 10,000 neurologists in the United States and they are responsible for nearly 20% of the triptan prescriptions written. About half of the neurologists account for over 90% of the triptan prescriptions written by this group of physicians. This is the initial target market for the Allergan/ MAPP team and the situation lends itself to a specialized sales force strategy.

 

MAPP will be responsible for the manufacturing and distribution of Levadex in the United States, and will record all product revenues. Profits and losses will be evenly split. MAPP retains all rights to commercialize Levadex outside the United States. MAPP also has all rights to commercialize Levadex to primary care physicians in the US.

 

Allergan paid MAPP a $60 million upfront payment in February 2011, and MAPP may receive up to $97 million in the form of regulatory milestones. The NDA filing triggered a $20 million payment so that $77 million of milestone payments remain. The companies also have agreed to jointly develop Levadex for the treatment of migraine in adolescents 12 to 18 years of age and for one additional indication. MAPP is responsible for obtaining NDA approval, and will retain ownership of the NDA.

 

Size of Migraine Market

There are an estimated 30 million migraine sufferers in the US of whom some 13 million are undiagnosed and 17 million are on therapy.

 

            

How Migraine Patients Are Treated
	Number of patients
	(millions)
Not diagnosed	11
Treated with migraine specific therapies	10
Treated with off-label usage	7
Over the counter	2
Total migraine patients	30

    

 

Over 30 million prescriptions are written annually in the US for the treatment of migraine attacks. Of these, 12 million are written for products indicated for use in migraines, principally the triptans, and 18 million are for off-label drug use. In 2010, the triptan market in the United States totaled approximately $1.6 billion in revenues even though there is significant generization of the class.

 

Patients well controlled on triptans are not candidates for Levadex, but MAPP’s market research indicates that there are significant numbers of non-responders and also patients who are not satisfied with current therapies as shown in the following table:

 

        

Potential Early Adapter Groups
	Patients (millions)	Percentage of total
Failed one triptan	6	35%
Failed several triptans	4	25%
Vomiting	5	30%
Severe nausea	8	45%
Severe allodynia	3	20%
Not fully satisfied with current therapy	12	70%
Highly disabled	4	25%
Menstrually related	3	20%
High frequency migraines 5-14 per month	3	15%
Note: There is overlap between groups

        

 

Reimbursement

Reimbursement comes primarily from private payors as over 75% of coverage is for women in the 15 to 55 age group. Imitrex (sumatriptan) has gone generic and is now the tier 1 drug in formularies and almost all patients start on generic sumatriptan. If they fail sumatriptan they can then go on to branded triptans which are in tier 2 and 3 formulary status. Anyone who responds to generic sumatriptan is not a candidate for Levadex, which will be placed in tier 2 and 3 with branded triptans. Pricing for current products is shown below:

 

      

Price Per Dose of Current Products
Dihydroergotamine products
Nasal	$75
Branded IV	$100
Triptans
Oral branded	$19-27
Nasal branded	$31-38
Injectable branded	$89-191
Needle free injection	$83

            

 

The tier 2 and tier 3 triptans are priced at $40 to $80 per dose. Historically most managed care plans have allowed 12 doses to be included in each prescription for the triptans. Some are now trying to reduce the number and some have gone to as low as four doses per prescription. I am estimating that MAPP will include 8 doses with each prescription. I think that Levadex can be priced at $40 to $80 per dose or $320 to $640 for a prescription containing eight doses without creating issues with managed care payors.

 

New Products or Additional Indications for Levadex

MAPP believes that there other product opportunities that parallel the development of Levadex. Developing products with inhalation dosing may be an advantage for neurology. The medicine goes directly from the lung to the brain and there are many indications in which getting a drug into the brain more quickly may provide greater benefit than a pill which might take an hour or two to reach full effect.

 

One example is epilepsy in which a meaningful percentage of patients with have an aura before a seizure. Current epileptic drugs can take an hour or more to work and can’t prevent a seizure or subsequent seizure. MAPP has the formulation technology to get a drug to the lung without sticking in the mouth or throat. This may result in PK and profiles comparable to IV as is the case with Levadex. This is also a 505 (b) 2 pathway for regulatory approval.

 

There is also meaningful potential to expand the use of Levadex through supplemental NDAs. There are 3 million adolescents aged 12 to 18 who suffer from migraines and this is a logical extension. Another is cluster headaches, which is an approved indication for DHE. This condition primarily affects men who experience a series of headaches over time. This often forces them to go to the hospital and receive infusions for 3 to 5 days. This is invasive and inconvenient treatment course which potentially could be handled with a series of Levadex doses in an outpatient setting.

 

Intellectual Property

I think that Levadex has very strong patent protection even though its key active ingredient dihydroergotamine has been in use for over 60 years and is obviously not subject to a composition of matter claim. MAPP now has 8 issued patents and ten patents pending which address delivery technology for the drug and device, pharmacokinetics, formulation, particulate forms and method of use.

 

In August of 2011, the company announced that it had been issued a pharmacokinetics (PK) patent 7,994,197 for Levadex. It covers the delivery of Levadex in a certain therapeutic window that retains efficacy while reducing side effects. The patent covers the PK profile of the primary metabolite after delivery of DHE by any route of administration. Historically, PK patents have proven to be nearly as strong as those for new chemical entities. The patent extends until 2028. This patent deals with a metabolite, but is part of a family of patents that are coming.

 

Another important barrier to entry for a generic would probably be the difficulty in duplicating the action of the Tempo inhaler. It is likely that any company that wanted to market an inhaled dihydroergotamine inhaler would have to develop their own device and then do their own phase III trial. The resultant product could receive approval, but would not likely be interchangeable with Levadex.

Disclosure: The author of this article owned shares of Map Pharmaceuticals at the time this note was written. This should be taken into account as it may introduce bias into the conclusions and interpretations that are made. In reading this note, you acknowledge that you have not used it as the sole basis of your decision making and that all investment decisions are based on your own analysis. An investment in Map Pharmaceuticals carries substantial risk and investors could potentially lose much of their investment. The reader acknowledges that he/she has carefully read the Investment Approach, Terms/Conditions and Disclosures sections in the About Us section of the website. The reader acknowledges that he/she will not hold SmithOnStocks accountable for any investment loss that may be incurred if a decision is made to invest in Map Pharmaceuticals.

 

 

 

 

 

 

 

Tagged as MAP Pharmaceuticals Inc. + Categorized as Company Reports