PCSK9 Meets PRV: Regeneron’s $70 Mil. Bid To Catch Up To Amgen

Regeneron and its partner Sanofi have become the first biopharma companies to buy a Priority Review Voucher. The $67 million price is a nice bonus for the seller, BioMarin, but probably not the start of a big new market for PRVs.

On Aug. 28, Amgen Inc. took the lead in a very high-profile race to launch the first of what might be a new blockbuster class of cholesterol lowering therapies.

The company announced the filing of a BLA for evolocumab, which becomes the first PCSK9 inhibitor filed for approval to lower LDL. Assuming Amgen’s filing is accepted and given a standard, 12-month review, it could enter the market as early as August 2015.

But, despite being the first application filed at FDA, evolocumab may not be the first PCSK9 to receive an approval action by the agency. Regeneron Pharmaceuticals Inc. and Big Pharma partner Sanofi are preparing to file their own PCSK9 inhibitor, alirocumab, in the fourth quarter. That suggests a filing date at least six weeks behind Amgen’s – and perhaps as much as fourth months.

But Sanofi and Regeneron have an ace in the hole: the companies plan to use a Priority Review Voucher on the application, to convert the 12 month standard review clock into an 8-month priority timeline. Thus, depending on when they file, their application could be up for an approval action at the same time as – or just ahead of – Amgen’s first-to-file application.

The chance to keep pace with Amgen didn’t come cheap: Sanofi and Regeneron paid $67.5 million to buy the voucher from BioMarin Pharmaceutical Inc.[See Deal] Considering that using the voucher means paying an enhanced user fee to cover the cost of the faster review, the two companies will be paying $70 million to keep up with Amgen in the potential new class.

That is an unprecedented wrinkle in the race to be first to market with a major new class of drugs. Regeneron’s gamble may or may not pay off, but it is certain to rekindle interest in vouchers as an incentive to encourage drug development.

However, it is far too early to declare a rally in the voucher market. There are plenty of reasons why the Regeneron/BioMarin deal is unlikely to trigger a wave of deals to buy a faster FDA review.

First off, the competitive dynamics of the PCSK9 race are highly unusual in the current era of drug development. There just aren’t that many classes where multiple sponsors are in a tight race to launch where paying up front for the chance at a faster review makes sense.

Then there is the continued uncertainty about whether using the voucher will in fact pay off. Regeneron could catch up to Amgen with voucher. But it also could just get a “complete response” four months faster. Or, perhaps, find that it qualifies for priority review without the voucher. And even if the voucher does mean Regeneron gains a faster market entry, there is no guarantee that will mean it pays off commercially.

Then there is the matter of supply: there are only two other unused PRVs that have been issued by FDA, and those have conditions of use that make them less attractive than the one sold by BioMarin. FDA will be issuing additional easy-to-use vouchers in the future, but not many and not for long – unless or until Congress acts to expand the program.

Even if Congress does act, any impact is likely to be inherently self-limiting: FDA is likely to be wary of efforts to hijack its own priority setting process for new drug reviews.

All of which suggests that Regeneron’s purchase of a PRV will be a singular event – albeit a most interesting one to watch play out.

A Very Slow Developing Market

The Priority Review Voucher is a concept first created by the FDA Amendments Act in 2007 as an incentive for neglected tropical disease drug developers. The voucher entitles the holder to a faster, priority review schedule for a product that would otherwise have a four-month longer standard review timeline.

The idea was to reward sponsors who invest in global health priorities for non-industrialized countries, recognizing that Big Pharma companies would not value traditional incentives like increased exclusivity given that the product would likely be primarily donated rather than sold. The voucher was also intended to be transferable, thus making it an “asset” that non-profits could sell to fund further research. (Also see "Treat and Trade: The New Priority Review Voucher Market" - Pink Sheet, 1 Jul, 2008.)

The idea was first proposed by a group of academics at Duke, and made it into statute with unusual speed. At the time it was enacted, there were academic analyses suggesting that the value of an extra four months of time on the market could be worth as much as $650 million to sponsors.

However, no one in the biopharma business development world saw that kind of valuation as realistic, in part because it was based on the assumption that a sponsor could be certain that a given application would generate blockbuster sales on the market (and thus recoup the cost of the voucher in four months of sales).

In addition, the voucher came with some unwieldy terms, including a requirement to give one year’s notice before redeeming the voucher. That seemed to present sponsors with the need to use the voucher before pivotal studies are complete, taking the risk that the trials will fail – or succeed so well that the application would gain a priority review even without the voucher. Conversely, they could wait to file until the 12 months were up – defeating the purpose of accelerating the review.

But more fundamentally, executives worried that the right to a four month faster review would not translate into an earlier launch – just a faster complete response letter.

That, in fact, is precisely what happened when Novartis AG redeemed the first PRV, granted after approval of the tuberculosis drug Coartem in 2008. Novartis used the voucher to gain a priority review for a supplemental filing for Ilaris in gouty arthritis. FDA delivered the faster review – but rejected the application for safety reasons. (Also see "The End of Priority Review Vouchers? Reactions to Novarits' Ilaris Panel and Incentives for Tropical Disease Research" - Pink Sheet, 1 Sep, 2011.)

