Epix Seeks Partner To Market Vasovist

After a five-year ordeal, the firm gets FDA OK for the cardiovascular contrast agent.

Epix Pharmaceuticals' received an early holiday gift from FDA: approval for its vascular imaging agent Vasovist (gadofoveset) on Dec. 22.

Vasovist is a niche product, but its approval is likely to play an integral role for Epix, which is on shaky financial ground. A NASDAQ delisting is a real possibility for the company. On Nov. 11, the exchange warned the company that it has been out of compliance for 30 days with a requirement that companies maintain a $50 million market capitalization.

Vasovist could help to keep the firm's standing afloat. While the approval does not directly affect compliance, it is boosting the stock price. In order to regain compliance, the bid price needs to be at $1.20 for 10 consecutive days, the firm has said. The company's shares closed at $1.66 Tuesday, up 38.33 percent, and more than five times the opening bid of $0.30 on Monday. The run up gave the company a market capitalization of $69 million. However, by Friday, Dec. 26, the stock had dipped back under water, closing at $1.19 for a maket cap of $49.6 million.

Epix needs to find a buyer or licensor for Vasovist soon. The firm's long-time partner, Bayer Schering Pharma, announced in September that it was backing out of a global agreement to market the agent as of March 1, 2009 (¹ (Also see "Epix Seeks New Vasovist Partner After Bayer Backs Out" - Pink Sheet, 10 Sep, 2008.)). Bayer, which currently sells the product in 19 countries outside of the U.S., didn't say why it was terminating the agreement.

Bayer Schering and Epix have developed the contrast agent together, but both companies' strategies have changed significantly. Bayer inherited the deal when it acquired Schering AG in 2006 and has since revamped parts of Schering's portfolio.

Epix has changed its direction in recent years, moving away from imaging agents to focus on developing more lucrative therapeutics, including drugs for Alzheimer's disease, cystic fibrosis, and depression. But these are long-term, and the company has been losing money steadily; in October, it laid off 23 percent of its staff, including 30 physicians. CFO Kim Drapkin said that if it does not find a way to "monetize" Vasovist, it will have to look for alternative financing to pursue its other projects - a challenge in this credit-constrained environment.

"Vasovist, at this point we're looking at as a financial asset," Drapkin said in an interview, adding that the approval is an opportunity to boost financial growth.

"We've reached out to all the appropriate players," said interim CEO Elkan Gamzu; these likely include the major contrast agent companies General Electric, Bristol-Meyers Squibb and Philips Medical Systems.

Vasovist - the first imaging agent approved by FDA in several years - was once a high-priority product for Epix, but has been pushed to the back burner more recently as it hit regulatory snags in the U.S. and the firm changed direction.

The product is also the first contrast agent approved for marketing in the U.S. for use with magnetic resonance angiography (MRA) to evaluate aortoiliac occlusive disease in adults with known or suspected peripheral vascular disease. Getting the approval in the U.S., however, has been challenging.

A Long Approval Road

Epix first submitted the agent for FDA approval in December 2003 and has since received two "approvable" letters, which it appealed. It reached a final agreement with the FDA in January 2008 on the protocol for a re-read of images from a Phase III clinical trial, and, following the re-read by three independent radiologists, it re-submitted an NDA in June. (² (Also see "Epix Looks To Late-2008 Approval For Vasovist Following NDA Resubmission" - Pink Sheet, 1 Jul, 2008.)).

Though Vasovist caters to a niche-population - about 20 percent of the 1.3 million imaging procedures performed annually in the U.S. -a plus for physicians is added flexibility the product allows, Gamzul said.

"The most important for the physician is that with all the other [gadolinium] contrast agents you have to take the image within 5 minutes because it's cleared from the blood by that point, whereas with Vasovist, because it binds to albumin, you can take images up to one hour after giving the drug," he said.

Additionally, the product has a high signal per dose and good resolution angiography. "You get a greater bang for the buck in the sense that you get a very good image with the smaller dose," Gamzu said.

-Carlene Olsen ([email protected])