Watson Seeks Partner For Rapaflo: Is There Still A Market For “Me-Too’s”?

Watson is in discussions with potential primary care partners for its newly approved benign prostatic hyperplasia therapy Rapaflo (silodosin).

The company says it hasn't decided for certain that it needs a partner for the alpha blocker, but it is talking to potential partners to support the broad, general practitioner population.

"We're actively considering" a partner, Watson CEO Paul Bisaro said during the company's third quarter earnings call Oct. 30. "We are talking with companies even as we speak, but we have made no solid plans."

Any deal Watson makes will be an interesting case study for the future of the primary care market for Big Pharma.

As a licensing candidate, Rapaflo is something of a throwback. It is a late entrant into a primary care blockbuster class: exactly the type of product that the Big Pharma companies are built on, but also the type that most now say lack sufficient commercial differentiation to succeed in the years ahead.

The level of interest in a partnership on Rapaflo will serve as a mini-referendum on the outlook for old-style primary care brands within the industry.

Watson's Future In Brands

Rapaflo is also a second chance of sorts for Watson. Five years ago, the company thought it was ready to make a big push into the branded sector on the strength of the urinary incontinence path Oxytrol (oxybutinin).

Watson turned to a contract sales organization to support that launch, but Oxytrol never really emerged as the flagship brand that could have transformed the company from a generics profile into a specialty play like Forest, Sepracor, Kos or Reliant. (See " ¹ (Also see "Watson's Strategy for Beating the Big Boys" - In Vivo, 1 Nov, 2003.) ," IN VIVO, November 2003.)

That may in part explain why analysts are greeting Rapaflo with more trepidation than jubilation. Investors seem more concerned about the potential for Watson to over-spend behind Rapaflo than they are excited about its commercial prospects.

Needham Company's Eliot Wilbur's assessment is typical: "While Rapaflo represents Watson's most significant intermediate-term product opportunity, details behind launch plans, launch timing and more importantly potential investment spend around the launch have yet to emerge."

"Bottom line is that while '09 will be a banner year in terms of recharging the brand business, it appears that, at least at this juncture, that incremental investment spend to support new product launches will diminish any potential bottom line contribution ... until at least 2010," Wilbur concluded.

Wilbur heard enough to raise his revenue projects for Watson's brand business modestly for 2009 and 2010, but expects total growth across all Watson's brands to be just $70 million between 2008 and 2010 - despite the introduction of Rapaflo and the possibility of two other launches in that period.

Credit Suisse's Marc Goodman is more blunt: "We think that management remains too optimistic for its new urology product launches." Credit Suisse projects just $30 million in sales for the brand in 2010.

Unexpectedly Rapid Approval

Rapaflo cleared FDA after an uneventful, 10-month standard review-no small accomplishment in an era of missed user fee deadlines and increasing use of "complete response" letters (² (Also see "Rapaflo Approved For BPH; Watson Will Stress Unique Selectivity" - Pink Sheet, 13 Oct, 2008.), p. 14).

Even Watson wasn't entirely prepared for its good fortune. The company originally planned to launch Rapaflo in 2009 after introducing a novel gel formulation of the urinary incontinence drug oxybutinin to extend the Oxytrol franchise.

Now, it appears that Rapaflo will be launched first.

When launched, it will be the fifth alpha blocker for BPH. It will join a market currently dominated by Boehringer Ingelheim/Astellas' Flomax (tamsulosin). The long-term competition, however, is against generics. Flomax's patent expires in October 2009, and generic versions of doxazosin ( Cardura) and terazosin ( Hytrin ) are already available.

Sanofi-Aventis' Uroxatrol (alfuzosin) is the only other branded alpha blocker on the market (with patent protection until at least 2011).

A decade ago, the potential to sell a branded alpha blocker against generic competition would have looked very attractive as a business proposition.

Now, conventional wisdom dictates that managed care gatekeepers (and/or cost-conscious consumers) will make it very difficult for Rapaflo to get traction.

In a category where Flomax generates about $1.5 billion in annual revenues, most Watson analysts peg Rapaflo at less than $100 million in peak revenues.

Watson, however, probably won't have too much trouble finding a partner interested in the opportunity - if only because the number of new products entering the market remains far below the capacity of primary care marketing organizations.

Even though many big pharma companies are cutting back on their primary care sales forces, plenty of candidates are available for a co-promotion with Watson.

Big Pharma Partner Candidates

Pfizer, for instance, is maintaining its primary care presence with a dedicated business unit. Rapaflo could be positioned with the erectile dysfunction therapy Viagra (sildenafil) as well as the company's urinary incontinence franchise: Detrol (tolterodine) and the soon to be introduced successor Toviaz (fesoterodine) ³ (Also see "Pfizer Toviaz Clears FDA For OAB: Three-Year Window To Establish Detrol Successor" - Pink Sheet, 3 Nov, 2008.)).

GlaxoSmithKline could also position its 5-alpha-reductase inhibitor BPH therapy Avodart (dutasteride) against Rapaflo, since physicians often prescribe alpha blockers for immediate symptomatic relief even if they do use Avodart or the older finasteride.

For that matter, all of the companies that previously marketed alpha blockers could use Rapaflo to rebuild that class.

Given the modest projections for the drug, though, a Big Pharma partner looks like a long shot.

A company like Forest would fit more logically as a potential partner, since Forest specializes in making the most of later entrants in crowded classes. In comparison to Forest's most recent launch - the 20th beta blocker, Bystolic (nebivolol) - the opportunity to be fifth in the alpha blocker class looks positively enticing (⁴ (Also see "Forest Hopes Efficacy In Blacks And Tolerability Will Set Bystolic Apart" - Pink Sheet, 7 Jan, 2008.), p. 5).

Forest, however, typically in-licenses late-stage development projects rather than marketed compounds.

Last but not least, Watson could turn to a contract sales organization or equivalent firm to support the marketing without any further tie-ups.

That is the route Watson took with Oxytrol - signing on contract sales reps from Ventiv. The modest success of that effort may encourage Watson to go a different route with Rapaflo.

Making A Virtue Of Necessity

In any event, Watson plans a phased launch of Rapaflo, concentrating on the urology specialist segment using its 100-person sales force.

The sales messages will be typical of the tactics used by big pharma companies in the past to establish new brands in crowded classes. "We believe the product is differentiated ... for several reasons," Bisaro said. He listed "the fast onset of action, the strong efficacy and safety profile, and the cardiovascular benefits that this product provides."

"We'll spend a fair amount of effort dealing with that and educating the urologist on this topic."

"Certainly we will not be spending at the levels of Flomax or a product like that, but I think we can do quite well out of the box," Bisaro said. "If and when we get a partner," he continued, Watson expects "a sort of second launch."

"Flomax is coming off patent in 2010," Bisaro noted, so "we expect that at some point in either late '09 or early '10, the detailing and the DTC on Flomax will start to dissipate and that will make Rapaflo a better opportunity for us."

Watson is also already working on reimbursement, Bisaro stressed. "We will be using our managed care reps to get out and make the pitch for Rapaflo."

Watson has "expectations that the product will land at a decent spot on the formularies, but I can't give you any hard prediction about where that is going to be." And, Bisaro acknowledged, the company expects that "the dynamic will change" once Flomax goes generic. "We are working on strategies right now to deal with that situation."

- Michael McCaughan ([email protected])