Sweden’s Medivir Prepares For Simeprevir And Profitability
This article was originally published in The Pink Sheet Daily
Executive Summary
Swedish hepatitis specialist Medivir aims to start Nordic marketing of its oral therapy simeprevir in 2014 and start anew as a profitable biotech with expansion prospects.
Sweden's Medivir AB is preparing to market its oral hepatitis C protease inhibitor simeprevir in Nordic countries in the first half of 2014, an event which should allow the biotech to finally become profitable more than 25 years after its formation, as a spin-out from AstraZeneca PLC’s antiviral research unit in 1988.
"We have the opportunity to change from being a research-focused loss-making biotech to becoming an established small pharma company with high growth potential," Medivir's CEO Maris Hartmanis said during a first-half earning call for analysts on Aug. 22. The company was listed on the Stockholm Stock Exchange in 1996.
Simeprevir was discovered by Medivir and is being developed worldwide by big pharma partner Janssen R&D LLC (Johnson & Johnson), although the Swedish biotech has retained marketing rights for the Nordic countries. The first approval for simeprevir is expected in Japan at the end of 2013, and further approvals are expected in the U.S. and EU in 2014. A U.S. FDA advisory committee will discuss the compound on Oct. 24, Hartmanis reported during the call.
The 2004 hepatitis C deal between Medivir and J&J's Tibotec Pharmaceuticals division, valued at the time at €68 million ($91 million), may now be considered something of a coup for J&J [See Deal]. The Big Pharma is aiming to position simeprevir as a next-generation product with advantages that could include once-daily dosing and an improved tolerability profile (Also see "J&J Hoping To Position Simeprevir As Top Next-Gen Protease Inhibitor For HCV" - Pink Sheet, 14 May, 2013.).
Currently marketed HCV protease inhibitors Vertex Pharmaceuticals Inc.'s Incivek (telaprevir) and Merck & Co. Inc.’s Victrelis (boceprevir) are given three times a day.
Although there are many anti-HCV products in development at numerous companies, Hartmanis noted that the HCV market is expanding rapidly, and he expects simeprevir sales to rise and then to slowly decline, rather than to spike and then fall off. Initially, simeprevir is expected to be a constituent of triple therapy regimens that also include interferon and ribavirin, but eventually it ought to be a strong cornerstone of interferon- and ribavirin-free combination therapy, he said.
Commercial Operations
Unlike many other biotechs approaching the market with their first product, Medivir already has a commercial operation, at least in Nordic countries, following its 2011 acquisition of fellow Swedish company BioPhausia AB, for $91 million (Also see "Medivir To Acquire BioPhausia's Commercial Platform To Market HCV Drug" - Pink Sheet, 11 Apr, 2011.). BioPhausia sold medicines throughout Sweden, Denmark and Finland.
A new commercial exec., Henrik Krook, was recruited in June 2013 by Medivir to be Executive Vice President, Commercial, charged with building up these commercial operations to include simeprevir. Only a handful of sales personnel are expected to be needed to market simeprevir in each country, it was noted. Krook was previously country manager and commercial director at Novartis AG in Norway.
In the 2013 second quarter, Medivir had revenues of SEK 40.7 million ($6.3 million), and made a loss of SEK 63.7 million. Its best-selling products included the cough medicine, Mollipect (bromhexine), the mania medicine, Lithionit (lithium carbonate) and the laxative, Laxabon, and these sales are expected to be continue at around the same level in the future.
A second commercial unit, Medivir's parallel import business, Cross Pharma, was divested on June 30 2013 to Unimedic AB, a subsidiary of MedCap AB, for SEK 125 million, to streamline operations and to strengthen Medivir's financial position. The divestment meant that at the end of the 2013 second quarter, Medivir had around $60 million in cash.
With that "solid financial ground," continuing revenues from its marketed portfolio and the expectation of sales and royalty revenues from simeprevir, Medivir is expected shortly to reach a position of sustainable profitability, Hartmanis said. There are also around €50 million in milestones to come from Janssen, relating to the approval of simeprevir.
Decisions about capital allocation, and whether to start paying dividends or ploughing cash back into R&D, are questions for the board, Hartmanis noted.
Still, the company recognizes it is at an inflexion point.
"Today, Medivir is in an interesting position, and has the opportunity, along with its partner Janssen, to become a major player in the hepatitis C sector," he commented.
The company has already streamlined its hepatitis C research programs, by ending on August 15 its research on NS5A inhibitors to focus exclusively on HCV nucleotide polymerase inhibitors. "There are lots of NS5A projects under way at other companies, and we have not found a sufficiently differentiated second generation candidate," Hartmanis said.
Medivir is working with Janssen on one NS5B nucleotide-based polymerase inhibitor project in preclinical studies, and is researching other un-partnered polymerase inhibitor projects.