Nicox — Looking ahead to Mont Blanc study readout

Nicox expects to report top-line primary efficacy results in early November from its Mont Blanc Phase III study of lead topical ophthalmic drug candidate NCX-470, which is being advanced for the treatment of elevated IOP in patients with open-angle glaucoma or OHTN.

NCX-470 is a second clinical-stage compound based on the company’s proprietary NO-donating platform that combines a nitric oxide (NO)-donating molecule with an established PGA drug, which, as explained below, provides an additional mechanism for the drug to reduce IOP. The technology has already been applied successfully in a first commercial glaucoma drug, Vyzulta, developed by Nicox and out-licensed to and commercialised by Bausch + Lomb (B+L). If trends from the Dolomites Phase II study are reproduced, NCX-470 could potentially become the first once-daily dosed non-combination glaucoma drug product to show statistical superiority to a standalone PGA drug in its registration-enabling pivotal trials.

As explained in our May 2022 Outlook report, glaucoma is a series of ocular disorders characterised by optic nerve damage that results in a progressive and irreversible vision loss, and is often, but not always, caused by an elevated level of IOP. PGA drugs have become the most commonly used first-line glaucoma treatment, owing to their more effective reduction of IOP compared to nearly all previous drug treatment classes. PGA drugs work by reducing aqueous humour (AH) outflow through the uveoscleral tract, and offer a convenient dosing schedule (once daily) and relatively benign adverse event (AE) profile. PGAs command c 50% of the topical glaucoma market in the US.

Vyzulta, approved by the FDA in 2017, is a modified form of latanoprost (the first PGA drug approved to treat glaucoma) designed to also donate NO. Vyzulta provides latanoprost’s PGA-lowering mechanism of action (MoA), but the donation of NO can also further reduce IOP by relaxing the trabecular meshwork and increasing AH outflow through the trabecular meshwork/Schlemm canal (TM/SC) pathway.

NCX-470 is a second NO-donating candidate drug. Instead of incorporating latanoprost as the base PGA molecule (as in Vyzulta), NCX-470 releases bimatoprost and NO when instilled into the eye. Bimatoprost is a second-generation PGA marketed as Lumigan 0.01% by AbbVie and is the best-selling branded glaucoma drug in the US in terms of revenue. Bimatoprost is generally considered the most effective approved base PGA molecule for glaucoma, with meta-studies1 suggesting incremental IOP reductions of c 0.5mmHg to c 1.2mmHg compared to latanoprost or travoprost, albeit with a higher incidence of hyperaemia. Further, the NCX-470 formulation in current trials provides a higher effective NO dose release per eye drop compared to Vyzulta, which could potentially lead to a stronger therapeutic effect.

NCX-470 was studied in the 433-patient US multicentre 28-day Dolomites trial, where different NCX-470 dose concentrations were compared with latanoprost (0.005%). Top-line results were reported in Q419, and discussed in a peer-reviewed journal article. The study showed the highest tested concentration (0.065%) demonstrated both statistical non-inferiority and superiority in IOP lowering (versus baseline) compared to the latanoprost arm at day 28. The IOP-lowering effect of NCX-470 (at 0.065%) from baseline was 7.6–9.8mmHg versus 6.3–8.8mmHg for latanoprost. Statistical superiority was met with NCX-470 (at 0.065%) being up to 1.4mmHg superior (in IOP-lowering efficacy) to latanoprost at day 28 (p<0.025).

Dolomites set the basis for the Mont Blanc Phase III study, which began in mid-2020 and enrolled 691 patients with OAG or OHTN and included around 50 US sites. Following the initial adaptive design phase of the study, subjects are randomised to take either NCX-470 (0.1% concentration) or latanoprost (0.005%) once daily in both eyes for three months. The primary endpoint is the mean IOP reduction from a time-matched baseline at 8am and 4pm time points at weeks two and six and month-three visits. The last patient visit was conducted on 16 September, and study results are expected in early November.

As a reminder, a second Phase III study in glaucoma will be required for FDA approval and this study, Denali, started in Q420. The company recently guided that, based on current recruitment rates, it now expects to report top-line results for Denali after 2024. We currently model a potential NCX-470 launch in the US to 2027.

