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Outlook Therapeutics (NASDAQ:OTLK) has made significant progress in advancing the use of its drug ONS-5010, which is being developed for the treatment of patients with wet age-related macular degeneration [Wet-AMD]. The use of this anti-VEGF drug is being explored in several studies, but the company is on the right track with de-risked events as it relates to the regulatory side of things, despite the fact that it had a major roadblock on the past with the FDA. Not only was it able to get to the FDA to agree to a Special Protocol Assessment [SPA] with the FDA to possibly file a Biologics Licensing Application [BLA] to the FDA for Wet-AMD, but it also received a positive opinion from the CHMP recommending approval of this drug for the treatment of this patient population.
A decision by the European Commission [EC] to decide if ONS-5010 should be approved is expected within the next few months. If given marketing approval for the European territory, then this is one catalyst that could increase shareholder value. In terms of the FDA though, what still remains a risk is that Outlook has to achieve the primary endpoint of the phase 3 which is best corrected visual acuity [BCVA] over an 8-week period. In essence, it has to prove non-inferiority to Lucentis [ranibizumab] in this late-stage NORSE EIGHT study. With a SPA with the FDA relating to possible U.S. marketing of ONS-5010 for Wet-AMD, positive opinion from the CHMP, I believe that Outlook is well on its way to becoming a full-fledged pharmaceutical company.
ONS-5010 For The Treatment Of Patients With Wet Age-Related Macular Degeneration
As I stated above, things are starting to line up for Outlook Therapeutics, despite having suffered a major roadblock in the past. That’s because when it first brought its case, to possibly receive FDA approval of ONS-5010 for the treatment of patients with Wet-AMD, the agency noted that it could not approve its Biologics Licensing Application [BLA] in its present form. Two major issues that were brought up include CMC issues [manufacturing issues] and the fact that only one study lacked sufficient evidence of efficacy. Well, the positive CHMP opinion could mean that the CMC issues the FDA brought up in its Complete Response Letter [CRL] may have been addressed. With respect to the lack of efficacy evidence, this is going to be taken care of through the advancement of the phase 3 NORSE EIGHT trial. Especially, since the FDA agreed that this particular study will be enough to satisfy the evidence necessary for it to receive FDA approval of ONS-5010 for the treatment of patients with Wet-AMD.
The phase 3 NORSE EIGHT study is a multicenter, randomized, controlled type study being done to evaluate the safety and efficacy of intravitreal administration of ONS-5010. The hope is that this ophthalmic solution of bevacizumab will be non-inferior to other type of anti-VEGF treatments. Speaking of which, this is exactly how this late-stage study was designed, in that ONS-5010 has to prove to be non-inferior to Lucentis [ranibizumab]. Lucentis is a medication from Genentech, subsidiary of Roche (OTCQX:RHHBY). It was approved by the FDA, for the treatment of patients with Wet-AMD, back in June of 2006. However, since then it has been approved for use towards the treatment of many other eye disorders such as: Diabetic macular edema, Diabetic retinopathy and Myopic choroidal neovascularization. This trial is expected to recruit up to 400 patients who are to be randomized to receive either of the following:
- 1.25 mg of intravitreal injection of ONS-5010
- 0.5 mg of intravitreal injection of Lucentis
This study is expected to be a 3-month study; however, the primary endpoint of best corrected visual acuity [BCVA] is going to be evaluated over an 8-week period. That is, ONS-5010 must prove to be non-inferior to Lucentis in terms of BCVA with a margin of 3.5 letters. If the drug proves this to be the case in this phase 3 NORSE EIGHT study, then this means that Outlook will be well on its way to file a BLA of this drug for the treatment of this patient population before the end of 2024. Speaking of which, this is the guidance at the moment, in that the company should be able to resubmit its BLA at that time. In addition, this also means that the primary efficacy analysis of this late-stage registrational study should be out before that time. These are just two of the catalysts that are expected to cause the stock price to trade higher during this year.
Besides the ability to get an SPA from the FDA, so that it can resubmit its BLA of ONS-5010 for the treatment of patients with Wet-AMD, it is also progressing very well on the European front. How so? Well, the CHMP reviewed the usage of this drug for the treatment of this patient population and gave a positive opinion of it. This doesn’t mean that the final decision to be made by the European Commission [EC] is in the bag, but it does improve the chances immensely. Such a positive CHMP opinion was made on March 22nd of 2024 and a decision is typically made 67 days afterwards. I believe that based on this event, there is a good chance that Outlook will receive European Marketing Authorization to market this drug. History would be made also if this does happen. How so? That’s because it would be the first on-label bevacizumab drug to be approved to treat Wet-AMD.
Potential Competitors For The Treatment Of Patients With Wet AMD
It is clear that Outlook Therapeutics has been able to do a good job of advancing ONS-5010 for Wet-AMD on the regulatory front. However, if it does get to the finish line, there is the competition factor to consider as well. That’s because, at the moment, bevacizumab that is used off-label to treat this specific patient population. That is, this drug is used as 1st-line treatment for these patients in an off-label fashion. Despite this, there are a couple of advantages for Outlook to make note of. The first would be in terms of lack of potency by off-label bevacizumab. For instance, about 55.4% of newly diagnosed patients are first prescribed this type of treatment. The problem is that after 3 years or so, approximately 40% of them switch to another approved anti-VEGF treatment. The reason why such a swap occurs is because off-label bevacizumab has certain problems, such as:
- Major safety problems
- Lack of potency
- Quality and supply issues
With respect to the lack of potency problem, it is because off-label bevacizumab is repackaged by compounding pharmacies, thus, lacks a lot of safety protocols that need to be in place to produce sufficient drug product. Other problems are frequent recalls of syringe products, along with visible particulates in them. The bottom-line here is that Outlook with ONS-5010 has a shot at obtaining an ophthalmic bevacizumab drug product that is well controlled in the manufacturing process. If potency is achieved by first-line treatment of ONS-5010, then there would be no need to switch to other anti-VEGF treatments on the market for Wet-AMD.
