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Dova Pharmaceuticals Targets a 9-Figure Opportunity, but Should You Buy Its IPO?

Patients with thrombocytopenia already receive treatment with drugs that work the same way Dova Pharmaceuticals' (NASDAQ: DOVA) lead drug candidate does, but that isn't stopping the freshly minted company from planning a Food and Drug Administration filing this year. Can Dova Pharmaceuticals capture sales in this indication, and are its shares a buy following its IPO yesterday? Read on to learn more about this company's prospects.

What's the market?

Thrombocytopenia is a low-blood platelet disorder that makes it hard for patients to form blood clots. Patients with thrombocytopenia can suffer major bleeding even from a small injury, and they can suffer life-threatening bleeding during medical procedures.

IMAGE SOURCE: GETTY IMAGES.

There are about 60,000 people in the U.S. requiring chronic treatment for thrombocytopenia and they're typically treated with corticosteroids or intravenous immunoglobin. Off-label use of Rituxan, removing the spleen, or a class of drugs known as TPO-RA's may also be used in the second-line setting.

It's the TPO-RA marketplace that Dova Pharmaceuticals' lead drug candidate, avatrombopag, hopes to shake-up. Like Amgen Inc.'s (NASDAQ: AMGN) Nplate and GlaxoSmithKline's (NYSE: GSK) Promacta, avatrombopag is a TPO-RA that mimicks thrombopoietin, a liver hormone that produces megakaryocytes, a bone marrow cell that makes platelets.

Currently, Nplate and Promacta are only approved by the FDA for use in chronic thrombocytopenia, not as a therapy to increase platelet counts prior to medical procedures. Instead, patients scheduled to have procedures that have platelet counts below 50,000 per microliter receive platelet transfusions.

However, these transfusions can be inconvenient and they include the risk of antibody development in up to half of patients. That has Dova Pharmaceuticals thinking that if it can win FDA approval in the acute setting, avatrombopag could alter standard of care. 

Backing up that thinking is data from two phase 3 trials showing avatrombopag works in chronic liver disease patients undergoing non-emergency minimally or moderately invasive procedures. Management estimates there are about 70,000 chronic liver disease patients in the U.S. with platelet counts south of 50,000 per microliter. 

Avatrombopag's commercial opportunity in the acute setting could be bigger than that, though. Dova Pharmaceuticals plans to research its use in thrombocytopenia patients undergoing joint replacement or chemotherapy too.

Additionally, it plans to sit down and talk to the FDA about a potential pathway to approval in the chronic setting. A go ahead in that patient population would position it to compete directly against Nplate and Promacta. Avatrombopag has already completed one phase 3 trial in these patients.

Can it compete?

If the company delivers on its timeline for filing its drug for FDA approval in the third quarter, then a regulatory go/no-go decision in the acute setting could happen sometime in mid-2018.

An approval, however, doesn't guarantee avatrombopag will displace prophylactic transfusion. Although there was only one incidence of portal vein thrombosis (PVT) in Dova Pharmaceuticals' chronic liver disease trial, the risk of PVT (a life-threatening blockage or narrowing of veins carrying blood to the liver) caused a Promacta trial to be halted in the past, and PVT is a big reason why this class of drugs isn't used in the acute setting. Given the history of PVT and TPO-RA drugs, doctors might stick with transfusions.

Even if the company convinces doctors to use avatrombopag, investors should remember that this is a small addressable patient population, so the commercial opportunity at first could be limited, and slow to grow.

That being said, the market in chronic thrombocytopenia is pretty big, and if conversations go well with the FDA, there's reason to think that avatrombopag could carve away at Amgen and GlaxoSmithKline's sales.

Unlike avatrombopag, Nplate is given subcutaneously rather than orally, and that could give it an edge. Promacta is taken orally like avatrombopag, but it carries a black box warning that requires liver testing and dietary restrictions. Nplate's sales were $584 million and Promacta sales were $635 million in 2016. So, an approval in this patient population could be a meaningful win.

Overall, there's clearly opportunity here that makes this company intriguing, but for now, I'm content with adding it to my watch list and tracking its progress with the FDA. 

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Todd Campbell has no position in any stocks mentioned. His clients may have positions in the companies mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.