FDAAA Pays Off: Drug Safety Controls Bring Immediate Returns to Sponsors

Companies as diverse as CV Therapeutics, UCB, GSK, Pozen and Biovail are all smiles about becoming unwitting guinea pigs in the new era of drug safety. None could have expected to be pioneers in facing new post-marketing burdens—but all are thrilled that their products were approved at all. And most have seen an immediate payback for their investors.

By Michael McCaughan

It is a sign of the times for the pharmaceutical industry that the CEOs of companies as diverse as GlaxoSmithKline PLC, UCB Group, CV Therapeutics and Biovail Corp. are practically giddy with excitement over what the past would be looked upon as decidedly bad news.

They all received approval in April from the Food & Drug Administration for products with unprecedented regulatory restrictions on their ability to market them, or with binding obligations to conduct potentially expensive long-term post-marketing trials. In some cases, both.

All four companies are in the dubious position of being REMS pioneers: the first sponsors with new drugs required to have Risk Evaluation & Mitigation Strategies (REMS) or mandatory post-marketing studies under the FDA Amendments Act. (Also see "The REMS Era Begins: FDA Applies Soft Touch With New Drug Safety Tools" - Pink Sheet, 1 May, 2008.)

And all four couldn’t be happier.

That’s because, at least for the first batch of products approved using FDA’s new regulatory tools, there was an immediate commercial payoff to sponsors and their investors. The payoff came in different shapes and sizes:

$175 Million: That is how much CV Therapeutics Inc. collected after agreeing to sell half its future royalties from the Adenoscan follow-up Lexiscan to TPG Biotech after the product flew through FDA as a first-cycle approval—and as the first drug ever subject to FDA’s new mandatory post-marketing study authority.

$20 Million: That is how much Aralez Pharmaceuticals Inc. received as a milestone payment from GSK after the long-delayed approval of the migraine combo Treximet—the first to use the new REMS authority.

£4 Billion: That is GlaxoSmithKline PLC’s surprisingly bullish forecast for Advair sales in 2008 after the respiratory product added new labeling for chronic obstructive pulmonary disease—along with a REMS to address (and GSK believes, resolve) safety issues that have slowed growth in the brand.

€1 Billion: That is how much UCB Group gained in market cap literally overnight, following the REMS-aided approval of the TNF inhibitor Cimzia.

Revived Partnering Talks: That is what Biovail Corp. got from the unexpected approval of a new salt form of bupropion (Aplenzin). The company still hopes to partner that drug, but is counting on collaborating with an outside party on a follow-on developmental project that uses Aplenzin in a fixed-dose combination.

The simplest explanation for the enthusiasm of the sponsors of the first REMS applications is that, in each case, they had little hope of getting approval as quickly as they did. That sure makes it easier to accept the burdens imposed by the new regulatory restrictions on the products.

It is far too early to say for sure how the REMS era will ultimately affect the research-based biopharmaceutical industry. For that matter, it is impossible to say for sure how the new regulatory authorities will affect even the first batch of sponsors. UCB, for example, agreed to post-marketing trials that won’t be finished until 2020—suggesting that a final accounting of the impact of the new authority on Cimizia will have to wait more than a decade.

And, of course, its not just the REMS that explain the recent approvals. The sponsors (along with several others not subject to REMS) are also benefiting from a broader change in climate at the drug center—at least relative to the nadir last summer—coinciding with the return of Janet Woodcock as director and to an influx of new resources. (Also see "Woodcock to the Rescue: Is CDER Approving More Products?" - Pink Sheet, 1 May, 2008.)

But in the short term there is no debate: the new drug safety era is a big win for the first companies affected.

Lexiscan: Sailing Through FDA

The first drug formally affected by the new law is also the most unequivocally positive outcome for the sponsor. CV Therapeutics Inc. pharmacologic stress agent regadenoson (Lexiscan), approved April 10, feels a bit like the regulatory equivalent of a unicorn: a first-cycle approval of an application given a "standard" designation.

"It was a first-pass approval" and "we are incredibly pleased by it," CFO Daniel Spiegelman said during the Morgan Stanley "unplugged" conference May 1. "The label we got is really excellent in terms of positioning Astellas to sell the drug."

A first-pass approval is something to crow about. In recent years, the first review of a standard application almost always ends with an "approvable" or "not approvable" letter—seldom with an approval. (Also see "The Data Everybody's Talking About: Proof FDA is More Conservative?" - Pink Sheet, 1 Nov, 2007.)

