Endo launches Natesto
US partner Endocan (OTC:ENDO) has launched Trimel’s (TO:TRL) Natesto in the c US$2bn US testosterone replacement therapy (TRT) market. Natesto is being positioned as the first and only nasal gel for hypogonadism, and is highlighted for its lower associated risk of testosterone transference.
Trimel to pursue BID study
With Natesto approved and now marketed in the US as a three-times-daily recommended dose, Trimel will start a 100-150 patient clinical trial in Q215 (cost US$3-4m) to assess efficacy with twice-daily (BID) dosing. Results are expected in 9-12 months. Should this result in FDA approval for BID dosing, Trimel will receive a US$10m milestone from Endo and Natesto’s competitiveness would improve beyond its current route-of-admin/safety advantages. Endo is responsible for future Natesto trials required per the FDA’s request for US TRT providers to conduct clinical studies to determine the cardiovascular risks (heart attack/stroke) with these products.
Estrace tracking well, potential for sales expansion
Estrace generated US$2.4m in Q414 sales, and after excluding fair value adjustments to the inventory acquired from Shire, Estrace's gross margin was 82%. Trimel is refining the sales effort to broaden its geographic reach without significantly raising SG&A costs; this may lead to sales above the current US$9-10m annual run rate.
Further details needed for next step on Tefina
Trimel continues to have discussions with the FDA to determine the next appropriate step for Tefina’s development for female anorgasmia. Guidance and agreement are needed on how and which clinical measures should be evaluated, given that no prior product has been approved. Development may proceed to a pivotal Phase III study, or may require another Phase II trial, while Trimel is also considering partnerships.
Valuation: EV of C$148m; upside on catalysts
Gross cash (31 Dec 2014) was US$31m (US$7.2m net cash), and 2014 free cash flow was US$8.2m, which included a US$25m upfront payment from Endo. Trimel expects funds on hand to meet 2015 operating costs, but may seek a commercial product in-licensing deal in 2015. Management anticipates such a transaction, in combination with Natesto and Estrace revenues, would enable Trimel to end 2015 with a positive recurring EBITDA and cash flow run rate. Progress on Natesto uptake in the US and the twice-daily dosing studies, coupled with clarity on future Tefina development pathway, are potential catalysts to drive the market valuation.
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