FDA Drug Approvals: Back to the Future

The first two new therapies cleared by FDA in 2011 feel like hail from a bygone era: a serotonin inhibitor antidepressant and an angiotensin II blocking anti-hypertensive. This is certainly not how we expected the new drug approval process to work after the FDA Amendments Act was signed into law in 2007.

Our view of the new drug safety law was that it would favor drugs to treat relatively small, high need populations—and especially ones where robust risk management plans could deliver high value to very sick patients. Primary care blockbuster indications? Not so much.

As we like to put it, it will never be 1997 again.

Or will it?

Take the antidepressant Viibryd (vilazodone) and the angiotensin II receptor blocker Edarbi (azilsartan). Both enter crowded primary care classes that seemed vibrant and innovative 15 years ago, but feel saturated and, well, generic today. And both applications breezed through FDA early in 2011, gaining approval on the first cycle, with no deadline extension and no advisory committee review. Just like they probably would have in 1997.

Heck, when Forest acquired Clinical Data, the manufacturer of Viibryd, it felt even more like turning back the clock, with the company that brought Celexa and then Lexapro to market in the 1990s buying back into the class.

And it isn’t just these two drugs. For all the talk that “me too” drugs are out of favor, there have been other recent examples of "me too" success at FDA. Like, for instance, pitavastatin—a statin!—which cruised through FDA in 2009. Or Watson’s Rapaflo, which breezed through in 2008 to provide yet another alpha blocker option for men with BPH.

Those recent approvals are surprising not just for their nostalgic value. They are remarkable as examples of products making it through the agency at a time of chronically dismal new drug approval statistics. Viibryd and Edarbi cleared FDA amid some fairly prominent disappointments for orphan products (Protalix’ Uplyso gets a complete response; Pharming’s Rhucin gets a refuse to file letter), seemingly tougher standards in oncology (think Avastin and TDM-1), and some setbacks for attempts to repurpose old blockbusters for new indications (Contrave for obesity, for example).

What’s going on here?

Okay, first of all, it isn’t 1997 again.

For one thing, even with the two latest approvals, FDA will be lucky to reach half the total in NME/novel biologics for 2011 that it cleared in 1997. FDA approved 44 new molecules that year, compared to just 21 in 2010, and there is no reason to expect a higher total in 2011. (For a comprehensive look at the pending new products in 2011, check out this week's issue of "The Pink Sheet," here.)

And, while the new drugs are coming into huge classes, they don’t exactly have 1997-level blockbuster expectations. Kowa/Lilly’s launch of pitavastin (Livalo) generated just $5.7 million in sales in 2010. That’s just a few hours worth of Lipitor sales. Forest paid $1.2 billion to acquire Clinical Data and Viibryd. That’s a lot of money—but doesn’t exactly suggest anyone things Viibryd will be a billion dollars a year any time soon.

On the other hand, it’s not like other recent launches are doing so great either. Lilly isn’t getting rich on Livalo, but it isn’t getting very far with Effient either--at much higher cost.
And Effient—despite (or perhaps because of?) a massive dataset including a head-to-head comparative trial—struggled through FDA, requiring a protracted review and a public airing of safety questions at an advisory committee, followed by still more internal wrangling over whether and how to address those questions.

Compare that to Edarbi, which went through FDA in 10 months without any public hiccups--and with head-to-head superiority data versus the market leader. It didn’t need an advisory committee, because—as FDA explains in the approval letter—

“This drug is not the first in its class, the safety profile is similar to that of other drugs approved for this indication, the clinical study design is acceptable and similar to previously approved products in the class, evaluation of the safety data [when used in the treatment of hypertension] did not raise significant safety or efficacy issues that were unexpected for a drug of this class, the application did not raise significant public health questions on the role of the drug in the diagnosis, cure, mitigation, treatment, or prevention of a disease, and outside expertise was not necessary; there were no controversial issues that would benefit from advisory committee discussion.”

That may not sound like a ringing endorsement of the products therapeutic potential, but at today’s FDA lack of controversy might be as good as it gets. Commercial models aside, it is just possible that the secret to a first cycle, on time approval is as simple as “me too.”

Pfizer to Tin Man: Drop Dead

You're axing what?

Pfizer is, according to today's Wall Street Journal (not to mention at least one astute blogger last week), giving up on R&D in heart disease, obesity and bone health.

The big news here is the abandoning of cardiovascular medicine--Pfizer's profit center driven by $17+ billion annual revenues from Lipitor and Norvasc--but of course there are exceptions to consider. Pfizer isn't dropping its late-stage programs, like the much-written about apixaban, for example.

