Cephalon Looks For Growth as Nuvigil Fails Schizophrenia Trial

With sales leader Provigil slated to lose patent protection in 2012, specialty pharma also is looking beyond Nuvigil for answers.

Nuvigil 's(armodafinil) failure in a Phase II trial in schizophrenia puts more pressure on Cephalon to find ways to prop up earnings after Provigil (modafinil) goes off-patent in April 2012. The Frazer, Pa., specialty pharma is developing armodafinil in several other indications but none is likely to be added to the label before that onerous date.

Nuvigil, a longer-lasting isomer of Provigil, is, like Provigil, approved by FDA to improve wakefulness in patients with excessive sleepiness due to obstructive sleep apnea, shift work disorder or narcolepsy. While Provigil sales continue at a blockbuster pace, totaling $1.2 billion in 2009 and $262 million in the first, Nuvigil sales are lagging. The latter drug generated just $35 million during the same quarter, only the fourth-highest total among Cephalon's seven brand-name products.

On June 2, Cephalon announced that Nuvigil failed to meet the primary endpoint - improvement on the Positive and Negative Syndrome Scale - compared to placebo in a 24-week trial as adjunctive therapy for treatment of the negative symptoms of schizophrenia.

The drug, an oral tablet tested at doses of 150, 200 and 250 mg daily, showed a trend toward a positive dose-dependent treatment effect in interim data, but not to a degree of statistical significance. The treatment effect trend also was not maintained in final data, the company said, reporting that it was ending all efforts to develop Nuvigil for schizophrenia.

Other indications sought for Nuvigil

The failure is a significant disappointment for Cephalon, which had pegged schizophrenia as a potential $1 billion opportunity for Nuvigil. The company continues to study the drug in Phase III for major depression associated with bipolar disorder, another opportunity that has blockbuster potential.

In addition, Cephalon has a pending sNDA for Nuvigil at FDA for jet lag disorder and a Phase III program for excessive sleepiness related to traumatic brain injury. In a June 3 note, Robert W. Baird & Co. analyst Thomas Russo estimated each of those as potential $100 million to $200 million indications.

Cephalon filed an sNDA for the jet lag indication last June and had a late March PDUFA date but FDA instead issued a "complete response" letter on March 30 questioning the robustness of the data backing the filing (Also see "Cephalon's Nuvigil Jet Lag Indication Grounded By Complete Response Letter" - Pink Sheet, 30 Mar, 2010.). While the three conditions currently on Nuvigil's label comprise about 36 million patients in the U.S., jet lag is suffered by 70 million Americans annually, according to the Department of Labor.

After a recent meeting with FDA, which focused on concerns about Nuvigil's apparent lesser efficacy on day 2 of use than day 1 in jet lag sufferers, Cephalon hopes to file a response to FDA by the end of June and receive a Class 1 two-month review, Russo wrote.

In a June 3 note, Lazard Capital analyst William Tanner pointed out that while traumatic brain injury and bipolar disorder could be attractive commercial opportunities for Nuvigil, neither would go on the drug's label before 2013, after generic versions of Provigil likely have launched.

"Because there will likely be a market for generic modafinil, if new lifecycle indications for Nuvigil don't expand overall utilization, we believe it is impossible to contemplate Cephalon not facing significant revenue erosion," Tanner said. "We doubt that Nuvigil is meaningfully differentiated to justify premium pricing relative to generic."

Inflammatory disease pipeline offers potential

Cephalon long has been cognizant of the Provigil patent cliff and has looked beyond its wakefulness drugs franchise for potential answers. One possible solution is to find ways to continue the growth of cancer drug Treanda (bendamustine hydrochloride), which has FDA approval for chronic lymphocytic leukemia and relapsed indolent non-Hodgkin's lymphoma.

The chemotherapeutic, which posted first-quarter sales of $81 million, up 62 percent from a year earlier, also is in clinical development for three other oncology indications, including a Phase III program in first-line NHL.

Expanding its therapeutic focus to include inflammatory disease, Cephalon also has focused on business development, adding three clinical candidates with the in-licensing of Lupuzor from ImmuPharma and the purchases of Ception Therapeutics and Arana Therapeutics. Lupuzor currently is in Phase II in systemic lupus erythamatosus ([See Deal]).

Cephalon first paid a $100 million option in January 2009 to purchase all of Ception's stock, a transaction it finally completed this February for another $250 million ([See Deal]). The acquisition brought in Phase II candidate Cinquil (reslizumab) for adult eosinophilic asthma.

Meanwhile, Cephalon followed that deal with a February 2009 acquisition of Australia's Arana for about $206 million. In doing so, it added Phase I anti-tumor necrosis factor CEP-37247 (formerly ART621) to its pipeline for sciatica ([See Deal]).

-Joseph Haas ([email protected])