We anticipate that positive Mont Blanc top-line study data, demonstrating superior IOP-lowering efficacy to latanoprost, would materially de-risk future NCX-470 development and likely drive a re-rating of the stock. Further, positive Mont Blanc data could provide optionality as it may open the door for NCX-470 out-licensing transactions (eg for North America, Japan or Europe) or other strategic deals or initiatives. We highlight that in August 2022, Alcon announced it was purchasing Aerie Pharmaceuticals for $770m in equity value, a 37% premium to Aerie’s last closing price. Aerie’s leading commercial-stage products, and in our view, likely the primary drivers for the transaction, are its two FDA-approved glaucoma drugs based on its Rho-kinase (ROCK) inhibitor molecule, netarsudil. These are Rocklatan (a combination of netarsudil and latanoprost) and Rhopressa (netarsudil standalone).

As stated above, the glaucoma market is generally dominated by PGA drugs, with the PGA showing the highest IOP-lowering efficacy (bimatoprost) generally commanding stronger share and revenue prospects among monotherapy treatments. Net US Lumigan sales (after all discounts) were reported by AbbVie at $273m in 2021 and its international sales, including Ganfort (bimatoprost/timolol combination), were $306m. Hence, Nicox estimates that the commercial potential of NCX-470 will be more favourable with a higher level of IOP reduction versus latanoprost.

While predicting the precise quantity of incremental IOP benefit needed to show a differentiated and competitive profile in the glaucoma treatment market is not an exact science, we estimate a relative reduction of at least c 1.5mmHg vs latanoprost, provided that statistical superiority is demonstrated, should enable NCX-470 to distinguish itself effectively against other glaucoma monotherapy drugs.

We reiterate that the chosen NCX-470 concentration (0.1%) studied in Mont Blanc is higher than the 0.065% used in the Dolomites study and based on the Dolomites results, we estimate there is a reasonable probability the incremental IOP reduction to latanoprost 0.005% that can be shown could be higher than the 1.4mmHg amount shown in the Dolomites study.

We also note that no glaucoma drug class, including ROCK inhibitors (the most recent new drug class to reach the market), has matched PGA drugs in IOP-lowering efficacy. Further, nearly every PGA-based glaucoma drug that has been commercialised in recent years, including Vyzulta, has had its Phase III registration trials compare efficacy against a β-blocker drug for the primary endpoint. NCX-470 is being measured against latanoprost, a PGA (the standard-of-care), and if successful, would be the first monotherapy drug to show a statistical advantage in a head-to-head comparison against another PGA drug in a registration trial. We note Rocklatan has shown statistical superiority to latanoprost in Phase III studies, but it is a combination drug (and thus has the AE profiles of both constituent molecules) and, as with Rhopressa, can lead to hyperaemia (59% incidence in registration trials)2 and corneal verticillata. Altogether, among current US approved products, we perceive the most direct competitors to NCX-470 as Lumigan, Vyzulta and Rocklatan. We note that Aerie had guided for its total glaucoma franchise (Rocklatan and Rhopressa) net product revenue to be $130–140m for FY22.

Another recent market entrant is Santen’s Omlonti (omidenepag isopropyl 0.002%), approved by the FDA in September. Omlonti targets prostanoid receptor EP2 (unlike currently approved PGA drugs, which target receptor FP) and, as a result, may also improve outflow through the conventional (TM/SC) pathway in addition to the uveoscleral pathway. In Santen’s initial new drug application with the US FDA, two of the three included Phase III studies meeting the non-inferiority statistical endpoint compared to timolol and latanoprost. Studies with Omlonti show a comparable or perhaps marginally lower IOP reduction (c 20–30%) to latanoprost 0.005% (25–35%), however its different MoA to approved PGA drugs, mentioned above, has thus far been shown to result in materially fewer cases of ocular prostaglandin-associated side effects (ie eyelash growth and eyelid pigmentation) compared to a more conventional PGA drug, tafluprost. Thus, we anticipate that Omlonti may not necessarily be positioned as a direct competitor for NCX-470 (whose key profile is expected to be superior IOP reduction to an established PGA) as rather than showing increased efficacy compared to approved PGA drugs, Omlonti’s differentiating aspect would be an improved safety profile.