But the strategic shift, not wholly unexpected and certainly not conflicting with statements made by Pfizer leadership lately (including comments by R&D chief Martin Mackay and head of strategy Bill Ringo at FDC/Windhover's Pharmaceutical Strategic Alliances meeting last week) says a lot about where Pfizer--and Big Pharma generally--is moving.

Where's that? Toward a greater emphasis on specialty therapeutic spaces like oncology (look for a feature on Pfizer's oncology ambitions in the next IN VIVO) and into large molecules like next-generation biologics, of course. By now this is not a surprise, but just how Big Pharma manages to transform itself while at the same time dealing with massive patent expirations and the demands of dividend- and buyback-hungry shareholders remains to be seen. Nevertheless, pulling out of the increasingly genericized cardiovascular space and some other primary care areas should speed this transition.

Some of the smaller top-tier companies, like Bristol-Myers Squibb, can make do with focused business development strategies--the acquisition of Adnexus, for example, or the please-let-it-be-over-soon-we're-so-sick-of-it Imclone takeover. For Pfizer such add-ons won't do the trick. But Bill Ringo noted at PSA that although Pfizer on the whole would have trouble moving the growth needle with a string-of-pearls strategy akin to BMS's, it could do so within the context of specific disease areas. Cardiovascular R&D is clearly not one of those areas.

Layoffs are likely (as of now still no official word from Pfizer on the cuts). But look also for more Pfizer spin-outs like the Japanese business RaQualia and the second incarnation of Esperion, as well as out-licensing deals, to help smooth the transition. Pfizer has, by its own estimates, too substantial a Phase II pipeline to take through to pivotal trials. "We need to be more creative with development," noted Mackay at PSA, and he said RaQualia was a good example of that creativity at work, as was the apixaban deal, which could be replicated in the other direction with Pfizer partnering on one of its own Phase III candidates. What should be worrying to Pfizer and other pharmas is that despite a Phase II glut these companies have a difficult time determining which post-proof-of-concept projects will succeed in Phase III and at the regulators.

Pfizer isn't the first pharma to abandon what most would consider its core therapeutic space. GSK and AstraZeneca, for example, sustained for years by the profits from GI franchises, each exited the bulk of their R&D in that area (witness AZ's spin-out of Albireo, though that pharma has noted it remains active in GERD research whereas Pfizer seems unlikely to continue in hypercholesterolemia R&D).

So where does the Tin Man turn when his new ticker gets rusty? And where do those small pharma and biotech companies in need of a partner for their next-big-thing HDL raiser or anti-hypertensive turn? In this up-is-down, black-is-white pharma shift to specialist drugs, perhaps primary care becomes the domain of a few specialists while the rest of the industry piles into oncology and orphan drugs.

One further irony: even as its exits cardiovascular research, Pfizer wants to remain one of those few remaining primary-care specialists. Bill Ringo noted exactly that at the PSA and in this article in IN VIVO -- as other Big Pharmas cut back primary-care commercial programs to boost their presence in specialist marketing, Pfizer, while certainly doing the specialist thing, is going to keep its primary-care capabilities, theoretically giving itself a comparative advantage as an in-licenser when it comes to those increasingly rare, and expensive, late-stage primary care candidates.

The Blockbuster Model is Dead, Sort Of

The numbers are in, and it’s not a pretty picture.

No, we’re not talking about today’s Potomac presidential primary. We’re referring to the latest IMS Health figures on the state of the pharmaceutical industry, and as Diana Conmy, corporate director of market insights put it, they are “sobering and possibly a little alarming.” Conmy was kind enough to preview the 2007 numbers for the Health Industry Group Purchasing Organization’s National Pharmacy Forum; the official data won’t be released for a couple more weeks.

Unfortunately for industry, Conmy’s numbers don’t leave much to cheer about. The US market growth for pharmaceuticals and biotech products slowed to 3.8% in 2007—the worst growth rate since 1961.

Part of that is a result of tough comparisons against the big pay-off pharma received from Medicare Part D in 2006. But a lot is simply due to a general market slowdown for the drug industry. While some of the latter months of 2006 saw market growth approaching 12%, by December 2007, month-over-month growth was in the negative range, Conmy reported.

And if you’re thinking the next big launch will turn around that trajectory, think again. New chemical entities aren’t contributing as much to market growth as they have in the past. In fact, if you look at the average launch curves for the top 10 new chemical entities over the past several years, 2007 had the weakest results since 2003. “Fewer of these NCEs are top-performing, contributing much less to growth,” Conmy said.

