J&J Risperdal, Topamax Are Candidates For Alza Drug Delivery Systems

Johnson & Johnson's antipsychotic Risperdal and anti-epileptic agent Topamax are candidates for product life extension through Alza's drug delivery technology (especially the OROS osmotic system), Alza Pharmaceuticals Group VP Samuel Saks, MD, told analysts March 27.

J&J's March 27 proposed acquisition of Alza presents "an opportunity to apply the OROS technology to creating a controlled-release, once-daily formulation" of Risperdal, Saks said. An OROS formulation of risperidone "would enhance compliance, which is certainly an important concern of the schizophrenia marketplace while extending patent life."

J&J could have worked with Alza as a development partner on the projects. By making the full acquisition bid, however, J&J gets more credibility in describing the development projects and current drug marketing projects to the financial community (¹ (Also see "J&J Increases Alza Ante By $5 Bil. Over Abbott: Concerta Has J&J Upbeat" - Pink Sheet, 2 Apr, 2001.)).

Janssen has patents listed in the "Orange Book" for Risperdal that could extend exclusivity until July 2014. The drug had a weak fourth quarter; U.S. sales declined 11% to $188 mil., which J&J attributed to heavy wholesaler stockpiling during the third quarter ahead of a price increase. In 2000, sales of the antipsychotic were up 21% to $1.6 bil. worldwide.

J&J and Alza do not have a Risperdal controlled- release project underway at this point. FDA approved a once-daily dosing regimen for Risperdal in October 1997. Janssen has been collaborating with Alkermes on a depot formulation of Risperdal for injection once every two weeks; the sustained release formulation, in Phase III, uses Alkermes' Medisorb technology.

Topamax (topiramate) could also benefit from Alza's technology, Saks said. "Topamax shows promise in other disorders such as neuropathic pain and bipolar disorder and an OROS formulation could further enhance its therapeutic performance," he commented. "We're also excited about investing in Topamax as part of a combination therapeutic for some CNS disorders."

J&J has Topamax patents that run until September 2003. In 2000, worldwide Topamax sales increased 103% to $309 mil.

An earlier patch investment by J&J in Cygnus technologies (in 1999) indicates the importance of the dosage form improvement to the company as a way to increase value in competitive markets and extend product lives.

The Cygnus deal included a contraceptive patch under development with R.W. Johnson Pharmaceutical Research Institute. Ortho-McNeil filed an application for approval of the seven-day contraceptive patch Ortho Evra with FDA on Dec. 22. The convenience of the patch may give J&J a way to combat commodity pricing pressures in the OC market.

Like all of the larger marketing companies that have looked at Alza in the past (or owned it for a period like Ciba-Geigy), J&J will face the inherent problem of convincing Alza's pharma clients that it is safe to turn development projects over to a competitor.

The J&J corporate structure of a family of affiliated companies may work to counter some of those concerns and retain the semblance of Alza's autonomy. According to the terms of the merger agreement, Alza will become a wholly-owned subsidiary of J&J. Alza Chairman & CEO Ernest Mario, PhD, will continue to head Alza reporting directly to J&J Worldwide Pharmaceuticals Group Chairman Robert Savage.

As a free-standing operating unit within J&J, "Alza will apply its advanced drug delivery technology to grow J&J business, as well as continue to develop new products based on these technologies for Alza's other pharmaceutical customers," J&J Vice Chairman William Weldon explained.

Asked about the potential conflict of interest of owning a firm that performs key development for major products of other companies, Weldon said, "we don't see that as a problem. We think that Alza has the best technology and it should be applicable to the clients who feel it would bring value to their products."

Contract development and manufacturing still represent a large piece of Alza's total revenue and act to support its large development staff. In 2000, Alza received $100 mil. in R&D revenues for product development work it performed for partners.

The company also received $281 mil. of royalties, fees and other revenue related to contract business. The $281 mil. primarily consists of royalties on Duragesic sales from Janssen and fee income related to the Viadur agreement with Bayer, which has U.S. commercial rights to the prostate cancer treatment.