Back in August I published my first deep dive report “Bellus – David vs. Goliath Can BLU Deliver A Better Chronic Cough Drug Than Merck?” (Link) about Bellus Health (BLU.TO) (BLUSF)  a biopharmaceutical development company based in Montreal, Canada. Its lead drug candidate is BLU-5937 which is a highly selective P2X3 antagonist that has the potential to be a best-in-class therapeutic for chronic cough patients who do not respond to current therapies.

Current investment thesis – Best in class P2X3 antagonist with same efficacy as Merck’s MK-7264 with significantly better side effect profile (decreased taste loss)

These days, Bellus is working tirelessly to finish their Phase 1 study in chronic cough with data expected in Q4. Merck has validated P2X3 for chronic cough with their product MK-7264 which showed very good efficacy in several Phase 2 studies. Unfortunately, Merck’s program comes with a problematic side effect, the drug alters the sense of taste, since MK-7264 inhibits another P2X receptor (P2X2/3) that contributes to the taste sensation. In the latest phase 2B study from Merck, 80% of patients experienced taste disturbance and 20% had complete taste loss. That’s really where Bellus comes in with BLU-5937, a highly selective agent for P2X3, driving a differentiated product profile having just as good efficacy on the cough side, with a significant reduction or even, potentially, eliminating the taste side effect. The results of Bellus’ Phase 1 study should be published in Q4, most likely during November to max December 2018. This is important data because we should see if Bellus can significantly reduce the rate of taste effect seen by Merck.

Publications have estimated refractory/unexplained chronic cough patients to be 10-40% of the chronic cough patient population. Even at the most conservative level, this represents about 2.7 million people in the United States, and when extrapolated to the major pharma markets, represents more than 6 million patients. Assuming a course of average 3 months treatment at the cost of $900 per patient, with 2.7M patients in the US will bring the market opportunity to >$2.4B. Even if Bellus can capture only 40% of the market, that’s around $1B market opportunity for a $85M Mcap company. I believe Bellus can become a “multi-bagger” investment potential to at least $1.50 to $2.00 per share if BLU-5937 phase 1 results are positive and show minimal taste side effect, and to $5+ per share if phase 2 results (1H-20E) are positive.

Potential for P2X3 pipeline expansion

Many investors were cautious about starting a position in Bellus calling it a tiny Canadian biotech company and a one trick pony, if the P2X3 failed in the Ph1 study then the company will drop below cash value. First answer was very clear, their P2X3 is already de-risked, following MRK’s lead with great efficacy results, and the second answer is the chance of expansion to many other P2X3 indications to expand their pipeline in the near future.

What has gotten my curiosity more recently is the potential of a P2X3 in multiple other indications. This was triggered by Merck starting a Phase 2 study for MK-7264 in endometriosis. As I started reviewing publications and data regarding P2X3 in general, I realized that there is potential for significant expansion of P2X3 antagonist not just in endometriosis but many high unmet need indications.

P2X3 receptors are an important part of the pain and irritation sensing system in the human body. P2X3 receptors are expressed predominately and selectively in C- and Aδ-fiber primary afferent neurons in most tissues, including skin, joints, and hollow organs.

Th potential for treating other P2X3 indications has not been lost on Merck. Here’s an extract from a Bernstein report interview with Dr. Perlmutter, Head R&D at Merck where he highlights the potential for a P2X3 antagonist in bladder pain, endometriosis and osteoarthritis:

• BERNSTEIN Question: Shifting to gefapixant, your chronic cough compound, which made its way to MRK through your 2016 acquisition of Afferent Pharmaceuticals. While the drug is mentioned periodically, we haven’t heard you talk much about it. Gefapixant moved into two phase 3 trials two to three months ago, with the registrational program spanning 2,000 patients, collectively. The first of those two phase 3 trials are expected in late 2019, with the other one in 2020. Reviewing the drug’s development history, it looks like a drug trying to find a home. Various phase 2 trials starting back in 2013 span areas from asthma to osteoarthritis to bladder pain, and now we’re in two big phase 3s for chronic cough. The prevalence of chronic cough, which you put in your press release a year ago, is about 10% of the US adult population. That’s a big number. What’s your high‐level perspective on gefapixant and your level of confidence behind the molecule? Is this going to be the next big thing at Merck?

