MediciNova Inc. (NASDAQ:MNOV) is having a good week. The company just put out data from a phase II trial of one of its lead development assets and – as per the release – the numbers look pretty strong. This news will be a great relief for a portion of shareholders (we'll get to why shortly) and it positions the company for some potential near-term growth.
Here's why, with a look at what just happened.
For those new to MediciNova, the company is a development stage biotechnology stock that's focused on the repurposing of an already approved and well-established asset called ibudilast. In Japan, which is the major market for this drug, ibudilast is widely used as a treatment for both asthma and poststroke complications.
MediciNova has other ideas, however.
The company's scientists took a look at the drug and decided that it's mechanism of action could potentially be applicable to other indications, and primarily neurodegenerative disease. The primary target is amyotrophic lateral sclerosis (ALS) but this is a small market so, beyond ALS, MediciNova wanted to try out the drug in a bigger population but in a similar indication. Multiple sclerosis (MS) fit the bill perfectly and the company got to work investigating the drug in MS late last year.
And it is data from this investigation that just hit press.
The primary endpoint was rooted in the drug's ability to demonstrate a statistically significant reduction in the rate of progression of whole brain atrophy compared to placebo as measured by MRI analysis using what's called brain parenchymal fraction (BPF). That's a bit jargony, but it's basically asking the question – does the drug slow down the rate of degeneration of the brain in these patients?
The secondary endpoint was a bit simpler – can the drug be tolerated and is it safe?
As per the latest numbers, the drug was able to score a hit against both of these endpoints.
We don't have the exact numbers, as management is keeping them close to its chest until a late-breaking oral platform presentation, which begins at 8:30 a.m. on October 28, 2017, at the ECTRIMS Meeting in Paris, France.
As such, we've got to wait a couple of days to see just how much of an impact this drug had in these patients. What we do know, however, is that it seems to work and – in a population like this, where treatments options are thin on the ground and not particularly reliable for a large portion of patients – even modest efficacy can be enough to warrant regulatory approval (assuming the drug is safe, which in this instance, it is).
So what's the market potential of a drug like this?
The current first-line therapy in this market is a drug called Ocrevus, which is marketed by Roche Holding (SIX:ROG) AG (RHHBY), and analysts predict peak sales of that drug will come in at somewhere around $4 billion annually. The future market for this type of MS, however, could be much larger. MediciNova itself expects it could be in excess of $20 billion by the end of the next decade.
For a company valued at just $230 million, as is the case with MediciNova, that's a substantial target market and its one that could provide the company with a real upside revaluation if and when it's able to go at it.
And what's next?
The assumption now is that the company will push this asset into a pivotal trial in both the ALS and the MS indications. The strategy it employs to achieve this is going to be something to keep an eye on over the coming months, with the question of whether or not MediciNova will opt to take on a partner to alleviate some of the capital requirements of what will likely be a large scale (500 patients plus) pivotal or whether the company will go it alone likely dictating sentiment near term.