AstraZeneca's Real Concern is Map Pharmaceuticals

Last week, the market cap for AstraZeneca (Nasdaq:AZN) was cut by some $10 billion dollars following a string of bad press including news that Teva Pharmaceuticals (Nasdaq:TEVA) will soon be selling a generic version of their pediatric asthma drug Pulmicort Respules following a favorable ruling from the FDA in Teva’s favor. This drug currently has sales of $996 million dollars and has been growing nicely throughout the world. Teva essentially wants to sell the same drug as a generic and will presumably undercut current AstraZeneca pricing in order to steal business from them. On Friday, AstraZeneca stopped some of the bleeding by pushing through a restraining order that prevents Teva from marketing and selling this generic version of budesinide until the U.S. District Court of New Jersey makes a decision on the patent at a hearing in mid-January.

Looking beyond this tug of war, the real 800-pound gorilla threatening AstraZeneca’s Pulmicort Respules and any Teva-like copycat comes from a small pharmaceutical company called Map Pharmaceuticals (Nasda:MAPP). Map is in late stage 3 development of an improved version of Unit Dose Budesonide (UDB) for the treatment of pediatric asthma that outperforms Pulmicort Respules. Map’s product is a reformulated version of UDB that allows parents to administer the drug to their children more easily and with a lower steroid dose that helps to cut down on side effects.

These drugs need to be administered with a nebulizer and Map’s drug gets the job done much quicker that Pulmicort Respules. Just imagine trying to put a mask on your kid's face and have him sit on your lap for 10-15 minutes twice a day. Map’s drug gets the job done in 3-5 minutes. Secondly, MAP gets a higher percentage of the drug into the kids lungs allowing the steroid dose to be as much as 50% less, plus the drug gets delivered more quickly during the nebulization period resulting in better compliance. This helps to cut down on potential side effects associated with inhaled steroids and ultimately results in children breathing better, the most important end point. In Map’s Phase 2 clinical trial, UDB reduced symptoms of asthma at a dose approximately half that of the current treatment.

If news of a copycat generic getting approved can cut billions of dollars from AstraZeneca’s market cap just imagine what will happen when a much improved version of the same drug gets approved.

In a world where major pharmaceutical companies are pressed to fill their pipelines with up and coming drugs, Map could be a real winner in this game. In my opinion, if AstraZeneca or Teva want to control this market for the foreseeable future, they might want to consider buying out Map Pharmaceuticals. Tim Nelson, Map’s CEO, did mention in a recent analyst presentation that there is interest in their company by big pharma. This is no surprise to anyone who has followed this stock. And don’t think Map is just some side show. They have strong backing by some of the biggest investors and hedge funds in the world, including George Soros who controls around 20% of MAPP stock. You know these guys are pressing for something big to happen for Map.

Lastly, Map may not be a one hit wonder. They also have a second drug in stage 3 development for the treatment of migraine that also looks very promising and targets another multi-billion dollar market. This drug could be another great pipeline filler for a large pharma player.

Disclosure: The author is a shareholder in MAPP stock

Comments

[hoopdreamer...:]

Managed care won't care if a patient needs 10 minutes of therapy instead of 5 minutes.

If you were a parent would you pay $20 for your generic pulmincort or $100 for MAPP's? Total extra cost to your family of $960/year?

I don't find mapp to be particularly compelling.

2008 Nov 25 10:06 AM

[Lydiasha227...:]

Hi Shane,
Thank you for your comments about MAP Pharmaceuticals.
Both UDB which is called MAP0010 and Migraine (MAP0004) are great products, specialy MAP’s drug delivery system for migraine which is a robust combination device drug product that delivers the medicine via pulmonary/inhalation. A lot of migraine suffers are waiting to this product to hit the market! I am the packaging engineer for both these product at MAP Pharmaceuticals.
Best regards,
Lydia

2008 Nov 25 04:46 PM

[User 307603:]

Your persepctive is inaccurate in one sense. Yes I agree MCOs do not give a hoot if your therapy takes 3-5 or 30-35 minutes or if it has less side effects in the long term. What they do care about is if this drug works better as per delivering more medication to the lungs. If this increases efficacy which can possible lead to keeping kids out of the ER which costs the MCO hundreds to thousands of dollars per ER visit then MCOs will want this prodcut on their formularies at least as a Tier 3 level with mininal contracting if not at a Tier 2 level with higher contracting. Not sure where you are getting the $100 figure from as most MCOs will cover most asthma prodcuts, espcially steroids, at a Tier 3 level ($35-$45 copay) with some of them requiring a Prior Authorization to push this through. These are facts.

The biggest X factor here will be to se if Map has done any head to head (with Pulmicort) longer term studies looking as asthma rates, FEV1 over the 24 hour period, and ER visits with the two products. My guess is they have not since negative results would significantly hurt this drug and their ability to market it that way I have described above. Hope this helps.

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On Nov 25 10:06 AM Jose Mcintyre wrote:

> Managed care won't care if a patient needs 10 minutes of therapy
> instead of 5 minutes.
>
> If you were a parent would you pay $20 for your generic pulmincort
> or $100 for MAPP's? Total extra cost to your family of $960/year?
>
>
> I don't find mapp to be particularly compelling.

2008 Nov 26 03:10 PM

[hoopdreamer...:]

User, 2 things, one, mapp isn't doing cost/benefit analysis vs pulmincort. So its a moot point and hypothetical. Two, chances are it won't prove any discernable difference anyway. Mapp's claim to fame is a little more efficient delivery and using less drug. It's all good stuff, but I don't think its going to yield any material cost saving difference that would interest payors. My point being it will be at a branded cost entering a generic market. Good luck.

With respect to the migraine drug its a slim chance for approval, another company tried for approval with the same drug in an oral delivery and was denied for hypothetical safety concerns. This doesn't bode well for mapp.

2008 Nov 28 09:49 AM

[Investclub2008:]

Well I guess there were others who didn't agree with you Mr.Hoopdreamerz, like AZN. Looks like AZN know's the potential for MAPP's UDB. This is great news for MAPP and shareholders. I expect MAPP to start picking from here.

GO MAPP!!!!

2008 Dec 23 02:33 PM