JPM Meeting Notes – InVivo Therapeutics (NVIV)

My meeting with InVivo Therapeutics (NVIV) was rather boring. We talked about the weather and Boston sports teams – not much to report.

Just kidding!

Obviously, enrollment was a primary topic of discussion. Management continues to believe that the pace will accelerate in the coming weeks and that full enrollment is probable by the end of the second quarter. They point to evidence that enrollment was accelerating in May 2016 just prior to the FDA halt. As of today, 29 sites are up and running (more than back in May) and it sounds like new centers in Canada and the UK are going instrumental in getting the trajectory moving up. Those countries have “National Centers” where the majority of SCI work is done, making it ripe for new and exciting technology like InVivo’s NSI.

We talked about the fact that five of 12 patients have been at one center (Charlotte, NC). This has been an area of concern for some investors. To me, it seems like the PI at the Charlotte site (Dom Coric, MD) not only “gets it” from a therapeutic standpoint, but was already familiar enough with the criteria and type of patient InVivo is looking for to enroll. This makes him more efficient. For example, all patients in INSPIRE must be AIS-A. That seems a simple concept, but it’s not something that neurosurgeons are actively focusing on prior to surgery. It’s more an after-the-fact. That seems the case because the surgery is the same whether the patient is AIS-A or AIS-B. There are no real operational differences; again, it’s more a classification for progress tracking during rehabilitation and healthcare database. So InVivo needs to get more PI’s actively thinking and looking for patients that fit into INSPIRE. I don’t think the protocol is restrictive and I absolutely do not think this is “just too small a market”. I think there are logistical issues slowing the pace, and guys like Dr. Coric can help with best practices for other PIs. All fixable stuff.

We also talked about the control issue. This is the bigger issue for me. Full enrollment is a “when” not “if” problem, and it sounds like management expects the “when” to be in about 5-6 months. I’m fine that. We’ve waited this long! What is far more important is the “how” and the control issue needs to be addressed. Right now the OPC is 25% and that is based on PubMed and databases that suggest normal history at 10-15%. What management is doing now is enhancing that support package, including finding and presenting new databases to the FDA. It’s an ongoing process and what management is doing make sense to me. I think if the company can convince the FDA the current path forward makes the most sense – which I think they have a good shot at doing – I think the stock has a big recovery. I think a lot of institutional investors are on the sideline because the “how” question is far more important than the “when”. Hopefully, that gets resolved soon.

Other topics discussed were when management anticipates moving forward with the cervical trial and the BNT program. It sounds like InVivo pulled the cervical application because getting to a resolution on questions around INSPIRE – mostly the “how” discussed above – were more important. I think InVivo figured they will tackle one issue at a time. That being said, it sounds like the cervical trial is on track to start later in the year, only in Canada instead. I’ve got no issues with that plan. If they said Turkmenistan than I might have pushed back (no offense to my huge Turkmenistan following)! If management can generate some safety and efficacy data with a small cervical trial in Canada, that’s great. The FDA will be on board with a larger U.S. study thereafter or after the protocol for INSPIRE has been (finally) finalized. With respect to BNT, InVivo is still engaged in discussion with organizations that might provide the cells. This includes academic centers and public and private companies. There are a lot of moving pieces here so I’ll just leave it at that.

We also talked about how the newly passed 21st Century Cures Act increases the number of eligible patients under HDE to 8,000 from 4,000. I haven’t seen any investor chatter about this even though it’s quite important. Now, perhaps INSPIRE doesn’t even target 4,000 patients. Given the slow pace of enrollment, that might be a fair statement, but when you start including cervical and incomplete injuries, being limited to 4,000 capped InVivo’s commercial upside. At 8,000, the addressable market opportunity is twice the size. I think the FDA did that because they are looking to encourage more HDE applications. Biopharma companies have exploited (perhaps overly so) the Orphan Drug pathway, but medical device names have yet to really capitalize on HDE. That may change in the coming years thanks to the Cures Act.

Finally, we talked about the offer from Pixar Bio. What more is there to say? The offer is not credible and I do not see IP issues at InVivo.