Stryker Misses the Goal with OP-1

Analysts watching the progress of Stryker's OP-1, the first orthobiologic device to deliver a manufactured bone growth-inducing protein, have long been aware that the design for the product's pivotal clinical trial had its shortcomings. Nonetheless, a US approval appeared likely, especially after the CPMP unanimously recommended the product for European approval on January 3. But three weeks later, FDA sent Stryker a not-approvable letter. As it turned out, however, the OP-1 news, coincident with the company's announcement of strong financial results for 2000, barely put a dent in its stock price.

Analysts watching the progress of Stryker Corp. 's OP-1, the first orthobiologic product to deliver a manufactured bone growth-inducing protein, have long been aware that the design for the product's pivotal clinical trial had its shortcomings. Only 100 patients were enrolled, the label indication—for the treatment of tibial nonunion fractures—was narrow, and both the treatment and control arms of the study used nails to fix the fractures, making it more difficult to ascribe any clinical benefit directly to OP-1.

Nonetheless, a US approval appeared likely, especially after the CPMP unanimously recommended OP-1(osteogenic protein-1, also known as bone morphogenetic protein-7 [BMP-7]) for European approval on January 3. But three weeks later, the FDA sent Stryker a not-approvable letter, basing its decision primarily on a lack of statistical equivalence as compared to the control treatment of autograft (bone chips, usually taken from the hip, and inserted into the bone gap), according to the company. Indeed, radiographic analysis of patients showed early differences in cortical bridging that favored the autograft control. Those differences lessened over time, but did not disappear (see "When the Body Alone Can't Build Bone," START-UP, July 1999 [A#1999900114).

The FDA's notification came as Stryker was preparing to announce strong results for the year. In fact, FDA notified Stryker executives of its decision by phone on January 26, just one business day before the company's scheduled release of its numbers. Not wanting to delay release of the OP-1news until after its earnings announcement (after the close of the market on Monday), Stryker asked the FDA to put its decision in writing as soon as possible, to avoid any appearance of hiding bad news. It received the not-approvable letter just two hours before the Monday afternoon analysts' conference call to discuss its results, and managed to put out a press release 45 minutes before the call.

As it turned out, the OP-1news barely put a dent in Stryker's stock price. Of much greater importance to the company's traditional institutional investors were president and CEO John Brown's observations that Stryker has now completely integrated Howmedica Inc., which it acquired from Pfizer Inc. in August 1998 [See Deal], and that it is again on track for 20% top-line growth. Stryker showed strong performance in the US in all of its divisions, and excluding the impact of foreign currency comparisons, amounting to $24.6 million in the fourth quarter and $43 million for the year, its 2000 net sales increased 11%, to almost $2.3 billion.

Stryker had licensed rights to orthopedic and dental applications for OP-1from Creative BioMolecules Inc., which in 2000 merged with Ontogeny Inc., and Reprogenesis Inc. to form Curis Inc. [See Deal] Curis's stock, in contrast to Stryker's, was virtually cut in half following the FDA's action, because a main rationale for the merger was to create a company that could use the anticipated revenue stream from OP-1—Creative BioMolecules' only significant asset, for which its shareholders received 43% of Curis's stock—to self-fund its longer-term programs. Any significant delay in US approval of OP-1 obviously calls into question the viability of Curis's strategy and the price it paid for Creative.

In explaining the FDA action on OP-1, Stryker's Brown notes that the FDA had "trapped" his company when the parties decided on the design for a pivotal trial. "The study was designed more than ten years ago," he points out, at a time when the agency was concerned about the increasing size of pivotal trials. "Companies were almost marketing products under the guise of doing a study," he explains. So the FDA decided to limit the OP-1pivotal study to 50 patients in each arm.

Brown contends that a larger trial would have had greater statistical power, which he believes would have worked in the company's favor. Additionally, the trial design included only patients with tibial nonunion fractures (breaks that had not healed in nine months) who had received no further treatment. The latter criterion greatly influenced the type of patient that could be recruited—primarily indigents and other individuals who perhaps did not take care of themselves as well as would a more representative sample of the overall population. And although the CPMP based its decision on the same data as the FDA, it was reviewing the product as a drug and, Brown says, it placed greater emphasis on the clinical result—weight bearing and pain reduction. The FDA, on the other hand, had decided back in 1989 to review OP-1, which comprises the protein soaked in a bovine collagen matrix, as a device.

The market for nonunion fractures isn't large enough to warrant running a new trial, Brown says. Stryker is continuing its clinical trials in fresh fractures, however, potentially a much bigger opportunity: the company has completed a pilot study and is preparing an IDE submission for a possible pivotal trial in that indication. It also is enrolling in a 45-patient pilot trial in spine, which Brown says may lead to another pivotal trial later this year. (It also has ongoing trials in periodontal disease using OP-1.) But Brown is reluctant to speculate about the next phase of its US regulatory strategy until the company meets with the FDA to discuss the letter, which he expects will happen within 30 days. He says a final EU approval of OP-1should come in the next 3-4 months.

Putting aside the particular problems associated with the Stryker trial, OP-1's inability to show benefit over the control group did nothing to lessen existing concerns about the value of orthobiologics in general—and in particular the delivery of single proteins, as opposed to cocktails of proteins (as presumably contained in autograft bone or even bone processed from cadavers), to stimulate bone growth.

The combination of the time it has taken to bring the first orthobiologics to the market and the absence of compelling data has dampened enthusiasm for such products for some time, leading to only modest expectations for commercial success. Especially given the high cost of biologics, advancements in the field may require technologies that deliver whole cells or genes to a fracture site.