This Week In Pharma: Ionis Pharma’s Upcoming Phase 2a Obesity Drug Results And The DEA’s Second Look At Marijuana

SLINGSHOT CONTRIBUTOR: Killian McKee

This week covers hotly anticipated drug trial results from Ionis Pharmaceuticals (NASDAQ:IONS) and a potentially landmark decision from the DEA.

IONS expects to release Phase 2a data for its obesity drug IONIS-FGFR4Rx. Investors should pay attention; the obesity market is massive (no pun intended), and the company could have a blockbuster on its hands if it can successfully clear phases 2 and 3. Expert Interview Option 1 will go into more depth about what investors might expect to see from Phase 2a data.

The DEA ruling on whether or not to reschedule marijuana down from a class Schedule 1 substance comes out this summer and could present the few companies currently making cannabinoid-based drugs with a big opportunity. In Option 2 below, we will touch on GW Pharmaceuticals (NASDAQ:GWPH), Cannabics Pharmaceuticals (OTCQB:CNBX), and OWC Pharmaceutical Research Corp. (OTCQB:OWCP). Currently, marijuana sits in the most restrictive class option (more restrictive than cocaine), deemed by the DEA to have “no currently accepted medical use and a high potential for abuse.” Option 2 will focus on the likelihood of a marijuana reclassification and how it might impact pharma.

Option 1: Discussing the Phase 2a results coming Q3 for IONS’ obesity drug. What outcome can investors likely expect, and what impact would it have on the market?

What’s the Situation?

Obesity has become a global epidemic in both children and adults. In 2014, the World Health Organization estimated over 600 million adults over 18 and 42 million children under 5 were either severely overweight or obese. Obesity is quickly becoming one of the most expensive conditions in developed countries around the world. In the U.S alone, estimates typically range from $147–210 billion annually. To make matters worse, it puts people at risk for an extensive list of other diseases. Some examples are hypertension, type 2 diabetes, dyslipidemia, and a host of cardiovascular diseases. Despite the growing size of the obesity epidemic, few drugs have been approved to treat it, due to central nervous system (CNS) and cardiovascular concerns. Furthermore, many of these drugs are poorly prescribed due to their low efficacy. A large unmet need exists for weight loss drugs without harmful cardiac or CNS side effects. This makes the results from IONS’ Phase 2a study critical for both investors and the medical community.

What Might Change?

IONS believes it has developed an antisense weight loss drug without harmful cardiac or CNS side effects (IONIS-FGFR4Rx). It works by inhibiting the body’s ability to store fat via fibroblast cells, while simultaneously increasing fat burning and energy consumption. If the company can successfully bring a weight loss drug to market with these parameters, it will be able to gain significant market share from competitors, all of which have serious side effects.

What Else Should You Know?

  • IONS recently had issues in two ongoing trials for IONIS-TTR (both trials saw severely decreased patient blood platelet counts) for different indications. While this doesn’t directly influence the company’s ability to bring IONIS-FGFR4Rx to market, it has seriously dented its stock price. Some analysts have suggested IONS is a prime target for a buyout by companies like Gilead (NASDAQ:GILD) or AbbVie (NYSE:ABBV).
  • Although IONS has a large pipeline on paper, the platelet problem from its two Phase 3 trials could impact some of its other drugs using a similar delivery method. This heightens the importance of IONIS-FGFR4Rx to the health of the company.

What’s the Next Step?

Talking to an expert. Interviewing a physician with significant experience treating metabolic disorders or obese patients would provide investors with insight into the viability of IONS’ obesity drug and a window into what they might expect to see from 2a data.

Questions for metabolic disorder expert:

  1. What is your background dealing with metabolic disorders?
  2. What are your initial impressions on IONS obesity drug based on how it performed in Phase 1? What would you expect to see in the Phase 2a data?
  3. Are there any alternative types of obesity treatment in the pipeline you see as potentially more viable?
  4. Are there any competitors to IONS you’re aware of that may be flying under the radar? How do you see them as a threat?
  5. Some analysts have suggested IONS could financially have trouble getting drugs to market due to its platelet-related troubles. Are metabolic drugs like IONIS-FGFR4Rx typically more or less expensive to develop? Do you see this drug as promising enough to attract buyers for the company?
  6. Is FGFR4Rx delivered similarly to the IONIS-TTR program?
  7. Would you prescribe a drug like IONIS-FGFR4Rx? Why so, or why not?

