King Confident Of Embeda Opioid Approval In 2009; REMS Is The Final Hurdle

King Pharmaceuticals believes the FDA review of its abuse-resistant painkiller Embeda is "substantially complete," and that the company will be able to launch the drug in 2009, CEO Brian Markison assured investors during an earnings call Feb. 26.

Although FDA missed a December user fee deadline for Embeda, an abuse-resistant form of morphine, Markison told investors that King is close to agreement with the agency over product labeling.

The sticking point, Markison said, is likely caused by "the current issues surrounding the application of a Risk Evaluation and Mitigation Strategy." But Markison is optimistic that even the REMS issue will be resolved soon.

FDA is planning a closed-door meeting March 3 with the manufacturers of 24 marketed opioid-based pain killers to discuss the agency's plans for imposing a class-wide REMS program for currently marketed products (¹ (Also see "Record-Setting REMS: FDA’s Classwide Opioid Program Will Be “Massive”" - Pink Sheet, 16 Feb, 2009.), p. 4).

The agency has since expanded the invitee list to include "sponsors of pending NDAs and ANDAs for products that are similar to the types of products covered by our current plans (e.g., sustained-release products)."

As the marketer of extended-release morphine ( Avinza ), King will participate in that meeting. While the meeting will not be directly related to the Embeda NDA, Markison appeared confident that the agency will act on the application shortly afterwards.

"The meeting on March 3 is really for the currently approved opioids, but having said that, I think all of this is related in some fashion," he said.

Will The Class REMS Cover Embeda?

Questions remain about whether the class-wide REMS will cover abuse-resistant opioids, such as Embeda, and King's Remoxy , an abuse-resistant form of oxycodone, and also about how the agency plans to handle pending NDAs for opioids. The FDA has not definitively addressed these concerns.

The uncertainty could delay approval of one or both products until the agency finalizes its REMS plans.

FDA issued a "complete response" letter for Remoxy and missed the December user fee deadline for Embeda (² (Also see "FTC Lets King Buy Alpharma Now That Antitrust Problem Is Resolved – But New Embeda Delay Adds Risk To Acquisition" - Pink Sheet, 4 Jan, 2009.)).

FDA's decision on whether to fold abuse-resistant opioids into the class REMS will hinge in part on the Office of Chief Counsel's legal interpretation of the agency's authority under the FDA Amendments Act, according to Office of New Drugs Director John Jenkins (³ (Also see "Opioid Approval Delay? Class REMS Poses Legal Questions For Pending Drugs" - Pink Sheet, 16 Feb, 2009.), p. 6). "The primary focus of the REMS at this time is on the approved products that we listed on our Web site when we made our announcement," the agency told "The Pink Sheet" in an email Feb. 24.

"We are also evaluating what pending applications or to-be-submitted applications (i.e., products under development) will also need to be covered by the class REMS and how their approval might be impacted by the need to develop a REMS," it said.

While FDA said it cannot acknowledge the specifics of any possible pending applications, it stressed that it supports the development of "new products that will serve to deter misuse or accidental overdose. We will continue to work with sponsors interested in developing such products and will approve products that are supported by adequate data to support their proposed labeling statements."

Analysts Express Optimism On Embeda

Embeda became part of King's pipeline when King bought Alpharma in late December. By acquiring Alpharma, King is making a huge bet on Alpharma's portfolio of abuse-resistant pain medications (⁴ (Also see "Third Time’s Not The Charm For King’s Pursuit of Alpharma" - Pink Sheet, 1 Sep, 2008.), p. 11).

Analysts don't expect Embeda to be a major product for King, but a U.S. approval this year would help to validate the company's bet on Alpharma, even as the FDA's work on developing the class-wide REMS for existing opioids progresses.

Cowen & Co. analyst Ian Sanderson is optimistic that FDA will approve Embeda prior to resolving the class REMS issue. King's confidence in Embeda is rooted in "very good feedback from the agency," Sanderson said. "When this [product] was in Alpharma's hands, Alpharma said the label is 'done.'"

