Split-Indication Agreements: Happy Unions Or Problematic Proposals?

Greater restrictions on off-label promotions and continued cost pressures are creating an environment ripe for alliances based around single products with split indications, industry executives said during the Windhover Pharmaceutical Strategic Outlook conference in New York March 27-29.

Split-indication agreements can provide pharma manufacturers with enhanced labeling, incremental revenue and, in some cases, extended patent exclusivity, while requiring limited resources, Aspreva Pharmaceuticals President Noel Hall said.

In the last several years, there has been a significant shift in the U.S. around the attitude towards off-label promotion and risk, he said.

"Today, if you are a brand manager that has a brand that potentially has utility in disease areas outside of your focus, and you want to legitimize that indication by getting it on label, and it's a mature brand, you have to reach back into your development organization," Hall said.

"You now have to develop resources to get that brand formally indicated and that, I think, does increase the resources," he added.

Aspreva has been involved in a split-indication partnership with Roche since 2003 for mycophenolate mofetil. Roche owns the drug and markets it as CellCept for transplant indications, but Aspreva is studying it under a licensing agreement for lupus, dermatology and neurology indications.

"If you have an indication that is out of [a manufacturer's] core area of expertise, but the net present value is high, this is where you are a trusted partner and this is the area we focused on at Aspreva," Hall said.

Such sharing of indications may become more common given the current trend by drug makers to narrow their therapeutic focus.

"It can be very difficult for that lifecycle team leader to get internal resources to pursue a new indication, particularly when that product is two or three years into its market life [and] particularly if that indication happens to be in a therapeutic area defined by that company as non-core or outside [its] strategic focus," Hall said.

For example, in the case of the Aspreva/Roche alliance, CellCept is one of Roche's top-selling drugs, and while there was growing pressure from advocacy groups to legitimize an indication in lupus, there was also the view on the part of Roche that pursuing the indication could result in a loss of focus on the transplant market, Hall said.

"Was this a perfect storm within the Roche organization, or does the perfect storm exist in many pharma companies today," he asked.

Sharing indications has not always ended in such happy unions. A split indication alliance dating back to 1985 between Johnson & Johnson and Amgen over the rights to anemia agent epoetin alfa has resulted in a long-standing dispute between the two companies.

Under that agreement, J&J gained the rights to market epoetin alfa as Procrit in the U.S. for non-dialysis markets, while Amgen sold it as Epogen in dialysis. Amgen later sought to invalidate J&J's license by alleging that the company sold Procrit in Amgen's exclusive markets (¹ (Also see "Amgen Effort To Reclaim Procrit Rights From J&J Moving To Trial Phase" - Pink Sheet, 20 Mar, 2000.), p. 19).

The two have been battling over pricing and marketing of epoetin products virtually ever since.

Roche Palo Alto campus R&D President Robert Stein, however, urged big pharma to consider creative approaches to deal-making, including split indications and out-licensing collaborations on non-priority compounds.

"Big companies spend a huge amount of time, money and effort to create pipelines....There are things that are clear winners, there are things that are clear losers, and then there are gray zones," he said.

"A lot of times, it's a matter of decisions about the risk the company is willing to take and the degree of uncertainty at a particular time," Stein noted. "You have the chance of taking compounds in that gray zone, finding a smaller partner who'd like to work on them...and the smaller company might take a risk on trying to reduce that degree of uncertainty."

Several pharma execs discussed strategies to enhance flexibility when it comes to in-licensing compounds and technologies (see ² (Also see "Big Pharma Gets Flexible As Licensing Activity Heats Up" - Pink Sheet, 3 Apr, 2006.)).

However, few large drug makers have been active at out-licensing compounds or establishing split-indication relationships.

In addition to its split-indication alliance with Aspreva, Roche is also involved in a three-way split partnership with Biogen Idec and PDL BioPharma for daclizumab, which is marketed by Roche as Zenapax for prevention of organ rejection in patients receiving renal transplants.

PDL licensed the rights to the drug for all non-transplant indications in 2003 (though subsequently gave back rights to asthma and related respiratory disease applications). Then, last year, Biogen Idec announced a deal with PDL to co-develop daclizumab in multiple sclerosis indications.

Biogen Idec Exec VP-Business Development Mark Wiggins and PDL CEO Mark McDade said they have found the split to be similar to any other partnership alliance.

Although both executives said they would hesitate to jump into another three-way partnership, they added that they would consider other indication-splitting alliances in the future.

Novartis Head of Global BD&L Mature Products, Partnering and Project Manager Jean Marc Séquier advocated out-licensing strategies, pointing out that such alliances are evolving into a more collaborative relationship then in the past.

Big pharma is often reluctant to out-license compounds, he conceded, because "you are always scared of giving away any potential compound that could turn out to be a blockbuster in the future."

However, "we are trying to realize or to maximize the value of our own assets, and those assets could actually be compounds that have been terminated during their development and are sitting basically on the shelves, and no value is created," Séquier said.