Shares of Theratechnologies Slip Lower on Production Delay of Egrifta

Shares of Theratechnologies Slip Lower on Production Delay of Egrifta

By: Dylan Sikes - AllPennyStocks.com News

Friday, May 23, 2014

The introduction of antiretroviral therapies in the 1990’s provided a great benefit in the treatment of human immunodeficiency virus/acquired immunodeficiency syndrome, or HIV/AIDS as it’s typically shortened. Although HIV/AIDS is still very prevalent, to the tune of 35.3 million people globally living with the disease in 2012, according to the World Health Organization, death rates have declined dramatically in the last decade. However, the virus still lives on, creating new areas of medical need for the disease and associated with co-morbidities, opportunistic infections and chronic conditions related to reactions to antiretroviral therapies. To better explain, let’s take a look at just one chain. Epidemiological studies show antiretroviral therapies to have a causal effect on the evolution of lipodystrophy, a condition characterized by fat loss or fat buildup. Amongst other possible body sites, an excessive accumulation of abdominal fat, called visceral adipose tissue, is common. Liposuction is not recommended for this condition. Lipodystrophy is associated with diabetes, insulin resistance and dyslipidemia (a cholesterol problem), which are documented to increase the risk of things such as cardiovascular disease, stroke, kidney disease and more.


To that point, developing new therapeutics for lipodystophy is important, as there are limited treatment options and no known cure. For that matter, scientists aren’t even sure of the exact cause. Of course, along with potential co-morbidities, patients also deal with the mental component of the excessive fat. The only drug approved for treatment to reduce excess abdominal fat in HIV-infected patients with lipodystrophy is Egrifta (tesamorelin for injection). Egrifta, which was developed by Montreal-based Theratechnologies Inc. (TSX:TH) was approved by the U.S. Food and Drug Administration in November 2010 and Health Canada on April 30, 2014. The treatment’s efficacy is believed to be built upon helping the body produce natural growth hormones to reduce excessive abdominal fat, although it should be noted that this is not an obesity drug and not indicated for weight loss management.

Two separate clinical trials that led to regulatory approval showed Egrifta to reduce abdominal fat by an average of 18 percent and 14 percent, respectively, after six months of therapy. For those continuing treatment, the reductions were sustained, but for those ceasing treatment, the fat returned.

Lately, it’s been a rocky road for Egrifta, a drug that seems to have nice upside sales potential, but stumbled last year with production issues related to the lyophilization cycle and quality issues. This is quite an issue as Theratechnologies primarily generates revenue from sales and royalties through a collaboration and licensing agreement with Merck (NYSE:MRK) affiliate EMD Serono. Sales in the quarter ended February 28, 2014 took a hit on lower shipments and eventually supply exhaustion of Egrifta. The partnership with EMD Serono was terminated in December, to which Theratechnologies flipped the script, regained all rights to Egrifta, including commercialization in the U.S., and agreed to pay EMD Serono a contract termination fee over five years and royalty payments.

Manufacturing problems have hamstringed Theratechnologies all year so far to meet market demand for Egrifta, lending to a plan to revert to a 1mg/vial production cycle and working to improve its 2mg-vial product that was expected to hit the market in June. After reporting on May 20 that it thought it would release limited supplies of the 2mg vial on schedule, the company recanted that prediction on Friday, saying that target date has been scrapped as it continues to work with the FDA and no timeline is discernable at this point.

Theratechnologies did offer that pre-production of the 1mg vial is nearly complete and that manufacturing would commence “shortly.” The product is expected to be available to the marketplace sometime in mid-August to mid-September, upon completion of requisite testing, packaging and shipping.

Shares of TH have been on a nice ride since October, climbing from a low of 19 cents to as high as 65 cents late in April, including a spike in December upon news that the company had taken back control of Egrifta. Shares have fallen from the recent high throughout May, including a negative reaction on Friday to the ongoing production delay, with shares down 11.5 percent at 43 cents about halfway through the trading session.

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