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In Conclusion:

IONS’ obesity drug has potential and could be tremendously profitable if it clears clinical trials. Speaking with an expert about the science behind the drug and upcoming results could give investors a leg up on the competition.

Option 2: Delving into the DEA’s possible marijuana rescheduling. What is the most likely decision, and what would this mean for cannabinoid pharmaceutical companies?

What’s the Situation?

The DEA announced earlier this year that it would make a decision regarding the reconsideration of marijuana by the end of summer. Cannabis is currently listed as a Schedule 1 drug under the Controlled Substances Act. This classification, which marijuana shares with LSD and heroin, means the U.S. government considers it one of “the most dangerous drugs” with “no currently accepted medical use and a high potential for abuse.” Investors should be interested, because this change could open the door to a “green rush” of cannabinoid investing, while simultaneously dumping significant FDA regulation on current medical dispensaries. Companies already invested in marijuana might get a jump-start on the competition.

What Might Change?

The scheduling of marijuana from Schedule 1 to a Schedule 2 or 3 drug. The rescheduling argument primarily revolves around cannabis’ potential for medical use. 23 states have legalized medical marijuana to address diseases ranging from chronic pain to cancer, despite it being illegal in the federal government’s eyes. Furthermore, the U.S. Surgeon General admitted last year that “marijuana can be helpful” for some medical problems. If the DEA does decide to schedule marijuana with apparently less dangerous drugs, like cocaine (Schedule 2) or anabolic steroids (class 3), it will become much easier for pharmaceutical companies to initiate medical trials using cannabinoids. Currently, all the U.S.-based drug companies pursuing marijuana must conduct their research abroad and cannot easily sell their drugs in the United States.

This became clear in an Expert call Slingshot did earlier this year regarding GWPH. The doctor expressed the difficulty in prescribing Schedule 1 drugs, saying, “It’s really tough, because we had to jump through hoops to get approved for a Schedule 1 license here. I just can’t imagine many physicians want to do that, so I think there’s going to… There’s going to have to be some negotiation at some point along the way with DEA…” A change in DEA scheduling could increase physician demand for cannabinoids and make their production more widespread.

What Else Should You Know?

  • Three U.S. marijuana companies worth noting are GW Pharmaceuticals, Cannabis Pharmaceuticals, and OWC Pharmaceutical Research . All three have tested marijuana-based drugs abroad — GWPH in the U.K., and the other two in Israel. GWPH has brought two THC (one of the main components in marijuana)-based drugs to market in the U.K. Looser domestic restrictions could see all of these companies attempting to get their products/trials approved by the FDA.
  • Ironically, some medical dispensaries are fighting rescheduling. Rescheduling would put marijuana under FDA regulation, increasing costs for current pot sellers. They fear each strain of cannabis they sell would need separate FDA approval and drive them out of business.

What’s the Next Step?

Talking with a legislator or lobbyist with an understanding of the rescheduling process and the political landscape surrounding medical marijuana. Ideally, this person would be familiar with the pharma companies and process to institute a rescheduling. The interview would discuss the likelihood of the DEA rescheduling marijuana from Class 1 to something else and help investors gain a better understanding of how a change would impact companies currently invested in cannabis-based treatments, like GWPH.

Questions for marijuana expert:

  1. What is your background with the medical marijuana industry and the DEA’s rescheduling process?
  2. Could you walk us through the rescheduling process? Why do you think the DEA is considering reclassification marijuana?
  3. What classification would you expect marijuana to receive if it were rescheduled? How important is this classification to drug manufacturers?
  4. How do you see rescheduling impacting pharmaceutical companies currently in the business, like GWPH, and those that aren’t? Have you heard of serious interest or pressure from large pharma companies regarding rescheduling?
  5. What do you think will be the likely outcome of the DEA’s decision? Why?
  6. How long does the rescheduling process take, if approved by the DEA? When could we expect to see more companies initiating marijuana-based drug trials?
  7. Which are the most vocal and important groups that oppose this? How strong a group do you consider them?

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In Conclusion:

The DEA’s decision to reschedule marijuana could have a significant impact on the medical marijuana and pharmaceutical industries. Investors should be interested because of how this will impact companies already invested in making cannabinoids, and what it might mean for those who found previous scheduling too restrictive.

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