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Executive Summary

ATHENA Rx SPECIALTY MAIL-ORDER BUSINESS ENROLLS 3,959 PATIENTS by the end of March, almost doubling in one three-month period the number of enrollees, up from 2,096 patients at the end of December 1992. Athena Neurosciences predicts that the number of patients in its specialized neurological drug mail-order service should increase to 15,000-20,000 during the next year. There are approximately 500,000 patients in the major neurological category covered by Athena, Parkinson's disease. The company estimates that about 200,000 of those patients are under the care of neurologists. Athena President John Groom told a May 11 session of the Alex. Brown & Sons annual health care seminar that the mail-order business should be profitable by the end of this year at the current rate of patient base growth. Groom said Athena expects the "impressive growth" of the mail-order business "to continue as we enter the Parkinson's market with a powerful array of products." The company recently has added an "Athena-brand bromocriptine" to its Athenaline branded neurological generics through a 10-year supply agreement with Sandoz (the manufacturer of bromocriptine mesylate and marketer of the product under the Parlodel brand). Sandoz is manufacturing the bromocriptine for Athena through a wholly-owned subsidiary, Creighton Products Corp. Athena notes that Parlodel sales for Parkinson's treatment in 1992 were $42 mil. Athena's mail-order business is noteworthy as an attempt by a start-up company to build name recognition with a specialty group (office-based neurologists) and direct ties to the ultimate consumers (patients). Bypassing traditional wholesaler/pharmacy distribution patterns, Athena is attempting to become a full- service specialty provider in the neurological field. "Our strategy," Groom explained, "is to provide to the neurologist a choice in Parkinson's disease products. We expect to have our version of all the important drugs that are used by the neurologist and to support their needs and the patient's by being able to point to compliance, by the fact that our [mail-order] pharmacy can remind patients when their prescriptions are due to ensure that they do not run out of medication." Athena maintains that using its mail-order pharmacy and the Athenaline can ensure product consistency in the neurological field where attention has been paid to the clinical effects of switching between different versions of the same active ingredient product. Athena also claims that its neurological line provides cost savings. Estimating the average annual cost of purchasing a full complement of generic neurological drugs at a chain retail store as $4,027, Groom said the same products purchased through the Athena Rx pharmacy would cost $3,049, a savings of over $900. Versus brand purchases at retail, the Athenaline products can save an advanced-stage patient more than $1,800 per year, Groom contended. Recent promotional material from Athena Rx maintains that a $560.71 annual price differential exists between the Sandoz brand Parlodel at retail and the Athenaline version of bromocriptine. In a recent prospectus, Athena notes that in addition to providing the Athenaline generics, the company's mail-order business will dispense "any other drugs that the neurologist prescribes." The company says it purchases these drugs from wholesalers or directly from other manufacturers. Groom explained that "particularly we are anxious to persuade [neurologists] to use our Athenaline drugs." Athena recently has expanded its neurological line by adding a brand product from Lilly with the purchase of exclusive marketing and distribution rights to Permax (pergolide). The dopamine agonist Parkinson's product had annual sales in the $10 mil. range in 1992 ("The Pink Sheet" April 26, T&G-13). Athena expects Permax to grow to the $30 mil. to $40 mil. annual sales range by 1995-1996. Athena paid Lilly the first half ($18 mil.) of its license payments for the Permax deal early in April and began full detailing of the product to neurologists on May 11. "Lilly has done an excellent job establishing among the 400 main thought-leaders in Parkinson's disease the value of adding a dopamine agonist....We believe that that base that has been built can now be exploited by the field force that we have established and rolling out the story of Permax to the 6,000 office-based neurologists," Groom said. Athena has a sales force of about 30 detail reps, "capable of delivering around 33,000 details a year." A third major Parkinson's product was added to the Athenaline of products through the introduction of Atamet, a branded generic version of carbidopa/levodopa, produced for Athena by Teva. The three original Athenaline products were Atretol (carbamazepine, manufactured by Teva), Atrofen (baclofen, manufactured by Zenith) and Atarin (an isometheptene combo, manufactured by Nutripharm).

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