While advocates for the voucher model argued that the concept still had value, any chance of a vibrant voucher market seemed to evaporate with that outcome.

However, that didn’t stop Congress from expanding the program, creating a new PRV award for drugs to treat “rare pediatric diseases” as part of the 2012 FDA Safety & Innovation Act.

The new program attempted to address some of the concerns of the first voucher program, by setting a 90-day notice requirement that is much more consistent with real world NDA filing timelines. It also made the voucher more easily transferable by explicitly allowing multiple sales of the same voucher.

However, Congress also limited the new program, setting a sunset date one year after the third of the new vouchers is issued. The awarding of the third voucher also triggers a Government Accountability Office study of the program to determine how effective it has been in incentivizing research on “rare pediatric diseases.” (Also see "Another Chance to Make Priority Review Vouchers Work" - Pink Sheet, 22 Aug, 2012.)

So, from the supply side, the vouchers are of uncertain value, and are too rare to have the sort of liquidity that makes most “markets” work.

At the same time, there has been a distinct lack of demand for vouchers as the industry evolves away from “me too” drug development. The emphasis on targeted therapies and increasingly narrow patient populations means fewer and fewer cases where Big Pharma companies are racing to market for a potential blockbuster indication.

Thus, there are fewer and fewer cases where redeeming a voucher makes sense. If you are first in class, you will likely get a priority review anyway. If you are late to market and in a relatively small class, why bother?

Given those dynamics, it may seem surprising that anyone would pay anything to acquire a voucher, much less the $70 million investment from Regeneron and Sanofi.

However, this was clearly a case where an unusual set of competitive dynamics made a voucher attractive –and an almost equally unusual set of circumstances made one available for sale at the same time.

A Big New Class Where Sponsors See First Mover Advantage

The PCSK9 class stands out as a rare example of a potentially huge new drug class with multiple sponsors in a close race to be first to market – and where one is clearly behind the pace a bit.

If Regeneron was a year or more behind Amgen, it is unlikely that they would pay so much for a slightly-less-late launch. But on the other hand, if Regeneron believed it was in the lead or closer to the lead, they would have no reason to buy a voucher at all (except, perhaps, to keep it away from Amgen).

Those competitive dynamics are rare, especially in the modern era of drug development. An added wrinkle is that the race is between publicly traded companies for whom the market potential is big enough to be treated as material (and therefore make filing timelines more transparent). In other competitive classes, it may be much harder for sponsors to judge exactly where they stand in the race to file at FDA – and therefore make it much harder to justify paying for a voucher to catch up.

Finally, the race has to include an assumption that being first to market will be critical to commercial success; in other instances, companies may choose to be a fast follower with a clearly differentiated product.

In this case, both sponsors are acting as if they think being first is a critical factor. Amgen submitted its BLA first, but decided not to include a novel injector device in the initial application, in order to avoid any risk of delaying the review process.

Amgen’s BLA uses the “SureClick” auto-injector already approved as part of the Enbrel franchise, so “we have many, many patient years of exposure and the regulators are very familiar with,” R&D Head Sean Harper explained during the company’s quarterly earnings call in July. However, Amgen is not initially filing for a novel “automated mini-doser” which “administers the entire volume necessary for monthly injection as a single infusion,” Harper said. “The reason for that is to not take a chance, given the novelty of that device, as compared to our auto-injector, delaying the entire drug submission by including that rather than get it approved.”

Amgen instead plans to file a supplemental application for the novel device – after getting to market in the more established auto-injector.

Regeneron CEO Leonard Schleifer’s comments on his company’s Aug. 4 earnings call were also telling. Asked about “differentiation” among the molecules in the class, he initially replied: “from a basic biochemical point of view, the antibodies that most people are developing are subtly different, but not major differences.” Other executives then jumped in to point out different dosing schedules developed by Regeneron and to note that all of the antibodies bind differently to the target.

Still, Regeneron’s willingness to pay so much for the chance to catch up to Amgen clearly indicates the company’s view that being first to market will matter – no matter what differences end up in labeling.

BioMarin First To Gain New Type of Voucher

The voucher acquired by Regeneron was the first (and so far only) voucher awarded under the FDASIA provisions.

In fact, FDA’s decision to grant BioMarin the voucher was already precedent-setting. Under FDASIA, a product is voucher-eligible only if the sponsor “does not seek approval for an adult indication in the original rare pediatric disease application.” In the case of BioMarin, the application was for Vimizim for Morquio A syndrome, a disease that is predominantly but not exclusively pediatric.

FDA explained its interpretation in the review documents for the application: “While Vimizim’s indication encompasses an adult population, it is understood that the indication in the adult population is merely a continuum of the pediatric indication, and does not represent a different adult indication. Therefore, a priority review voucher will be granted at the time of approval.” (Also see "Vimizim Voucher A Result Of BioMarin’s Late Request, FDA Flexibility" - Pink Sheet, 11 Aug, 2014.)

That relatively liberal interpretation suggests that FDA might get to the triggering date for shutdown of the program relatively quickly; indeed, FDA officials have indicated publicly that there are already at least two more products that have been designated as voucher-eligible under the FDASIA provisions.

