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Blake Insomnia Therapeutics Inc (OTCMKTS:BKIT) Is Attempting To Succeed Where Merck & Co., Inc. (NYSE:MRK) and GlaxoSmithKline plc (ADR) (NYSE:GSK) Have Failed

By: | Tags: | Comments: 0 | January 9th, 2017

In the last ten years, Merck & Co., Inc. (NYSE:MRK), H. Lundbeck A/S(CPH:LUN) and GlaxoSmithKline plc (ADR) (NYSE:GSK), the three industry leaders in the sleep medication space, have all had to abandon attempts to develop and commercialize a prescription sleep aid that doesn’t induce side effects. Such a drug is the holy grail of the insomnia space, and the efforts of the above mentioned are just the tip of the iceberg of a long list of tried and failed assets.

Somewhere between 50 and 70 million Americans suffer from insomnia. Of these, close to 9 million take prescription pharmaceuticals to help them overcome the issue. More than 75% of these 9 million individuals, however, are dissatisfied with the drugs they are taking. The number one problem? A side effect called residual daytime sedation. Residual daytime sedation is exactly as it sounds – patients suffering from tiredness the during daylight hours, the day after they take a prescription medication to help them sleep. Additional issues, voiced by the FDA on approval of a variety of the currently approved standard of care therapies in the space, include sleep walking, hallucinations, violent outbursts and nocturnal binge eating. There’s a $3.6 billion market opportunity for a company that can come to market with a sleeping aid pharmaceutical that doesn’t have these side effects associated with it, and that’s why the big names are scrambling to fill the gap.

To date, however, none have been successful.

The problem, it seems, is that all of these companies are taking the current standard of care formulations, and attempting to modify them, or combine them with a complimentary ingredient, in an attempt to nullify the side effects of the formulation in question. Some have demonstrated promising results in early stage trials, and the science that underpins a number of the tried and failed Merck assets especially have looked like they warrant an FDA green light, until the final hurdle. There is seemingly no way to stop a pharmaceutical grade sleeping pill from causing tiredness during the day post-administration.

Markets are starting to realize this, and in turn, that in order to be succesfull in this space, a company is going to have go at the condition from a new angle. Blake Insomnia Therapeutics Inc (OTCMKTS:BKIT) is doing just that.

The company is a New York based biotechnology entity, with a focus on developing alternative formulation pharmaceutical sleep aids. Alternative, here, means avoiding the use of a hypnotic – the term used to describe the core ingredient in the market leading sleeping pills available today.

Instead of a hypnotic, Blake Insomnia Therapeutics is using a beta blocker as the core, active ingredient. To some, this might sound a little odd. Beta blockers are known the world over for having a primary side effect of sleep impediment. They inhibit the production of melatonin, the hormone that regulates sleep and wakefulness in plants and animals, and in doing so, stop a patient taking them from enjoying a regular sleep cycle. In turn, they also create the residual daytime sedation that makes the current standard of care treatments so dissatisfactory. That is true, with the majority of beta blockers. There’s a new generation of beta blockers, however, that is gaining traction among cardiovascular patients, and has been for the last five years. This generation (generally referred to as the third generation in the pharmaceutical space) doesn’t inhibit the production of melatonin, and in turn, has no impact on sleep.

For those not familiar with beta blockers, they are a class of medications that are particularly used to manage cardiac arrhythmias, and to protect the heart from a second heart attack. They are vasodilators, meaning they widen blood vessels, and in doing so, reduce blood pressure flowing through the heart. This, of course, is important to those with hypertension or for those who have cardiovascular issues, but it’s also important for Blake Insomnia Therapeutics.

Why?

Because the company is taking this mechanism of action, and applying it to the largest subpopulation of insomnia sufferers – patients with a class of insomnia called stress induced insomnia. Using the 70 million figure above, that’s around 56 million Americans suffering from the condition. As the name suggests, stress is the core contributor to this category of insomnia, and a large portion of sufferers don’t seek pharmaceutical treatment because of the side effects associated with drugs like Ambien. An individual with a stressful job, for example, isn’t going to want to risk daytime tiredness, as chances are this will just exacerbate on-the-job stress.

Blake Insomnia has taken a third generation beta blocker and used it as the core ingredient in a treatment it calls Zleepax. When a patient suffers from this type of insomnia, it starts as a mental condition, and then the thoughts that come with stress result in a physical manifestation of said stress. This physical manifestation creates physical symptoms, and these exacerbate the mental symptoms. It’s a vicious circle, and one that Zleepax aims to interject at the physical manifestation phase. How? The primary physical manifestations of stress practically mirror those that beta blockers address in hypertension patients.

The drug is about to enter phase II studies in the US. Phase I studies are not necessary, based on the litany of available data supporting the safety and efficacy of beta blockers in their more traditional indications, and this means that Blake Insomnia could be initiating a pivotal trial for Zleepax by the end of this year. Indeed, this is the company’s target, assuming the phase II runs smoothly and produces some indication of clinical benefit in the target population. Beyond a pivotal, an NDA submission during late-2018, and a 2019 launch, could see the company bring an asset to market that does what so many of the bigger names in the space have tried, but failed, to do so far.

Anyone considering an allocation here should be fully aware that this is a risky exposure. Few, if any, biotech companies the size of Blake Therapeutics have clear shots on goal, and the chances of failure need to be considered a major risk before adding a company like this to a portfolio. Zleepax may prove ineffective in large trials, or it may have some unexpected side effects, even if it doesn’t improve sleep. Blake Insomnia might have trouble at clinical phase (enrollment, that sort of thing), and this could push back the time to approval. In turn, the company could end up spending more money on studies than it expects.

With that said, however, this seems a simple and elegant approach to a severely unmet need, and for a risk tolerant biotech investor, is well worth a look.

The author has no position in the above mentioned companies.

By Samuel Rae


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