So what does this mean for the blockbuster model? Well, as Conmy put it—and Windhover publisher Roger Longman keeps driving into our heads—“the blockbuster model isn’t dead, but perhaps the primary care-driven market is.”

And it sure seems that way: 2007 marked the first time that industry saw a decline in the number of primary care blockbusters (29 in 2007 versus 33 in 2006), IMS data show. At the same time, there was an increase in specialty care blockbusters (30 in 2007 versus 25 in 2006).

That’s evidenced by the fact that the primary care market declined over the last seven months of 2007, contributing a negative 18% to overall market growth for the year, while specialty care contributed a positive 118%. The growth rates per therapeutic area tell the same story: specialty care grew 10.5%, while “branded products” grew 2.9%--a rate almost a full percentage point below the total market.

In fact, of the four launches for 2008 that Conmy believes have blockbuster potential, three are specialty products: UCB’s certolizumab (Cimzia) for Crohn’s disease, Bristol-Myers Squibb’s ipilimumab for melanoma and Wyeth’s desvenlafaxine (Pristiq) for depression. (The fourth potential blockbuster on Conmy’s list is MedImmune’s respiratory syncytial virus antibody Numax.)

So is there any good news in all these doom and gloom? Luckily for pharma, there are lessons to be learned. Here’s the bottom line: specialty care is increasingly where pharma needs to be. And given the generally slower uptake of specialty care products, executives may have to adjust their expectations when it comes to launch curves.

That kind of “slow and low” attitude has another benefit in today’s increasingly risk-averse environment. “You might hear manufacturers say that ‘our strategy is more lower octane, so we can have a more controlled environment, we can make sure it’s safe, and we don’t have any major incidents,’” Conmy says.

That’s quite a departure from the “fast and furious” model of the DTC-infused primary care market. My, how far we’ve come.

Can a Sleep Drug Awaken Demand from European Consumers?

Superficially, it’s paradoxical.

Sepracor wouldn’t sell US marketing rights to its sleep drug Lunesta, even though it could probably have gotten a great deal. And then last week it goes and sells European rights to GSK for just $20 million upfront and another $135 million in milestones?

OK, that’s by no means a true yawner. But it’s hardly a wake-up call in this age of colossal licensing fees and milestones. VX950, the barely post-proof-of-concept hepatitis C candidate from Vertex, fetched $165 million upfront, and $380 million in pre-commercial milestones for merely European rights. Why didn’t Lunesta, with US sales approaching $600 million, do at least the equivalent?

Because the comparison isn’t at all fair. Hep C is a life-threatening disease currently treated with a couple of inadequate, problematic therapies. Insomnia is probably just as big a market -- but is less important to doctors than it is to patients (for some background on the insomnia markets and related dealmaking, see our coverage here and here).

And that’s precisely the challenge. In the US, Sepracor sets its own price and then can spend hundreds of millions of dollars getting its message out to consumers. In Europe and Japan it can do neither.

Which means that Lunesta will have a lot more commercial risk outside the US than something like VX950. GSK’s $20 million bet on the product isn’t exactly trivial, but it isn’t a huge vote of confidence that European insomniacs and their doctors will clamor for Lunivia (European for Lunesta) in the face of a host of generics like racemic zopiclone, Ambien, and a number of benzodiazepines.

And it’s why so much of the deal’s $135 million in milestones apparently depends not merely on getting a centralized approval, but on getting reasonable levels of pricing from various European countries. Sepracor could still make plenty of money: we estimate that it’s getting what might, on a blended basis, work out to a 15% royalty (the rate increases with sales) plus another 10-15% profit on selling the material to GSK. But Sepracor will only make money if the drug is successful.

Thus the $20 million upfront fee represents a cautious gamble that Lunesta’s data package will not only pass muster with the EMEA, but will convince the national reimbursement groups that they should pay a premium for a drug that can be used chronically and which comes with a host of data showing its beneficial effects on insomnia-associated co-morbidities, like depression.

Same thing in Japan, where a pricing milestone on Lunesta is also a key part of the value in the deal Sepracor signed in July with Eisai. The upfront in that deal was probably considerably smaller than what GSK paid: not only is the market about half the size of Europe, the product has to jump through more clinical hoops before it can be approved. In any event, the Eisai terms were undisclosed, which means they weren’t material.

Financially material that is. Sepracor is certainly hoping they’ll be seen as strategically material. The company has recently been a punching bag for investors, taking particularly heavy punishment when new CEO Adrian Adams lowered revenue expectations for 2007 during the company’s July earnings call.