• Perlmutter is enthusiastic about gefapixant, a P2X3 cholinergic receptor antagonist. While the scientific evidence continues to evolve, there’s reason to believe that irritability within the nervous system is the result of chronic stimulation to which the P2X3 pathway contributes. Dr. Perlmutter disagrees with the characterization that gefapixant has been struggling through development for a long time. He explains how this reflects the broad potential of the compound, that it can be theoretically used wherever there is an irritable focus, for conditions like bladder pain syndromes, endometriosis, and osteoarthritis. There’s clinical data supporting gefapixant’s use in these different settings. What they’ve seen is that gefapixant’s effect is the most dramatic in treating chronic cough, as supported by phase 2a/b data. With chronic cough, we’re talking about people who have an unresolved cough after a year, which is usually related to an upper respiratory tract infection. It’s an experience we’ve all had, a cough that takes a while to go away, but in this case, it just doesn’t subside. While Dr. Perlmutter is absolutely confident in gefapixant’s ability to suppress chronic cough, the drug does come with a mechanism‐based liability. The drug alters one’s sense of taste, since gefapixant works on the same set of targets that contribute to the taste sensation. Despite this side effect, what MRK’s seen is that the majority of patients would prefer to say on gefapixant, meaning relatively few people opt to drop off treatment due to this alteration in taste. Given Dr. Perlmutter’s confidence in gefapixant’s efficacy profile in chronic cough, the main question remains around what the drug’s safety and tolerability profile look like in a larger studied patient population, which he describes as the main question for any phase 3 trial. The phase 3 studies will help answer this question and inform the overall benefit risk profile. The drug is not meant to replace the likes of Robitussin. It targets a more severe patient population. On net, Dr. Perlmutter thinks the probability of success with this program is “very high” and the opportunity is large.

So, the first thing that comes to mind, Bellus’ BLU-5937 a highly selective P2X3 inhibitor asset and being a potential best in class P2X3 antagonist, there could be significant value for Bellus in these additional indications. The best way is watching Merck and Bayer starting their own studies, letting them take the lead in these indications, and rely on their POC, then Bellus can piggyback on any data they generate, and start their own study with their P2X3 as a de-risked asset.

This move can expand Bellus pipeline and affect their Market-cap and valuation with large upside, despite the fact they will have to compete with two large pharmaceutical companies, but David can beat Goliath only if Bellus can bring in the next asset as “Best in Class” category as well.

The first indication that Merck has decided to explore is pain related to endometriosis so let’s focus on the potential of that indication.

Endometriosis – Severity of main symptoms and comorbidity

** Main symptoms requiring treatment is chronic pelvic pain, with a wide range of pelvic pain levels.

** With symptom prevalence occurring during the peak fertility years in women, endometriosis can prevent procreation at an inopportune time.

** Symptom severity can be increased in patients with extra‐peritoneal lesions leading to potential significant negative effects on the normal function of several visceral organs.

Impact on QOL – Quality of Life

General chronic pelvic pain, dyspareunia, and dysmenorrhea can have a negative impact on QOL.

** Considerable physical and psychological impact on everyday life due to chronic pain, and on intimate relationship due to dyspareunia.

** Estimated ~10 hours in loss productivity per week linked to work effectiveness (Nnoaham, 2011, PMID: 21718982).

** Failure in reproductive efforts during fertility years can have significant negative psychological effects.

Disease & Standard of Care (Source: MayoClinic.org) (Link)

Endometriosis is an often-painful disorder in which tissue that normally lines the inside of your uterus — the endometrium — grows outside your uterus. Endometriosis most commonly involves your ovaries, fallopian tubes and the tissue lining your pelvis. With endometriosis, displaced endometrial tissue continues to act as it normally would — it thickens, breaks down and bleeds with each menstrual cycle. Because this displaced tissue has no way to exit your body, it becomes trapped. When endometriosis involves the ovaries, cysts called endometriomas may form. Surrounding tissue can become irritated, eventually developing scar tissue and adhesions — abnormal bands of fibrous tissue that can cause pelvic tissues and organs to stick to each other. Endometriosis can cause pain — sometimes severe — especially during your period. Fertility problems also may develop. Fortunately, effective treatments are available.

The primary symptom of endometriosis is pelvic pain, often associated with your menstrual period. Although many women experience cramping during their menstrual period, women with endometriosis typically describe menstrual pain that’s far worse than usual. They also tend to report that the pain increases over time.

Beyond pain, the main complication of endometriosis is impaired fertility. Approximately one-third to one-half of women with endometriosis have difficulty getting pregnant.

Treatment for endometriosis falls into three categories:

1. Pain medication

Your doctor may recommend that you take an over-the-counter pain reliever, such as the nonsteroidal anti-inflammatory drugs (NSAIDs) ibuprofen (Advil, Motrin IB, others) or naproxen sodium (Aleve, others), to help ease painful menstrual cramps.

2. Hormone therapy

Supplemental hormones are sometimes effective in reducing or eliminating the pain of endometriosis. The rise and fall of hormones during the menstrual cycle causes endometrial implants to thicken, break down and bleed. Hormone medication may slow endometrial tissue growth and prevent new implants of endometrial tissue.

Hormone therapy isn’t a permanent fix for endometriosis. You could experience a return of your symptoms after stopping treatment.