NCX-470, if approved, may need to compete against other emerging glaucoma therapeutic agents. We provide a selected list of some of the later-stage product candidates below (to our knowledge, none of these has yet shown statistical superiority in IOP-lowering efficacy to an approved PGA drug). Some of these (eg K-232, PHP-201) are targeting Asian markets first and/or may not be initial competitors for the US or Europe.

Santen/Ona’s sepetaprost (DE-126) is a dual agonist of the prostanoid EP3 and FP receptors and a dose-ranging Phase IIb (ANGEL) study found sepetaprost 0.002% delivered a similar IOP reduction to latanoprost 0.005% across all time points through three months and a lower rate of AEs. A subsequent Phase IIb (ANGEL-2) study was initiated comparing DE-126 to timolol 0.5% and was completed near YE21, but to our knowledge results have not yet been published.

There has been ongoing interest in the ophthalmic community in other (neuroprotective) approaches to manage glaucoma, such as improving ocular perfusion, to preserve the functionality of the retinal ganglion cells affected by glaucoma. The current approved treatments are designed to reduce IOP, which may not fully prevent retinal ganglion cell degeneration and thus progression of the condition in many patients, particularly those with normal tension glaucoma. It is thought that neuroprotective therapies could have the potential to prevent ischemic optic neuropathy (restricted blood flow to optic nerve) and oxidative damage (which would otherwise lead to apoptosis of retinal ganglion cells and optic nerve atrophy). A preclinical study of NCX-470 suggests it might exhibit neuroprotective activity alongside IOP reduction properties. Further evidence of NCX-470 neuroprotective activity could bolster its therapeutic profile and competitiveness among first-line glaucoma medications.

The preclinical study, discussed in a prior note, consisted of an endothelin-1 (ET-1) induced ischemia/reperfusion model in rabbits, used to mimic glaucoma pathophysiology. Rabbits were injected twice weekly for two weeks near the optic nerve with ET-1, followed by concomitant dosing with NCX-470 (0.1% twice daily) in one eye and vehicle in the other for an additional four weeks. The trial investigated changes in three key metrics: IOP, ophthalmic artery resistive index (OA-RI) and retina physiology (electroretinogram, ERG). OA-RI is a measurement of blood flow resistance that assesses vascular damage of the ophthalmic artery. Additionally, the change in concentration of oxidative stress markers were measured in the dissected retina and ciliary body (extension of the iris).

In this preclinical study, repeated ocular dosing with NCX-470 from week three was shown to reverse ET-1-induced changes in IOP; ET-1 increased IOP from 20.7±0.6mmHg at baseline to 27.0±0.6mmHg at week six, but with NCX-470 treatment baseline IOP was re-established (21.8±1.0 mmHg) at week six. OA-RI was calculated through the measurement of OA-PSV (ophthalmic artery peak systolic velocity) and OA-EDV (ophthalmic artery end diastolic velocity), both of which have been shown to be altered in glaucoma patients. ET-1 injection was found to increase OA-RI from baseline of 0.30±0.02 to 0.42±0.03 in week six, compared to NCX-470 treatment which re-established OA-RI to 0.33±0.02 in week six (p<0.05 vs vehicle). Therefore NCX-470 was shown to significantly reverse the increase in OA-RI induced by ET-1 injections over time.

ERG responses were investigated after flashlight stimulations in scotopic (dim lights) and photopic (well-lit) conditions following repeated NCX-470 dosing after ET-1-induced injury. Data showed that significantly less impairment occurred in both the rod photoreceptor response (dark-adapted scotopic ERG 0.01) and the combined response of rod and cone photoreceptors (dark-adapted scotopic ERG 3.0) with NCX-470 treatment compared to vehicle. The marked decline in photoreceptor responses seen with ET-1 dosing (which continued in eyes treated with vehicle) was nearly completely reversed by week six in the NCX-470-treated eyes (p<0.05 vs vehicle). Additional data showed changes in the concentration and activity of oxidative stress markers; the reduced levels of glutathione as well as the lower manganese superoxide dismutase activity in ET-1 treated eyes were reversed with twice daily NCX-470 treatment. Overall results from the study suggest that NCX-470 may also provide benefit in glaucoma patients through a mechanism other than IOP reduction, namely by potentially improving ocular perfusion. Larger human clinical trials would be needed to demonstrate possible neuroprotective activity of NCX-470, but we estimate that such studies would likely only occur following regulatory approval. Nonetheless, animal data suggestive of neuroprotection may improve the drug’s competitive profile, both once approved, and also for possible licensing or other corporate activity prior to the results from Denali.