Prior to the King acquisition, Alpharma had created a REMS for Embeda, which had a relatively smooth journey through the regulatory process until the PDUFA delay ⁵ , p. 7). The proposed REMS includes a communication plan, a prescriber training program, a medication guide, patient monitoring and prescription tracking. The company had also said it would commit to further study on prescription opioid abuse and the market impact of its products.

FDA could push forward to approve Embeda for political reasons, Sanderson speculated.

"FDA is nowhere near figuring out REMS for opioids, but it is working hard on Embeda possibly because it is eager to move ahead with a product that is safer than those already on the market," he said. Cowen & Co, with input from regulatory consultants, has estimated that the FDA review of an opioid class REMS plan could take up to six months at a minimum.

Facing A Threat to Skelaxin, King Restructures

King now has the leading pipeline of tamper-resistant and abuse-deterrent painkillers and is also a leader in other areas of pain medication, analysts say.

As a result of the Alpharma acquisition, King expects to have as many as four products - three related to pain - before FDA in 2009, of which Embeda is the most likely to actually reach the market this year. King is positioning Embeda as the first long-acting opioid with abuse-deterrent features.

On the earnings call, King executives also said that the company, along with its partner, Pain Therapeutics, expects to meet with the FDA in the second quarter to get a better understanding of what it needs to do to get final approval for Remoxy. FDA wants additional nonclinical data, but hasn't been more specific (⁶ , p. 16).

Also in December, the company submitted an NDA for its short-acting, abuse-deterrent oxycodone product Acurox and for CorVue , a cardiac stress imaging agent. King is seeking priority review for Acurox. CorVue comes out of King's pipeline, which traditionally was strong in cardiovascular drugs.

King has been under pressure as its key products lose exclusivity. The company's most important drug, the antihypertensive Altace (ramipril), went off patent in 2007. As a result, King's net revenues in 2008 fell from $2.1 billion in 2007 to $1.6 billion in 2008, and its branded drug business sales declined from $1.9 billion to $1.26 billion.

King now faces generic threats to its next-biggest product, Skelaxin (metaxalone), a muscle relaxant, which generated sales of $446 million in 2008. In late January, a federal district court in New York invalidated two of Skelaxin's three core patents. King is appealing but many analysts expect Skelaxin to face generic competition as early as this year, or, more likely, next year and King, too, is preparing for the worst (⁷ (Also see "Generic Skelaxin Moves Closer As King Loses Patent Case; Last Hurdle Is FDA" - Pink Sheet, 26 Jan, 2009.), p. 20).

As a result of the ruling, the company announced a significant restructuring in early February, including downsizing its workforce by 22 percent, or approximately 760 positions. The company expects these actions, which involved an even split between field sales and corporate positions, will save $90 million in 2009, beginning in the second quarter. The cost will be offset partially by a special charge for the restructuring of between $50 million and $55 million, to be taken in the first half of the year.

Even with the restructuring, however, King's sales force has been trained and is ready to detail Embeda, and can launch Remoxy if that product also gets approved in 2009, executives said.

Some 100 hospital reps, 400 specialty reps, and 140 pain reps (who focus on the highest prescribing pain specialists) will detail Embeda. This sales force currently markets the pain products Flector Patch (diclofenac epolamine topical patch) and Avinza, as well as Thrombin-JMI (thrombin, topical, bovine origin) and Skelaxin.

Like Embeda and Remoxy, the Flector patch also comes from Alpharma. This medicine, a topical analgesic for acute pain from muscle strains and sprains, and the only NSAID patch on the market, had sales of $130 million in 2008, according to Leerink Swann analyst Gary Nachman.

King executives, however, believe they can do better by focusing more on managed care markets and paying more attention to detailing the emergency room, where 10 percent of patients present with the kind of painful injuries that are indicated for Flector. Nachman believes that if King is right, Flector peak sales could be $500 million, or double what they might have been under Alpharma.

- Wendy Diller ([email protected])