3. Surgery for endometriosis

If you have endometriosis and are trying to become pregnant, surgery to remove the endometriosis implants while preserving your uterus and ovaries (conservative surgery) may increase your chances of success. If you have severe pain from endometriosis, you may also benefit from surgery — however, endometriosis and pain may return.

Surgery to remove the uterus (hysterectomy) and ovaries (oophorectomy) was once considered the most effective treatment for endometriosis. But endometriosis experts are moving away from this approach, instead focusing on the careful and thorough removal of all endometriosis tissue.

Supporting Evidence

One academic study (Yuan, 2017, DOI: 10.2147/IJN.S146569) has noted the efficacy in reducing pain related to endometriosis in a rat model of endometriosis by using a P2X3 antagonist tool compound, A‐317491. Another academic study (Ding, 2017, PMID: 28898282) notes increased expression levels of P2X3 in endometriosis patients versus control patients. Correlation analysis also linked P2X3 expression with pain levels in endometriosis patients.

Further validation comes from both active big pharma P2X3 antagonists ‘programs focusing on pain related to endometriosis.

We mentioned Merck’s Phase 2 study earlier. The information for this study “A Study to Evaluate the Efficacy and Safety of Gefapixant (MK-7264) in Women with Endometriosis-Related Pain (MK-7264-034)” can be found on clinicaltrials.gov (Link). The primary endpoint is:

1. “Change From Baseline in Average Daily Pelvic Pain Score During Treatment Cycle 2 [ Time Frame: Baseline and Treatment Cycle 2 (Week 4 to Week 8; each cycle is approximately 28 days) ]
2. Pelvic pain (cyclic and non-cyclic) severity will be measured using a 0-10 numeric rating scale (NRS), with 0 representing no pain and 10 representing extremely severe pain. The average of the daily pelvic pain scores (cyclic and non-cyclic) entered in the eDiary will be calculated for the Baseline and for Treatment Cycle 2 (Week 4 to Week 8).

The study is expected to have 166 participants and to be completed in October 2019.

In July 2017, a press release from Bayer describes the potential of their program: “Bayer and Evotec have decided to extend their partnership for the development of endometriosis”

** Bayer and Evotec have announced that a second compound derived from their endometriosis partnership has made it to clinical trials. The team has decided to extend the partnership for an extra year, until the end of 2018, and take the number of candidates to be developed up from three to four.

**Endometriosis affects 176 million women worldwide or 11% of women of reproductive age. There is no known cure and “most available reatement have certain limitation”.

**With around 11% of women in reproductive age suffering from this painful condition, the endometriosis market is expected to reach €1.7B or around $2B by 2025.

P2X3 – a highly innovative target for the non-Hormonal treatment of endometriosis 

Davenport from Bayer and Evotec AG showed very nice experimental data to support P2X3 as a potential non‐hormonal treatment target option for endometriosis. P2X3 under inflammatory conditions is thought to contribute to central sensitization, which is a condition of the nervous system that is associated with development and maintenance of chronic pain. Dr. Davenport showed increased expression of P2X3 in nerve fibers of the disease lesions. Moreover, in a rat model, a potent P2X3‐selective antagonist was shown to interfere with vicious circle between the nervous and the immune system. Furthermore, in a rat endometriosis‐induced model of dyspareunia, this P2X3‐selective antagonist demonstrated significant reduction of vaginal hyperalgesia. Robust pharmacological evidence of the P2X3‐selective antagonist provides a strong potential for non‐hormonal treatment of endometriosis.

 Blockbuster Market Potential

According to Bayer, endometriosis affects 176 million women worldwide with no known cures and current drugs having limitations. With a specific focus on pain, a P2X3 antagonist could be used in place of or as a second line therapy to NSAIDs for treating endometriosis. This seems to be the use case Merck is exploring with patients in their Phase 2 only allowed to use NSAIDs as rescue medication. While difficult to quantify, this is likely a blockbuster ($1B+) market opportunity though will depend on the data for P2X3 reduction in pain.

Conclusion

As Merck highlights and expands the potential for the P2X3 antagonist class, Bellus can expand their pipeline and this can also build value for Bellus shareholders. Bellus should be working to pursue these additional P2X3 indications and we can anticipate them to continue following Merck’s lead with a program that has the potential to be best in class.

But before we start counting on pipeline expansion, Bellus has a very important milestone and they have to deliver. With the ongoing chronic cough study, the Phase 1 data is expected in Q4 (late-November to early-December) that can significantly differentiate the Bellus program from Merck, the taste effect data from these subjects (if better than Merck) can now build more value in Bellus, first in chronic cough but also in endometriosis and possibly other P2X3 indications to follow.

Disclosure: The author is Long BLUSF