ViroPharma Looks To Enter HAE Market With Lev Acquisition

Pennsylvania biotech assumes FDA will split HAE orphan designation, with Cinryze winning prophylaxis indication first.

As several companies compete to win the orphan indication for hereditary angioedema, ViroPharma is betting on Lev Pharmaceuticals' C-1 esterase inhibitor Cinryze - the lynchpin of its $443 million acquisition of New York-based Lev. The deal, announced July 15, has a potential value of up to $617.5 million.

Cinryze is the U.S. brand name of a product that has been available in Europe for 35 years to treat HAE, a rare, debilitating and life-threatening genetic condition that manifests through inflammation of the larynx, abdomen, face and extremities. FDA has designated HAE as an orphan condition, giving the first approved drug seven years of market exclusivity.

Lev filed a BLA for Cinryze in July 2007, seeking approval for both prophylaxis and acute treatment of HAE. Several other compounds, including CSL Behring's C1 inhibitor, sold in Europe as Berinert , and Jerini's Firazyr (icatabant), are in development for the acute indication, but only Cinryze has data demonstrating efficacy in prophylaxis (¹ (Also see "With Few Questions From FDA, Cinryze Seems Set For Smooth Committee Review" - Pink Sheet, 30 Apr, 2008.)).

FDA's Blood Products Advisory Committee voted unanimously May 2 that Lev's Phase III CHANGE trial demonstrated the safety and efficacy of Cinryze in prophylaxis of HAE (² (Also see "Lev’s Cinryze Wins Unanimous Advisory Committee Support" - Pink Sheet, 2 May, 2008.)). The agency subsequently accepted Lev's reply to a January "complete response" letter, setting up an action date of Oct. 14 for the BLA.

During a same-day investor call on the deal, ViroPharma CEO Vincent J. Milano said his company anticipates Cinryze will be approved by FDA for prophylaxis - the acquisition includes contingency payments should the drug also be approved for acute treatment of HAE.

Lev has maintained all along that it would seek the full HAE indication, but the advisory committee's consideration of only prophylaxis data suggests the agency is considering splitting the indication. FDA might require additional information to approve Cinryze for acute treatment, Milano noted.

If that is the case, Cinryze might be second in line for the acute indication behind Berinert. Behring has not stated publicly whether its BLA is being reviewed on a priority or standard basis. The application was filed March 6, setting up an action date of either Sept. 6, 2008, or Jan. 6, 2009 (³ (Also see "CSL Behring Submits C1-INH For Hereditary Angioedema" - Pink Sheet, 6 Mar, 2008.)).

Jerini received a "not approvable" letter from FDA for its Firazyr application in April. The firm announced last month that it would respond to a complete response letter from FDA within three to four months (⁴ (Also see "Jerini To Submit Complete Response Letter" - Pink Sheet, 23 Jun, 2008.)). Meanwhile, the company announced July 15 that Firazyr has received final EU marketing approval.

Orphan exclusivity would not necessarily block other HAE therapies that were different molecules/mechanisms, or if they showed superiority.

Big opportunity, small sales force

Milano said the acquisition of Lev, which should close by the end of the year, comes "after more than nine months of diligence and years of hard work looking for the right opportunity." Bringing Cinryze to market is a good fit for Exton, Pa.-based ViroPharma, he added, because it represents an opportunity that can be addressed with a small sales force and "modest additional infrastructure."

He projected his firm would build a 20-rep sales force for Cinryze; there will be little or no overlap with sales efforts for its only marketed drug, Vancocin (oral vancomycin), which is indicated for antibiotic-associated pseudomembranous colitis and enterocolitis.

ViroPharma COO Daniel B. Soland estimated the HAE market at about 117,000 treatments a year. Previous market research by Lev, he explained, indicates there are 4,600 U.S. patients diagnosed with C1 inhibitor deficiency, but when undiagnosed patients are factored in, the market is closer to 10,000 patients.

Lev has identified more than 700 allergists who treat at least one HAE patient, Soland added, and a high percentage have indicated dissatisfaction with current remedies available, such as corticosteroids. Steroid therapy has shown some efficacy in treating acute attacks of HAE, but virtually no utility in prophylaxis.

"When asked which patients they would convert to a C1 inhibitor replacement therapy, and why, these allergists said they would convert more than 60 percent of their patients with two or more attacks per month and ... approximately 80 percent of their patients if they experienced four or more attacks per month," Soland said.

Milano projected peak U.S. sales of between $250 million and $350 million for Cinryze, with profit margins in the 65 percent to 70 percent range.

Under the deal, Lev gets $442.9 million upfront, equivalent to $2.75 per share, comprised of $2.25 per Lev share and $0.50 per ViroPharma share. Lev's stock fluctuated between $0.69 and $2.10 per share during the 12 months preceding the July 15 announcement.

Lev could realize further contingency payments of up to $174.6 million depending on two circumstances: if Cinryze is approved for acute treatment of HAE or if no other drug wins approval for acute treatment within two years of the merger's closing or Cinryze approval for prophylaxis; and if Cinryze garners $600 million in cumulative net sales within 10 years of the merger's closing.

-Joseph Haas ([email protected])