Oculis’ OCS-05 (ATP-sensitive potassium channel activating prodrug) is a drug candidate that also aims for neuroprotection (rather than IOP control), but remains at a very early stage and is currently under evaluation for optic neuritis. So far, to our knowledge, no pipeline treatments have demonstrated significant and repeatable neuroprotection in clinical trials in glaucoma patients. Notably, oral memantine, an N-methyl-D-aspartate antagonist approved for Alzheimer’s disease, was not shown to reduce glaucoma progression across two Phase III studies studying up to 48 months. Brimonidine, a topical α2-adrenergic receptor agonist approved for glaucoma, had been previously suggested to slow visual field deterioration, however, a multicenter trial (n=190) comparing 0.2% brimonidine with 0.5% timolol did not provide conclusive evidence. We also note that a topical recombinant human nerve growth factor did not demonstrate statistically significant short-term neuroenhancement in a Phase Ib trial, but study authors recommended further investigation.

On 19 October Nicox reported Q322 financial and operating highlights, where it confirmed its overall business plan and its expectation to report primary efficacy data for Mont Blanc in early November.

Nicox reported that net royalty revenue (which we estimate is predominantly due to Vyzulta-related royalties from B+L, with a minor contribution from Zerviate royalties from Eyevance) was €0.8m in Q322, up from €0.7m of net royalties in Q321. Total Q321 revenue of €2.4m also included €1.7m of non-recurring licensing payments. Vyzulta US prescriptions continue to increase robustly, up 37% y-o-y in Q322 (vs a 35% y-o-y increase in Q222). We believe that pricing issues in reimbursement are continuing to drive a discrepancy between Nicox’s reported royalties and the Vyzulta prescriptions growth rate, but these should likely flatten out in coming quarters.

Nicox reported €25.6m in cash and equivalents at 30 September, compared to €31.6m at June 30. It reported financial debt of €20.6m, consisting of its €18.6m bond financing agreement with Kreos Capital and a €2m credit agreement guaranteed by the French government. We calculate Q322 net cash of €5.0m, excluding lease liabilities. Nicox estimates that it is financed until 31 October 2023 (or end-November 2023 assuming the extension of the interest only period of the existing Kreos debt), based on the development of NCX-470 alone.

Following the Q322 update, we have increased our 2022 G&A and R&D expense forecasts to €7.9m and €15.1m, respectively, from our prior estimates of €7.8m and €14.3m, respectively. Our FY22 normalised PBT and EPS estimates now project losses of €17.3m and €0.36, respectively, versus our prior forecasts of losses of €16.4m and €0.34, respectively. Our FY23 forecasts are broadly unchanged. We now also assume FY22e year-end net cash of €1.1m, compared to our prior assumption of €2.0m net cash (both excluding lease liabilities). We continue to expect the company will require €85m in added funding before the anticipated launch of NCX-470 (which we forecast in 2027). Our projections do not include any potential proceeds from the exercise of options or warrants, which if exercised would lower our funding forecasts accordingly.

We have also updated our model to reflect a $0.98/€ exchange rate (versus parity, previously) and have rolled forward our estimates.

Following these changes, we now obtain an rNPV valuation for Nicox of €236.2m (versus €224.0m previously). Our underlying probability of success estimates are unchanged. After updating for Q322 net cash of €5.0m, we obtain an equity value of €241.2m, or €5.58 per basic share (up from €5.45 previously). After considering the potential dilutive effect of options and warrants and their effects on net cash, our fully diluted valuation would be €5.29 (up from €5.17 previously) per fully diluted share.