Actavis Counting On Strong Product Line Depth For Avycaz Launch

The specialty pharma will take advantage of its presence in antibiotics to launch its third FDA-approved antibiotic for hard-to-treat infections before the end of the second quarter.

With the FDA approval of Avycaz, Actavis has added a third drug to its suite of marketed antibiotics and strengthens the company’s position for addressing the increasingly important nexus between hospital and outpatient care.

Avycaz – a combination of ceftazidime, a third-generation cephalosporin, with avibactam, a novel beta-lactamase inhibitor – was approved by FDA Feb. 25 for the treatment of complicated intra-abdominal infections (cIAI), used in combination with metronidazole, and complicated urinary tract infections, including kidney infections, with a limited use indication for “patients who have limited or no alternative treatment options” (Also see "Actavis Avycaz Approval Shows How FDA Handles Limited-Data, Limited-Use Antibiotic" - Pink Sheet, 26 Feb, 2015.).

“We think it’s a competitive advantage to cover the primary care and office setting, as well as the hospital,” Actavis’ Meury said.

“An excellent addition to our current antibiotic product line, it will be promoted right alongside Teflaro and Dalvance. The products completely complement each other: Dalvance is an outpatient drug; Teflaro is a Gram-positive I.V. for the hospital; and Avycaz is a Gram-negative antibiotic for a whole different array of infections,” Actavis Exec VP-Commercial and North American Brands Bill Meury said during the company’s Feb. 18 investor day.

In a post-approval interview, Meury talked further about the company’s broad swath of offerings. “We believe there is a competitive advantage to product-line depth,” he said. “We can give infectious disease specialists, hospitals and pharmacists a more complete view of pharmacotherapy than most companies can at this point.”

Actavis, according to Meury, has a well-developed presence in hospitals that is gaining further traction as the company adds to its product line. The company currently has 250 sales representatives, as well as managers, that serve almost 2,000 hospitals in the U.S. Actavis has been building this sales force since the launch of Teflaro (ceftaroline) in 2012 and expanded the hospital sales force by 25% to launch Dalvance (dalbavancin) and Avycaz.

“The hospital market is fairly complicated, but at this point we’ve established access and relationships with hospitals all across the country,” said Meury. “We think it’s a competitive advantage to cover the primary care and office setting, as well as the hospital. There is an interplay between the hospital and the office setting that is going to become increasingly important over time, and we think we can navigate it.”

Actavis (or rather Forest prior to being acquired by Actavis) has been actively commercializing anti-infectives since 2012, but began its push into the space with Forest’s 2007 acquisition of Cerexa. That deal brought Teflaro into the pipeline (Also see "Forest Acquisition Of Cerexa Could Set The Stage For Ceftaroline Launch In 2010" - Pink Sheet, 14 Dec, 2006.). In 2009, Forest acquired the North American rights to Avycaz through a deal with AstraZeneca PLC[See Deal]. Actavis added to that with the 2014 acquisition of Durata, adding Dalvance to its arsenal (Also see "Actavis Buys Durata In Bolt-On Deal, Leaves Room For Transformation" - Pink Sheet, 6 Oct, 2014.).

Investors can expect Actavis to continue pushing further into this space, Meury assured, saying fleshing out the anti-infectives portfolio will be a priority in business development (Also see "Actavis Flexes Its Commercial Muscles Ahead Of Allergan Integration" - Pink Sheet, 23 Feb, 2015.).

The Avycaz Niche

Avycaz works by using the avibactam component to protect ceftazidime against the destroyer enzymes that bacteria have developed to fight off antibiotics. Development of novel antibiotics has gained increasing importance as more strains of bacteria become resistant to currently available treatments. One particularly nasty family of bacteria, Carbapenem-resistant Enterobacteriaceae (CRE), causes serious respiratory and bloodstream infections resulting in extended hospital stays, increasing costs and death 35% to 50% of the time.

That’s where the limited use indication comes in. Avycaz was approved based on limited Phase II data, with the trade-off that utilization will be restricted – an idea that should introduce more new antibiotics sooner and ensure proper stewardship to keep use to the right settings and delay development of resistance. The idea has been kicked around for a while, but Avycaz is an early test case ahead of a formal policy (Also see "Targeted Antibiotics Could Get Limited Data Approval Option From FDA" - Pink Sheet, 11 Feb, 2013.).

“This is a pretty special product. It's going to be a reserved compound for a specific infection and patient type, a high-risk patient and infection type,” Meury noted. But that doesn’t mean there isn’t a significant commercial opportunity: “The category for infections caused by CRE, known or suspected, is approximately $2 billion to $3 billion,” he added.

Actavis understands that Avycaz will be used only in patients with specific bacterial infections. Meury stressed during an interview that Merck & Co. Inc./Cubist Pharmaceuticals Inc.’s recently approved Gram-negative antibiotic Zerbaxa (ceftolozane/tazobactam) is not a competitive threat, despite being a combination of a cephalosporin and a beta-lactamase inhibitor like Avycaz (Also see "Cubist’s Zerbaxa Approval Marks Firm’s Second Novel Antibiotic In 2014" - Pink Sheet, 19 Dec, 2014.).

“Zerbaxa does not have the same microbiological profile as Avycaz. In other words, Avycaz has activity mainly against a bacteria called Klebsiella pneumoniae carbapenemas (KPC). Avycaz is going to work against a specific pathogen type, a specific infection, a specific high-risk patient. Merck’s compound is active against a different organism than our product,” Meury explained.

“I’d also venture to guess that most infectious disease specialists would say that there is room for two compounds to treat infections caused by Gram-negative bacteria,” he pointed out.

Pricing has not been set yet, but will be “consistent” with Merck’s Zerbaxa.

With that said, Actavis is still taking no chances that it will be edged out by the competition for any other reasons. The specialty pharma has yet to set a price for the drug, which is expected to launch in late April or early May, but Meury did say it would be “consistent” with Zerbaxa pricing. Merck/Cubist set the wholesale acquisition price for Zerbaxa at $83 per vial. Zerbaxa became available on Dec. 22, just days after its Dec. 19 approval by FDA.

Actavis has predicted that Avycaz could bring in U.S. peak sales of $250 million to $500 million, and analysts see that as a fair estimate – although Meury admitted during the interview that the drug would have to expand its indications to reach the high end of that range. UBS analyst Marc Goodman expects peak U.S. sales of $420 million by 2020, although he predicts it will take some time for the drug to pick up speed.

“We would expect the drug to have a slow ramp as it usually takes time to get on the hospital formulary list,” Goodman said in a Feb. 25 note to investors.

Ongoing Phase III trials in several indications will help Actavis gain a less restricted label. Actavis and partner AstraZeneca, which owns rest-of-world rights to the drug, have Phase III trials in cIAI, cUTI, hospital-acquired bacterial pneumonia (HABP)/ventilator associated bacterial pneumonia (VABP) and infections caused by resistant pathogens. The trials are targeted for completion by late 2015 and will be submitted to FDA as a supplemental NDA.