Thus the biggest value to the deals may yet be validation for Sepracor’s ability to take a product developed in the US and convince leading CNS companies they can rely on the company’s US clinical and marketplace work to win approval for, and successfully commercialize, a consumer-driven product in markets where consumers don’t rule.

AZ: Radical Re-think?

David Brennan's certainly made his mark just over a year into his tenure as CEO of AstraZeneca. The company has embraced externalization with fervour, completing a dozen or so significant alliances or acquisitions in the last 12 months, bolting on biologics capabilities by snapping up compatriot CAT, and joined in the cost-cutting, efficiency drives and re-focusing that are fast becoming Big Pharma's hallmark.

But is that enough? Brennan doesn't seem to think so. When asked in an IN VIVO interview last month whether he's contemplating more revolutionary change to set AZ apart, the answer's an assertive "Yes". But he's not going to talk about how. So what might be afoot within the Mayfair HQ?

It's not going to be a merger--that's an old trick, after all, and one that hasn't been shown to work very well. Nor did he sound that excited by the notion of acquiring a new, ready-built franchise by buying a specialty pharma firm such as Shire (not that he'd want to now, anyway, after that firm's large lunch of Vyvanse promotion partner New River Pharmaceuticals.

Doing a Novartis doesn't seem to be on the agenda either--"we think about [buying] generics, vaccines or diagnostics, etc. during each annual review," admits Brennan. "But the whole point of the Astra-Zeneca merger was to focus us solely on innovative pharmaceuticals. Anything else would detract from that."

So what's left? Splitting up? As Brennan points out, AZ is already organized into small-ish units, research units, since recently including CAT and Arrow--and plans to remain that way, GSK-style--"better than putting everyone in one unit and saying, now we're all going to do things this way."

Perhaps that means more, smallish, bolt-on acquisitions--what most of the punters are predicting. But as these entrepreneurial cells are increasingly left to their own devices (unless you're Pfizer), it raises the prospect of Big Pharma as portfolio managers, assessing and managing a series of external partners rather than, not as well as, their in-house R&D.

"The hurdles for in-licensing are lower," Brennan says. "The way we look at it now is, we’ve got risk in our portfolio, there will be risk in what we’re licensing in, so let’s make sure we’re looking at the best technology, project, or product that we think we can get at the time, and we’ll deal with it accordingly." Sound a bit like a portfolio manager to you?

Big Pharma used to bask in relatively easy-won double digit growth--the safe havens of the stock market. That has changed. Today, "being successful is not a certainty—you have to make it happen," notes Brennan.

Watch this space.

AZ-BMS Diabetes Deal: Two Paths for Big Pharma

If there is a schism among Big Pharma it is between those companies clinging on to the notion that pharma's future role is--as it is today--as a massive marketer of mass-market drugs, and those that see specialism as a means to avoid imploding under the weight of their own infrastructures.
The diabetes deal announced yesterday by AstraZeneca and Bristol-Myers illustrates the pursuit of each strategy: AstraZeneca, eager to play in what one pharma CEO described this week as "the disease of our epoch," has paid BMS $100 million upfront for worldwide (except Japan) co-development and co-commercialization rights to two late-clinical stage diabetes projects. For BMS the move is another big step back from primary care marketing and confirmation that the company's future lies along a specialist path.

AZ will fund the majority (75%) of development costs through 2009, the companies said, after which costs will be split 50-50. Should each of the two drugs--saxagliptin, a DPP-4 inhibitor currently in Phase III and dapagliflozin, a SGLT2 inhibitor in Phase IIb--reach global markets BMS will earn $650 million in pre-commercial milestones and could land an additional $300 million per drug in sales milestones. Post launch expenses and profits will be split evenly on a global basis and BMS will manufacture both products and book sales.

Acquisition of diabetes projects to shore up its primary care portfolio has been high on AZ's agenda since the PPAR agonist tesaglitazar (Galida) crashed out of clinical trials in May 2006; ironically the decision to yank Galida was based on thought-leader and regulatory reaction to BMS's own PPAR, muraglitazar (Pargluva) and intimations that Galida was in for similar treatment. Pargluva was killed after analysis published in JAMA by Cleveland Clinic CV chair Steve Nissen, MD, questioned the safety of PPARs and FDA said further long-term clinical studies would be needed to approve the product. (See "Anything but Academic: Lessons from the PPAR Failures," The RPM Report, June 2006.)

By the time saxagliptin hits the market the best AZ and BMS can hope for is only two entrenched competitors: Merck's Januvia and Novartis' Galvus will likely await. Dapagliflozen is a sodium glucose co-transporter-2 inhibitor, which blocks the re-absorption of glucose from urine in the kidney; a more novel, yet riskier prospect.