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ELAN REPORTS 47% REDUCTION IN GASTROINTESTINAL SIDE EFFECTS WITH NAPRELAN NAPROXEN V. SYNTEX' NAPROSYN IN COMPARISON TRIALS; VERELAN SALES ARE $100 MIL.

Executive Summary

Elan's Naprelan once-daily naproxen showed a 17.5% incidence of gastrointestinal side effects compared to a 32.5% incidence for Syntex' patent-protected Naprosyn, representing a 47% reduction in head-to-head trials, Elan Exec VP-Product Development and Program Management Michael Sember told securities analysts at a meeting in New York City July 16. Manufactured with Elan's proprietary IPDAS (Intestinal Protective Drug Absorption System) technology, the once-a-day formulation of the nonsteroidal anti-inflammatory drug naproxen is in "definitive multi-center trials" in the U.S. for use in treating osteoarthritis and rheumatoid arthritis, Exec VP- Regulatory and Medical Affairs Ronald Kartzinel, MD, said. Pointing out that the company plans to file a CANDA (Computer Assisted NDA) to "speed approval," Kartzinel said "we are extremely confident" that the company will receive an early approval, allowing "Elan to achieve our goal of bringing Naprelan to market at an extremely favorable time point in relation to the patent expiration of Naprosyn," which is Dec. 21, 1993. In response to a question about a potential marketing partner for Naprelan, Elan Chairman and CEO Donald Panoz said: "We would be interested in working with them [Syntex] and with other people." He would not disclose whether Elan is in active negotiations with a particular company. A deal with Elan for a once-daily version of naproxen would fit with Syntex' efforts to extend the product life of its flagship money maker as patent expiry looms. Syntex already has committed to becoming the largest supplier of bulk naproxen for generic versions of the NSAID and is working with Procter & Gamble on an OTC version of the nonsteroidal anti-inflammatory drug. Elan's Erythelan, a sustained-release pediatric formulation of erythromycin, also has shown an improved adverse reaction profile compared to available forms of the antibiotic, Elan told the analysts. An NDA for Erythelan is pending and the product is licensed for U.S. marketing to an undisclosed company. Kartzinel reported that Erythelan achieved "a significant reduction of GI side effects" compared to equivalent doses of erythromycin in recently completed studies in over 300 children." Calling Elan's Pharma-Zone twice-daily liquid suspension both "more efficient and more convenient," Kartzinel asserted that two 200 mg doses of Erythelan have been shown to be "equally efficient" to a regimen of four doses of 400 mg of standard erythromycin. One possible marketing partner for Erythelan is Warner- Lambert. Panoz announced that Elan has reached an agreement with Parke-Davis U.K. to form a joint venture in the U.K. called Elan Pharma Ltd. Erythelan is among the three products that Elan will contribute to the joint venture. The joint venture also will sell diltiazem: Elan developed the twice-daily and once-a-day versions of Marion Merrell Dow's diltiazem, Cardizem SR and Cardizem CD. In addition, the transdermal nicotine patch developed by Elan and marketed in the U.S. by Lederle as ProStep is included in the joint venture agreement. Warner-Lambert will contribute an undisclosed product. Warner-Lambert was Elan's chosen marketing partner in the U.S. for the nicotine patch until May 1991 when the companies announced that they had parted by "mutual consent" ("The Pink Sheet" May 6, 1991, In Brief). The meeting with the financial community gave Elan's Panoz the opportunity to unveil the company's significantly expanded pipeline: over 50 products are in development covering 18 therapeutic categories and utilizing the company's nine specialized drug delivery technologies. In the pipeline are 13 products either pending at FDA or in the pre-NDA filing stage. Several of these products use the company's SODAS once-daily technology, including Iselan, a version of Wyeth-Ayerst's Ismo (isosorbide-5-mononitrate), Duranol (propranolol) and Quinelan (quinidine). Also pending at FDA is an NDA for Nifelan, a once-a-day version of nifedipine employing Elan's INDAS (Insoluble Drug Absorption System) once-daily tablet technology. The company announced July 10 that Pfizer filed a law suit alleging that Nifelan, if approved, would infringe a patent licensed in the U.S. to Pfizer by Bayer AG. Elan says its U.S. licensee is Bayer subsidiary Miles. Panoz defended Elan's claim that the company has not infringed Pfizer's patent. He told analysts that Elan will "defend this action vigorously" and that he considers the action a "nuisance suit." Pfizer's once-daily nifedipine, Procardia XL, has patent protection until Sept. 16, 2003. Pointing out that Elan has more in its pipeline than new delivery systems for existing drugs, Kartzinel noted that Elan is "ready to start" Phase III multicenter trials in the U.S. and Europe of its orphan-designated drug for multiple sclerosis, the potassium channel blocker EL-970. Kartzinel suggested that a Treatment IND for EL-970 is likely, and Elan expects "the NDA approval to be very rapid." El-970 (4-aminopyridine) was licensed from Rush-Presbyterian-St. Luke's Medical Center, Chicago. Elan plans to support continuing R&D efforts with about $32 mil. in the next year, Exec VP and Chief Financial Officer Donald Geaney told analysts. Products generating significant sales revenues that can be channeled into R&D include Verelan and the nicotine patch Prostep. Verelan sales in the U.S. have topped $100 mil., Elan Exec VP-Business Planning/Commercial Development Kenneth McVey said. The company's annual report for FY 1992 (ended April 30) indicates that Elan's revenues from the sale and manufacture of Verelan amounted to about $21 mil., up from $14.3 mil. in FY 1991. Elan's Verelan sustained-release verapamil was approved on May 29, 1990 ("The Pink Sheet" June 4, 1990, T&G-1). The product is being copromoted by Lederle and Wyeth-Ayerst. Sember said Elan is developing a nighttime formulation of verapamil. The newer formulation "provides critical coverage through the morning hours...the hours that are most associated with cardiovascular incidences," he commented. Bolstered by the success of Verelan, Elan's McVey said the company has learned to license its products only during the final stages of development, which allows Elan "to maximize the licensing revenues." Whereas Elan used to receive 5%-10% of the sales generated by one of its products, the company now can and does "command between 25% and 35% of market sales values," McVey said. In a separate presentation, Lederle VP Edward Fritzky discussed strategies for marketing ProStep. Calling ProStep a "consumer friendly" smoking cessation patch, Fritzky stressed that Lederle is the only company that offers a toll-free service line, a rebate program for patients who resume smoking and reimbursement to pharmacists who counsel ProStep patients. Under the rebate program, a patient who resumes smoking at any time after using ProStep is entitled to receive a $50 discount for the second course of therapy. If the patient needs to use ProStep for a third time, the rebate increases to $100. Noting that, at six weeks, ProStep has the shortest treatment period of all the marketed nicotine patches, Fritzky calculated that three courses of therapy (covering 18 weeks) would cost a ProStep patient $479 after the two rebates; three rounds of Marion Merrell Dow's Nicoderm (covering 30 weeks) would cost $959; and three treatment rounds of Ciba-Geigy's Habitrol (covering 36 weeks) would carry a price tag of $1,125. Pharmacists who counsel patients on how to properly use ProStep will receive $2 for each counseling session, Fritzky said. He noted that Lederle is hoping for "at least 25%" of the nicotine patch market share. In order to meet the unexpected demand for nicotine patches, Elan has installed a second manufacturing machine that has doubled the company's production capacity, Panoz announced. A third machine "is scheduled for installation sometime in the fall," he said. Estimating that each machine produces about $200 mil. worth of patches, Elan is looking to manufacture $600 mil. worth of patches per year, Panoz said.

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