This is where other competitors come into play, which are Eylea from Regeneron Pharmaceuticals (REGN), Vabysmo from Roche, and Beovu from Novartis (NVS). Plus, you have several of the biosimilars produced as anti-VEGF treatments as well. How does Outlook expect to overcome all these competitors? One major way would be pricing ONS-5010 at a level where payers and retina specialist would believe is reasonable. Eylea, Lucentis, Beovu and Vabysmo carry a vial price average of $2,000 per vial in the United States. Generics are a bit lower coming in with an average of between $1,000 to $1,300 per vial. Lastly, you have unapproved repackaged Avastin, which is used off-label to treat Wet-AMD. In essence, what Outlook could do here would be to price way below premium anti-VEGF drugs and generics and close to that of off-label Avastin. If such a method can be achieved, then it would be in a good position to capture a huge chunk of the Wet-AMD market. The anti-VEGF market size is projected to reach $13.54 billion by 2030. However, the company notes that the current anti-VEGF market could currently be worth $15.9 billion.
Financials
According to the 10-Q SEC Filing, Outlook Therapeutics had cash and cash equivalents of $10.4 million as of December 31st of 2023. It is in good shape, because it has been able to enact a financial transaction that could bring in up to $175 million. This would be with respect to a private placement agreement, which was made with institutional investors back on January of 2024. This includes up to $65 million in common stock and then up to an additional $107 million upon the exercise of warrants, subject to certain closing conditions being met.
If the private placement if fully completed with respect to such closing conditions, along with the full exercise of all the warrants as part of this transaction, then it believes it will have enough cash to fund itself through all milestones including potential launch of ONS-5010 for Wet-AMD. One way it could avoid the need to eventually enact another cash raise would be if it can establish a partnership with respect to this drug. For instance, it is actively seeking for a partner to help launch the drug in the European territory, should the EC approved ONS-5010 in the coming months. Such a financial partnership being made would reduce its financial burden substantially.
Risks To Business
There are several risks that investors should be aware of before investing in Outlook Therapeutics. The first risk to consider would be with respect to the ongoing phase 3 NORSE EIGHT study, which is using ONS-5010 for the treatment of patients with Wet-AMD. In order for this study to be successful, it must be shown that non-inferiority of BCVA when compared to that of Lucentis. There is no assurance that this late-stage study will end up being successful, nor that the primary endpoint will be met with statistical significance.
The second risk to then consider would be with respect to the possible Biologics Licensing Application [BLA] submission of ONS-5010 for the treatment of this patient population. Even if such a U.S. marketing application is submitted to the FDA, there is no assurance that the agency will approve it in its present form. Although, based on the fact that a SPA agreement was made, I don’t believe that the FDA will have an issue with the regulatory application this time around. In addition, I think it looks good on the CMC front as well. If any deficiency in manufacturing was still present, then I believe the CHMP would have caught it.
The third risk to then consider would be the recent positive opinion of ONS-5010 given by the CHMP. That’s because the European regulatory application of this drug for Wet-AMD moves over the European Commission [EC] for review. As I stated above, this agency has 67 days after the CHMP opinion to issue its response to approval of this drug. There is no guarantee that the EC will approve it for the European market, nor that it will generate substantial sales.
The fourth and final risk to consider would be with respect to the competitors that are in place. That’s because ONS-5010 would have to go up against a lot of competition in this Wet-AMD space. I believe that it can tackle off-label bevacizumab by having a more potent product lot with ONS-5010. Along with the fact that a packaged FDA approved product is likely safer compared that which is produced at repackaged compound pharmacies. In terms of the other competition, I think they can be easily beat with respect to pricing power. That is, the ability to price this Wet-AMD drug way below all this competition. Especially, since it will be able to list ONS-5010 at a more reasonable price. Despite all these competitive advantages that are possible, there is still no assurance that it will do well even if it is ultimately approved by the FDA.
Conclusion
Outlook Therapeutics has done well to advance its lead program in its pipeline, which is the use of ONS-5010 for the treatment of patients with Wet age-related macular degeneration [Wet-AMD]. It has already de-risked this asset on two fronts, which would be on possible U.S. and European approvals. With respect to possible U.S. approval of this drug, it is all going to depend upon what the final results from the phase 3 NORSE EIGHT study are going to be. That is, upon whether or not the primary endpoint of BCVA is going to be met with statistical significance in this trial.
However, I believe that an even better opportunity lies with respect to European approval. Why is that? That’s because the EC didn’t require another study for potential ONS-5010 approval. Not only that, but the CHMP has already pretty much given a positive opinion on it. This doesn’t mean that European approval is guaranteed to happen, but it greatly increases the odds of it. With several catalysts on the way in 2024, plus continued regulatory advancement of ONS-5010 on two fronts, I believe that investors could benefit with any potential gains.
Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.
