The FDA has extended the NDA review period for arimoclomol in Niemann-Pick Disease (NPC) with a standard 90 days extension. The NDA remains under Priority Review, and the extension does not impact the eligibility for a potential Priority Review Voucher (PRV). The updated PDUFA date is set to June 17, 2021, extended from previously March 17, 2021.
We had looked forward to March 17, and believe we share the initial disappointment with the management team and investors on this delay. In the press release, we learn that Orphazyme has “responded to all FDA information requests and submitted all outstanding information regarding the arimoclomol NDA for NPC.” It also encompasses the crucial QTc clinical data. Thus, we see a small risk for additional delays. Based on the arguments below, we even believe that a potential decision by the FDA could come earlier than June 17:
Naturally, other factors speak against an earlier approval. It attributes not least to the ongoing pandemic that complicates, for instance, site visits. Further, we cannot rule out that additional factors come up during the extensive NDA review, which could impact the timeline.
Impact on Valuation
Orphazyme is a relatively small biopharma company, with not unlimited resources and we also see a risk that the US delay impacts the timeline for the EMA process. Hence, we don’t factor in any sales in the next year in Europe (a minor adjustment). For the US market, we factor in slightly lower sales for the coming years. The estimate changes fall under our margin of safety in our valuation, and we reiterate our Base Case of DKK 145 per share.
When delays occur, it is relevant to emphasize exclusivity protection. Arimoclomol in NPC has Orphan Drug Designation. From approval, it entitles to seven years of market exclusivity in the US and ten years of market exclusivity in the EU. Orphazyme also has a method of use patent for arimoclomol in NPC that expires in 2029, with a potential extension to 2032 (US) and 2034 (EU).
It is no surprise that the market trades the stock down on today’s news, currently in the range – 5-10%. Delays and uncertainties do seldom appeal to investors. Based on what we know today, our stance is that this news is about FDA needs sufficient time to review the NDA and that a decision will come on June 17 at the latest.
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