Vriese et al (2006: 1111) described the case of a 63-year old woman who "developed optic neuropathy, encephalopathy, skeletal myopathy, lactic acidosis, and renal failure." What is interesting from the perspective of a Trius investor is that these symptoms occurred after being treated with linezolid (marketed as Zyvox by Pfizer (PFE)) for four months (keeping in mind that the labeled length of treatment is for a maximum 28 days).
Instead of being a set of seemingly unrelated adverse events, Vriese et al noted that
the clinical and biochemical features in this patient were reminiscent of mitochondrial disorders caused by drugs or hereditary defects in respiratory chain complexes.
Given that linezolid acts on bacteria protein synthesis, it is quite possible that long-term use could affect human mitochondria. In fact, Palenzuela et al (2005) had previously hypothesized a linezolid effect on human mitochondria, so this case seems more like a predictable outcome of long-term use as opposed to an aberrant case. This effect on mitochondria was confirmed by Garrabou et al (2007), although luckily the effect is reversible with the discontinuation of treatment.
While the dangers of extended linezolid use are certainly medically important, it might not be immediately clear why this matters for Trius Therapeutics (TSRX) or tedizolid. The fact is that the long-term use (over 28 days) is both off linezolid label and represents a considerable commercial opportunity. Recent work by AMR found that around 50% of linezolid sales are actually off-label and a significant portion of these would be long-term prescriptions. In other words, about $600 million of 2011 Zyvox sales are not in its labeled indication and a significant portion of those are treatment regimes over the 28 days maximum. While there are obviously significant risks associated with off-label, long-term use, the question is whether tedizolid (which is in the same class of antibiotics) is any safer. If it is, then it should be able to capture a large portion of these sales as an insurer does not want to pay for a treatment that has a high risk of adverse events even if it is generic (as linezolid will become in the next couple of years).
The patients that Vriese et al and Garrabou et al examined certainly appear to have adverse events that are driven by long-term linezolid use, but these may simply be spurious correlations. It seems unlikely as the linezolid mechanism of action would imply a possible deleterious effect on mitochondria and the adverse events appear to be mitochondria-driven but one certainly does not want to assume an association. As such Vriese et al went further and prospectively designed an animal toxicity study that mimic in rats the linezolid levels that were seen in their patient. The results of the test were fairly conclusive as they found that "in the experimental animals exposed to linezolid, we found an obvious time- and dose dependent effect . . . [and that it] provide[s] compelling evidence for a causal link between long-term exposure to linezolid and disruption of mitochondrial protein synthesis" (Vriese et al). In other words, given its mechanism of action, one might expect that long-term usage of linezolid would have a harmful effect on mitochondria. In addition, there are numerous cases where someone using linezolid in off-labeled lengths develops serious adverse reactions that appear similar to mitochondria diseases. Finally, when you expose rats to similar doses, you see a clear effect on the mitochondria. As such, it appears quite clear that the human cases are causally linked to linezolid exposure and this creates an opportunity for a drug that is similarly effective but without the risks of long-term use.
The ability of tedizolid to tap into this large commercial opportunity is, of course, contingent on its ability to avoid adversely effecting mitochondria. Das et al (ICAAC 2012) specifically examined the potential of tedizolid to similarly harm mitochondria and found that "there is no evidence of any stable association of tedizolid with mitochondria of eukaryotic cells." In other words, despite being in the same class of antibiotics, tedizolid has not shown any evidence to indicate a similar effect on mitochondria. The company also has an ongoing animal study that is looking at the safety of up to nine months of treatment with tedizolid and should report data at the end of the first quarter of 2013 or early in the second quarter. Assuming that the final data are consistent with previous work (and there is little reason to expect it not to be), then it seems like tedizolid has a significantly cleaner safety profile in the long-term use. This would provide tedizolid with a profile that should be an easy sell in this long-term use market: similar efficacy to linezolid and a far cleaner safety profile.
Over the past number of articles, I have attempted to address the bear thesis that focuses on a perceived lack of commercial opportunity for tedizolid. Not only is there the approved indication market where tedizolid should find some uptake but there is an opportunity for tedizolid in what will be the growing linezolid resistant market. Outside of looking at markets, I also tackled the issue with an alternative method by developing a statistical model of potential sales and it provided additional evidence that Trius is undervalued.
This article highlights what is perhaps the largest commercial opportunity and is one in which generic linezolid will have limited impact (having to retreat patients with adverse reactions is exceptionally expensive, so it seems reasonable to forgo cheap generic linezolid for a branded therapy with a lower risk of expensive adverse reactions). When all is said and done, I have looked at the commercial opportunity from three separate angles and they all point to Trius being undervalued as the market does not appreciate the full market opportunity in tedizolid.
Disclosure: I am long TSRX. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.