Regeneron could, in theory, have bought one of the other, FDAAA-created tropical disease vouchers. There are two that have been issued but not yet redeemed, one to Johnson & Johnson for the tuberculosis drug bedaquiline and the other to Knight Therapeutics Inc. for the leishmaniasis therapy Impavido. J&J will presumably follow Novartis’ lead and attempt to use the voucher for another internal asset, but Knight has placed its voucher up for sale. (Also see "For Sale: Knight Therapeutics Seeks Buyers For Impavido Priority Review Voucher" - Pink Sheet, 20 Mar, 2014.)

Based on valuations commissioned by Knight at the time of its stock market listing in Canada, the company would clearly have sold the voucher for much less than the amount that Regeneron paid BioMarin. However, because the tropical disease voucher requires one-year’s notice to redeem, it clearly would not have made sense for Regeneron to buy it once the dynamics of the PCSK9 race came into focus.

Knight, however, could still have a chance in the space, if the potential third applicant in the class -- Pfizer Inc. – decides it might be worth shaving some time off of the gap between their candidate and the leaders.

Outcomes Study Race: Pfizer Leading From Behind?

Pfizer appears to be well over a year behind Regeneron in reaching the NDA filing stage. According to ClinicalTrials.gov, Pfizer’s first Phase III studies of bococizumab don’t wrap up until October 2015.

That suggests that the company would have enough lead time to acquire the tropical disease voucher and give 12-months-notice to FDA. However, Pfizer would have to place some value on a four-month faster review to be third to market – a position where some form of product differentiation is likely to be more important than the date of market entry.

Interestingly, Pfizer appears to be ahead of both Regeneron and Amgen in conducting full cardiovascular outcomes trials in the class. Again, according to ClinicalTrials.gov, Pfizer’s massive CV risk reduction trial is scheduled to wrap up by August 2017, about six months before either Regeneron (January 2018) or Amgen (February 2018).

That suggests at least the possibility of an alternative to the PRV strategy to catch-up in the class.

FDA has made clear that it does not intend to require CV outcomes data prior to approval of the new therapies. Of course, FDA has been known to change its mind on issues like that.

While LDL remains a generally accepted surrogate endpoint, there is the troubling experience of Merck & Co. Inc.Zetia/Vytorin franchise to consider: the addition of ezetimibe to a statin clearly lowers LDL – but has so far failed to prove added benefit in CV outcomes. Merck will be reporting the data from the IMPROVE-IT trial in November, and it is at least conceivable that the results could prompt some rethinking of whether LDL reduction can be considered an absolutely reliable surrogate marker after all.

In that case, Pfizer may go from third to first in the race in a hurry – without any need to buy a voucher to pick up ground.

Still, it seems more likely than not that FDA will approve the Amgen and Regeneron products without demanding CV outcomes data first.

On the other hand, the lack of outcomes data could be a commercial obstacle, since payors are certain to resist widespread adoption of the therapies in patients who could otherwise be on a very low cost generic statin regimen. It is likely to take unequivocal evidence of an added CV outcomes benefit to open up the market for the new class no matter what the label says.

And it may make sense to Pfizer to get that claim a few months faster.

Proving the Voucher Concept

However the PCSK9 race plays out, there is no doubt that the sale of voucher has brought the most attention to that incentive model since it was first created in 2007. If nothing else, it validates the hypothesis that a voucher can have value as an asset for small companies to sell.

But it will also test how comfortable the broader public is with the idea of rewarding sponsors for specific types of drug development programs by allowing companies to buy faster reviews of what are by definition “me too” therapies.

Then there is the inevitable reality that the BioMarin voucher can’t really be said to have provided an incentive, since the Vimizim application would have been submitted with or without the FDASIA provision (and, indeed, the product’s eligibility for a voucher appears to have been a very late determination in the review itself). That same dynamic played out with the first tropical disease voucher given to Novartis, but in that case any possible controversy over the “windfall” was mooted when Novartis used the voucher for the failed Ilaris supplement.

In this case, there may also be some concerns raised about FDA’s decision to give a voucher for the Vimizim application at all. While the agency’s somewhat liberal interpretation of the basis for the pediatric voucher is likely to be applauded by sponsors of drugs for rare disease, the advocacy that lead to the FDASIA voucher program was driven primarily by support groups hoping to drive development of pediatric cancer therapies.

Thus, if FDA ends up awarding all of the FDASIA vouchers to non-cancer products, there may be little support for reauthorizing the program no matter how much of a voucher market evolves in the next year or two.

Last but not least, there is the interesting detail that the voucher was sold by an overseas subsidiary of BioMarin, leaving the company pondering uses for the proceeds that are likely to focus on overseas investments (rather than paying US taxes on the proceeds before using the cash in America). In the current climate around “tax inversions,” that is unlikely to make this transaction a useful way to rally political support for extending the incentive.

So it seems safe to bet that the BioMarin/Regeneron transaction is not the beginning of a new PRV market, but rather an unusual case where the right voucher met the right sponsor at the right time. But it still may be a major development in shaping the PCKS9 class.