Of course, CV’s application did not make it through without a hitch: FDA approved the product on the first cycle, but not within the 10-month standard review deadline. The agency has put sponsors on notice that it will be missing more deadlines in 2008, but that it hopes to maintain some predictability in communicating when those occur. (Also see "The New User Fee Rules: FDA Sacrifices Timeliness, Tries to Save Predictability" - Pink Sheet, 1 Mar, 2008.)

That makes the CV approval a double-dose of good news for other sponsors reading the current FDA climate: it was a first-cycle approval for a standard application—and a strong indication that a missed user fee deadline may be a positive for a sponsor. After all, the agency ultimately approved Lexiscan much more quickly than it would have if it simple issued an "approvable" letter to buy more time—or even if it took a three-month extension on the deadline under existing user fee procedures.

Lexiscan is positioned as a successor agent to CV/Astellas Pharma Inc.’s Adenoscan, which is about a $340 million product.

CV received a $12 million milestone from Astellas upon approval. But the bigger payoff came when the company sold off its future royalty stream from the drug as part of a $175 million deal with TPG. That deal includes a potential $10 million more for a future commercial milestone. And the approval also triggers payments to CV from another Astellas product (generally assumed to be Adenoscan, though the companies are keeping that detail confidential).

All in all, not a bad payoff.

CV thinks there may be more to come. The next opportunity is licensing the product in Europe, a prospect made easier by the validation of a US approval.

Longer term, it may enhance the attractiveness of the company’s earlier-stage pipeline. "This is a seminal day for CVT because regadenoson is the first approval of a drug that we invented, and it gives a lot of credibility to the R&D and regulatory team," CEO Louis Lange said. "It is the first selective ligand to be approved anywhere in the world, as far as I know. We have a terrific library, a lot of other ligands as you know some of which are already in clinical studies."

And CV gets all of that without giving up too much in terms of additional regulatory burden. The product cleared FDA without a REMS. But it does include the first ever mandatory post-marketing studies: A 600-patient trial in patients with respiratory disease, and a 300-patient study in patients with kidney disease. Both are to be completed by April 2011, meaning CV has a tight timeline to meet its commitment—but also will be free of longer-term constraints tied to the approval. (Also see "Long-Term Commitments: The First Mandatory Post-Marketing Trials" - Pink Sheet, 1 May, 2008.)

Treximet: The First REMS

The first drug approved with a REMS—the migraine combo Treximet—is a very different case, but on the whole more typical of the first class of REMS products.

When Treximet was originally developed, GSK and Pozen certainly didn’t expect it to become a regulatory landmark—and the company surely would have considered it a serious setback if it knew then that a seemingly simple fixed-dose combination would require special regulatory restrictions to address safety issues.

GSK and Pozen originally filed for approval of the product in August 2005. A seemingly straightforward request to market a fixed-dose combination of GSK’s blockbuster migraine brand Imitrex (sumatriptan) and the OTC analgesic naproxen, the sponsors had every reason to expect a rapid and uneventful review.

The application, however, received two "approvable" letters—each raising safety issues. Indeed, the struggles of the application supported the view that no product was safe enough for FDA. (Also see "The Agency that Cries Wolf" - Pink Sheet, 1 Mar, 2006.)

GSK, though, isn’t troubled by that one bit. "Yesterday’s approval to get the broader label for COPD is terrific news," Viehbacher told the Morgan Stanley "unplugged" conference. "It is something that we can go back to the marketplace with."

Apart from the benefit of the broader label, Viehbacher added, is the simple fact that "FDA has approved this." With all the safety concerns swirling in the class, the fact that FDA looked at that data and said "let’s give them a broader label" is an important point. GSK says that the next round of safety review will focus on formoterol, the long-acting beta agonist in AstraZeneca PLC’s Symbicort.

The upcoming advisory committee is "being driven by the formoterol data," Viehbacher says. "We’ve been through a thorough examination of all of the Advair data."

So the new labeling "has a bit of a halo effect." It "is certainly a motivation for our own people in the business."

Given the new labeling and despite the still unsettled safety issues in the class, GSK told shareholders later in May that it expects Advair to top the £4 billion mark ($8 billion) in sales this year—a fairly healthy growth rate from the £3.5 billion in sales for the brand last year. (See Exhibit 3.)

If that forecast proves correct, it gives GSK 500 million reasons to be grateful it became a REMS pioneer.