Idorsia Stock: Q2 Should Reveal Success For Newly Approved FDA Drug

It seems like only yesterday when I identified the small Swiss-based biotech, Idorsia (OTCPK:IDRSF) (IDIA.SW) as having the potential for “fantastic” growth based on a pedigree where the predecessor biotech had been sold to Johnson & Johnson (JNJ) for $30 billion dollars. Now with the same management leadership and research scientist still in place, the new company has a stable of potential drugs in its pipeline that could reestablish them as a new juggernaut in the biotech arena. With this premise, I wrote and shared my first SA article on July 16, 2019— Idorsia: A Swiss Biotech Poised for Fantastic Growth. Now three years later, and after undergoing an arduous journey with the ensuing stock gyration, next Tuesday, July 26, 2022, in the wee morning hours here in the USA, in Basel, Switzerland, Idorsia will announce its second quarter 2022 financial results. This report will highlight the first revenue from the internal pipeline of approved and marketed drugs. In fact, it will involve two drugs approved in 2022. One is being marketed here in the United States is Quviviq for insomnia. Pivlaz, for cerebral vasospasms, is being marketed in the Japanese marketplace.

What We Should Expect to See in the Upcoming Financial Report

The worldwide market for insomnia suffers is a massive number needing relief from this debilitating affliction. As mentioned, the drug is FDA approved and is now being actively marketed here in the United States. The drug has been approved for the EU market with plans to formally launched the drug later this year. We should expect an update on the status of this launch. It has the approval, but due to a host of demographic issues and the number of countries and related language issues for drug insert information, etc. It simply takes longer for drugs to be launched in the European markets.

Idorsia is fortunate to have most of the major US and European brokerage firms following their stock and have updated projections for key Q2 data.

Analyst Projections

Nine analysts have projected a total revenue with 21.2 million CHF being the highest, 14.3 million CHF being the median range, and 11.7 million is the lowest projection.

For Quviviq, seven analysts have projections where 12.0 million CHF is the highest, 7.3 million CHF is the median number, and 1.9 Million CHF is the lowest projection.

Pivlaz has seven analysts whose projections range from 5.0 million CHF being the highest, 3.0 million CHF being the median range, and 1.0 million CHF is the lowest projection.

In full candor, these numbers are not overwhelming until you consider that both products were not launched during the full three months of this Q2 being viewed. There are a lot of variances in launching a new drug into the market. Sadly, in the US, this involves getting the insurance companies on board with adequate coverage of such new drugs. The second issue, especially for large group practices, such groupings normally have approved formularies for the drugs they will prescribe for their patients. It takes time for them to review and sign on board for a new drug they will consider prescribing to their patients. Based on these issues what I’m hoping to see next Tuesday is both Quviviq and Pivlaz showing numbers that are near the median numbers projected.

I know my personal GP doctor has been seen by the Idorsia drug representative. Medical doctors are like the rest of us in that we like to move in packs – we like to join consensus groups where our acceptance of something new is supported by our peers. I expect that after this initial contact by Idorsia, they will move to create group meetings for the doctors to hear their spiel and why the Idorsia drug deserves to be on their approved list for prescribing to their patients.

At this point in the pre-launch and actual launch of the drug, I’ve been pleased with the completeness and wide variety of advertising given for the new drug. The TV advertising and personalities who were chosen for this task are outstanding selections. The TV ads I’ve seen have all been well selected for the time slots they are being shown.

As for Pivlaz being marketed in Japan, the marketing effort will not be as difficult, as dosing this drug will normally be in an in-patient hospital situation. Therefore, the marketing effort will be limited to hospitals where I assume they have a formulary list of approved drugs used in treating specific situations. The prevalence of cerebral vasospasms is higher in Japan than in other nations of the world. I think as doctors see the benefit of using Pivlaz the revenue will increase to more relevant levels. The key to this drug is the fact it is currently in Phase III clinical trials here in the United States. It would be nice if we get an encouraging update in the discussion sessions in the July 26^th quarterly update. A steady increase in the Japanese market will help the growing revenue stream in the interim period till final approval here in the United States.

Other Topics for Discussion on July 26

The jointly developed drug with Janssen, aprocitentan, had good news for the Phase III testing back in May. This drug is designed to address hypertension (high blood pressure). This represents a huge market around the world. Having a detailed update on the status of filing an NDA with the FDA would be nice news of encouragement for expanding the approved drug list for Idorsia.

In the long-running clinical trial with selatogrel, for AMI patients, where 14,000 patients have been randomized for the Phase III trial, it would be helpful if there is a detailed update on this program. Having the unique ability for identified AMI patients having a self-injectable drug that would allow a sudden-heart episode patient the time to get to the hospital is a huge benefit to the patient. Such a drug and the delivery system would address a major medical issue.

As for Cenerimod, their lupus drug candidate, it is approaching a year since they released data that supposedly gave them proof the drug had potential, but they would discuss options with the FDA. A decision on what they will do with this drug would be helpful in the upcoming update session. At some point, the cost of running clinical trials and what the end potential will achieve must be decided. The current burn rate of cash must always be a top priority for being on top of the situation.

Then there is lucerastat, the drug designed to treat Fabry disease. When they released critical Phase III data, it showed that the data didn’t meet the desired endpoints. However, due to certain subset data, there were indicated results that would be helpful for certain patients’ use. Based on this, Idorsia opted to continue with an open-label extension -OLE — with some of the trial patients. A final resolution on spending more money developing this “potential” drug should be addressed with a definitive game plan.

And finally, there is the Neurocrine Biosciences (NBIX) partnership for a global license to develop ACT-79478. This drug is in two Phase 2 trials for pediatric epilepsy and tremors. Plus, Neurocrine has the option to expand this drug into other medical indications. An update with positive results would be nice, however, since Neurocrine has control of the drug, any relevant information would come from them. But Idorsia investors should keep this potential revenue stream in mind as they continue to monitor their investment evaluation process.

Financial Situation for Idorsia

The price that Idorsia, and we investors, must pay for the extensive pipeline is a constant awareness of the cash burn rate for moving drugs through the costly pipeline development process. I think we can all agree that for the short time Idorsia has been an operating company, they have shown the same success they achieved in the previous incarnation by this group of managers and scientists. However, fully realizing that the overall biotech segment of the market has been under constant pressure in 2022, it is still difficult to see the obvious success of having two drugs approved for marketing, yet the stock is currently sitting at a 52-week low trading price. The latest (as of July) median target price by the 11 covering analysts projects a price of 27.73 CHF for the stock.

As I’ve stated many times here on SA, I have been unwavering in my conviction that long-term Idorsia offers a compelling story for investors with a long-term horizon. Until I see a major change in the factors I based my due diligence for ownership of the stock, I will continue to hold. Let’s hope that next week we get confirming good news for a bright future in holding Idorsia’s stock.

Good luck with your investing decisions!