DUBLIN, Ohio — It’s easy to forget that Neoprobe is a medical device company.
The company generates all of its revenue from a series of cancer-detection and blood-flow devices, yet it is valued for the drugs that have yet to come: cancer detectors Lymphoseek and RIGScan.
In recent months, it has made a series of adjustments — both financially and through partnerships — to advance its two drugs. Since the end of April, the stock has climbed from 55 cents to $1.35 as of Wednesday afternoon.
In the case of Lymphoseek, it expects to file a new drug application with the U.S. Food and Drug Administration sometime in the next 18 months. Also, a distribution deal for Lymphoseek with Cardinal Health could help Neoprobe quickly double its annual revenue if that drug is approved.
“They’ll convert a rapid portion of that market to our drug in a rapid period of time,” said Brent Larson, Neoprobe’s chief financial officer.
Neoprobe on Monday made the first commercial shipment of its latest device: a handheld, high-energy probe for the operating room that will work with PET imaging. The company says its device can help physicians see the same images — and locate cancerous spots — in the operating room that a PET scan highlights when patients lay under a scanning table.
Revenue continues to increase from the company’s devices. During the first half of the year, it generated $4.6 million — a 15-percent increase from the $4 million it made over the same time last year. Larson said he expects the company to maintain that revenue increase for the year — fueled both by higher sales and a new agreement with its distribution partner, Ethicon Endo-Surgery, which will receive a higher portion of device sales revenue, according to Neoprobe’s annual report to shareholders.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
The company likely will produce another device by late 2010, but then would focus on the two drugs — the immediately promising Lymphoseek, and the resurrected RIGScan — for the next three years, Larson said.
Neoprobe has announced positive results from a Phase 3 trial of Lymphoseek, which is designed to pinpoint cancerous lymph nodes, decreasing the number of lymph nodes doctors must remove and drug side-effects, and increasing quality-of-life and survival rates. Additional details of the first Phase 3 trial should come once the results are submitted to academic journals. Also, a second Phase 3 trial is underway, examining how well the drug can pinpoint cancerous lymph nodes of patients with head and neck cancers.
That second trial could finish by year’s end. If the results are positive, Neoprobe will begin talks with the FDA at the beginning of next year to prepare for a drug application, Larson said.
Cardinal Health would handle the U.S. distribution of Lymphoseek, under which Neoprobe would receive 50 percent of sales revenue from the drug, according to a Neoprobe investor presentation. (The company is still seeking a global distributor.) In addition, Neoprobe would receive an additional $3 million for hitting sales milestones, which Larson thinks the company can reach in the first two years of the five-year agreement.
But Neoprobe knows the perilous and unpredictable nature of drug approval. The business became a device company a dozen years ago because it failed to get FDA approval for RIGScan, which attaches to cancerous cells in the body and can detect cancerous cells other tests can’t find, Neoprobe says.
There was renewed interest in the drug several years ago, and now Neoprobe is ready to try again. The company raised $3.5 million from an investor to help pay for re-development of the drug, and earlier this month, it made a development deal with Laureate Pharma to help with RIGScan.
Unlike Lymphoseek, this drug is still four or five years away from FDA consideration, and Larson estimates it will cost up to $30 million to get RIGScan through the approval process. The company also has yet to get definitive feedback from the FDA on how to proceed with its application.
Neoprobe has already received positive guidance from Europe’s regulatory agency. But Larson said the company wants to hear from both agencies to create one approach to its applications, which could help the business attract additional development partners.
