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BURROUGHS WELLCOME ZOVIRAX SALES ARE $568 MIL. THROUGH SIX MONTHS, FIRM TELLS ANALYSTS; OTC APPLICATION FOR ZOVIRAX FOR GENITAL HERPES MANAGEMENT ON TAP

Executive Summary

Burroughs Wellcome's Zovirax sales increased 17% in constant currency to $568 mil. ([pounds]369 mil.) in the first half of fiscal 1993 (ended Feb. 27), Burroughs Wellcome USA President Philip Tracy told a securities analysts meeting March 25 in New York City. U.S. sales grew even more robustly, gaining 21% in constant currency, Tracy said. Zovirax (acyclovir) is approved in the U.S. for treatment of chicken pox, shingles and genital herpes. The chicken pox indication was approved in February 1992. Zovirax sales through six months last year were [pounds]278 mil. ("The Pink Sheet" June 22, 1992, p. 16). Tracy outlined a three-part strategy to continue to grow B-W's Zovirax franchise: cost-effectiveness research, a broadening of the genital herpes market and a switch to OTC status. "We are continuing investments in the area of health economics research," Tracy said. "We think that such research is important" for showing the "value" of Zovirax "in the overall cost of treatment." Secondly, "we are seeking to further develop Zovirax in the suppression of genital herpes to meet the tremendous need for psychological and physical control of this emotionally debilitating disease," Tracy continued. In a March 28 press release, Burroughs Wellcome publicized a study in the journal Sexually Transmitted Diseases demonstrating that "the emotional and psychological impact of genital herpes can be severe and long-lasting." "Finally," Tracy said, "we are actively pursuing a strategy of making Zovirax available on an over-the-counter basis for certain segments of the herpes market." The firm has received approval in six countries for OTC Zovirax cream for treatment of cold sores and expects U.K. approval this year, Tracy noted. In the U.S. Burroughs Wellcome is pursuing an OTC switch application for an "oral form for the management of recurrent genital herpes," Tracy said. Burroughs Wellcome has been in contact with FDA in developing the application, he added, and is encouraged by the agency's response. "We intend at the moment to submit an NDA later this year," Tracy continued. "There may still be some studies ongoing at the time, but we think we'll have the bulk of the package ready by the end of the year, then it will be a question of how long the FDA takes to review the NDA." Zovirax "has established an outstanding record of both safety and efficacy over its 10 years of prescription usage," Tracy said. "We're very hopeful that this track record will in fact expedite FDA's review and approval of the switch of the product to OTC status." Burroughs Wellcome has conducted epidemiological studies involving 30,000 to 40,000 patients to support the application. The Zovirax patent in the U.S. expires in 1997. The company is also developing follow-on compounds, 256U and 882C. "Both of these compounds are going to offer a real clinical improvement over Zovirax," Tracy declared, "without compromising the high safety and efficacy standards it has set -- a claim which we don't think...will be able to be made by other companies in development with this market." Retrovir (zidovudine/AZT) sales grew 14% through six months (excluding currency effects) to $202 mil. ([pounds]131 mil.), Tracy said. U.S. growth was 15%, he added. Barr Lab's challenge of Burroughs Wellcome's Retrovir patent is expected to go to trial "at the end of June," Tracy noted. The company believes "both the factors and law are clear...we expect that we'll prevail." Sales of "other patented products," including the epilepsy drug Lamictal, Wellferon brand alpha interferon, the lung surfactant Exosurf, the Pneumocystis carinii pneumonia treatment Mepron and neuromuscular blocking agents were up 37% to nearly $190 mil. ([pounds]123 mil.), Tracy said. Burroughs Wellcome half-year sales were up 22% (11% excluding currency) to $1.58 bil. ([pounds]1.03 bil.). Worldwide prescription drug sales rose 13% excluding currency fluctuations, to $1.37 bil. ([pounds]890.3 mil.). "We estimate that price increases contributed only 1%," the company said. Worldwide OTC sales were down 3% in constant currency. U.S. sales from continuing operations were $719 mil. ([pounds]466.9 mil.), up 9% in constant currency. Tracy was asked about Burroughs Wellcome's U.S. prescription drug price increases. He reported that the company's 1993 "effective price increase," taking into account rebates and discounts across its product line, will be "less than 3%." The "stated price increase" in January was 4.9%, he said. Tracy acknowledged that critics of drug industry pricing such as Sen. Pryor (D-Ark.) would focus on the 4.9% figure as an inflationary increase, an approach Tracy characterized as examining the issue "without regard to reality." Defending company product prices, Burroughs Wellcome USA VP-Research, Development and Medical David Barry said that "for our two most prominent drugs, Zovirax and Retrovir...our prices in the U.S. are significantly lower than they are in other countries." Burroughs Wellcome has not been forced to give steep discounts on its product to large purchasers, Tracy said. "We've been reasonably fortunate with some of our leading products being in an exclusive position -- Zovirax and Retrovir both -- so we're not in a situation where many companies are where they're being played off against a competitor," Tracy said. "All our deals so far have been based on volume increases in business." Burroughs Wellcome has "to continue to do business with these health maintenance organizations and others in the future, so we...have contracts with them that cover our patented product as well as unpatented products." Barry was asked to outline upcoming new drug launches in the U.S. He noted that Lamictal was recommended for approval by an FDA advisory committee March 20 (see preceding story), adding "we hope to have [it] approved" before the end of the year. The firm's nonsedating antihistamine/decongestant combination Semprex-D (acrivastine/pseudoephedrine) is scheduled for an advisory committee review April 26, Barry added ("The Pink Sheet" March 22, In Brief). "We have no reason to believe that won't go well," he said. "We believe it has a...unique advantage of not having cardiotoxicity" associated with other nonsedating antihistamines such as Marion Merrell Dow's Seldane and Johnson & Johnson's Hismanal, Barry maintained. He noted that the product is going OTC in some European countries. Other near-term prospects for the U.S. include Wellferon, Barry said. Burroughs Wellcome has an application pending for juvenile laryngeal papillomatosis, Barry said. "We also have had discussions and a lot of data into the FDA for warts, particularly genital warts with systemic administration," he said. Finally, Burroughs Wellcome is "in the midst of a very large and definitive study" comparing Wellferon to "another interferon product" for treatment of hepatitis C. "We've had the [Wellferon] NDA in to the FDA for an embarrassingly long time," Barry commended, adding: "Embarrassing for them, not us." The company had been seeking an indication for hairy cell leukemia but "I'm not sure we're going to assiduously pursue that," Barry said. Three agents (including Schering-Plough's Intron-A interferon brand) are now approved for the rare cancer. Compounds in late stage clinical trials that Barry estimated were two-to-four years away from U.S. launch include Exosurf for adult respiratory distress syndrome, the platelet inhibitor Flolan (epoprostenol) for treatment of severe congestive heart failure, RheothRx (poloxamer 188) -- licensed from CytRx -- for treatment of myocardial infarction, and Navelbine (vinorelbine) for breast and lung cancer. Navelbine appears to be most advanced: "we are in the process of having discussions with our regulators as to the appropriate timing for the submission of data for both of these indications," Barry said. Burroughs Wellcome has "a small program in gene therapy ongoing" as an offshoot of its retroviral research, Barry said. The research focuses "on a couple of areas, particularly in the treatment of cancer, using retroviral vectors," Barry said.

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