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Trius Therapeutics' (TSRX) tedizolid is a novel and game-changing treatment of acute bacterial skin and skin structure infection ((ABSSSI)). Tedizolid is an intravenous and orally administered second-generation oxazolidinone used to treat serious gram-positive infections such as methicillin-resistant Staphylococcus aureus (MRSA) - an infection that is increasingly prevalent. MRSA days of therapy continue to increase as seen by the over 13 million days in 2010, a five million day increase from 2005. It is estimated that 60 percent of ABBSSSI cases seen in the emergency room are MRSA cases. Current treatments include vancomycin, daptomycin (Cubicin) by Cubist Pharmaceuticals (CBST), and linezolid or Zyvox by Pfizer (NYSE:PFE), with the latter capturing a large percentage of sales in the MRSA market. At 40 percent of the U.S. market, Zyvox generated 613 million dollars in sales in 2010 and that figure is expected to grow significantly. As this market and MRSA continue to evolve, the need for additional efficacious treatments is clear.

Data from tedizolid trials have generated a lot of excitement and interest in this compound. In the phase 3, 112 trial, tedizolid achieved the primary objective of non-inferiority versus linezolid, met all secondary endpoints, and demonstrated significant advantages over linezolid in the ABSSSI space. With high response rates in the tedizolid and linezolid arms of 79.5 percent and 79.4 percent, respectively, the data from the 112 trial do not and most likely will not show superiority. However, when clinically important features of tedizolid are taken into account, one can conclude that tedizolid is "superior" to linezolid. Not only does tedizolid not exhibit the same adverse class effects that are seen with linezolid, but it is superior when convenience, dosing, and tolerability - all vital to compliance and the success of an antibiotic - are factored in. In fact, tedizolid offers many advantages when compared with current and standard-of-care MRSA therapies on the market.

Tedizolid Is "Superior" To Linezolid

Tedizolid is dosed once daily for six days, whereas linezolid is taken twice daily for 10-14 days, offering a shorter and more convenient dosing regimen, encouraging compliance, decreasing resistance, and resulting in better treatment outcomes. Furthermore, the data demonstrated tedizolid to be safer and better tolerated than linezolid. The percentage of patients experiencing any treatment emergent adverse events and any drug related treatment emergent adverse events were both lower for tedizolid versus linezolid at 40.8 percent versus 43.3 percent and 24.2 percent versus 31 percent, respectively. A statistically significant lower percentage of patients experienced gastrointestinal disorders at 16.3 percent for tedizolid versus 25.4 percent for linezolid. Linezolid has a number of limitations - namely, myelosuppression and significant, possibly fatal drug interactions. It is known that linezolid can cause a number of hematologic adverse effects such as anemia, leukopenia, pancytopenia, and thrombocytopenia - especially in courses greater than 7 days. In studies, tedizolid did not demonstrate a propensity to cause these side effects and had no indications of abnormal hematologic lab values. Unlike tedizolid, linezolid has many interactions with common foods and highly prescribed drugs - antidepressants, asthma medications, muscle relaxants, and foods such as pepperoni, sausage, aged cheese, red wine, and tap beers. Listed below are some of the many interactions with common drugs and food:

Interaction(s) with Linezolid

Description of Interaction

Limitations

Ginseng

Unexpected toxic effects such as manic-like symptoms and headache

Avoid concomitant use

Amine-Containing Foods

  • Aged cheese
  • Pickled fish
  • Concentrated yeast extracts
  • Red wine
  • Certain processed meats (sausage, pepperoni, salami)
  • Some tap beers

Hypertensive crisis, intracranial hemorrhage

Avoid amine-containing food

Monoamine Oxidase Inhibitors

  • Phenelzine (Nardil) by Pfizer
  • Isocarboxazid (Marplan) by Validus
  • Selegiline (Eldepryl, Emsam, Zelapar) by Somerset, DEY/Mylan (NASDAQ:MYL), Valeant (NYSE:VRX), respectively

Life-threatening serotonin syndrome

  • Agitation
  • Rapid heart rate
  • Hallucinations
  • Increased body temperature
  • Loss of coordination
  • Rapid fluctuations in blood pressure

Do not use linezolid within 14 days of listed products.

Sibutramine (Meridia) by Abbott Laboratories (NYSE:ABT)

Life-threatening serotonin syndrome

•Agitation

•Rapid heart rate

•Hallucinations

•Increased body temperature

•Loss of coordination

•Rapid fluctuations in blood pressure

Avoid concomitant use

Atomoxetine (Strattera) by Eli Lilly (NYSE:LLY)

Risk of serious or fatal reactions

  • Hyperthermia
  • Rapid fluctuations in vital signs

Do not use linezolid within 14 days of listed product

Beta-2 agonists

  • Albuterol
  • Ventolin by GlaxoSmithKline (NYSE:GSK)
  • Maxair by Medicis (MRX)
  • Proventil, Schering-Plough/Merck (NYSE:MRK)
  • Xopenex by Sunovion

Adverse cardiovascular effects such as hypertension

Monitor Blood Pressure

Bupropion (Wellbutrin) by GlaxoSmithKline

Risk of hypertensive crisis

Do not use linezolid within 14 days of listed product

Buspirone (Buspar) by Bristol-Myers Squibb (NYSE:BMY)

Life-threatening serotonin syndrome

•Agitation

•Rapid heart rate

•Hallucinations

•Increased body temperature

•Loss of coordination

•Rapid fluctuations in blood pressure

Avoid concomitant use

Cyclobenzaprine (Flexeril) by McNeil/Johnson & Johnson (NYSE:JNJ)

The risk of hypertensive crisis, convulsions, and death is increased.

Do not use linezolid within 14 days of listed product

Methylphenidate

  • Ritalin by Novartis (NYSE:NVS)
  • Concerta by Janssen

Risk of hypertensive crisis

Do not use linezolid within 14 days of listed product

Selective 5-HT1 receptor agonists

  • Sumatriptan (Imitrex) by GlaxoSmithKline
  • Rizatriptan (Maxalt) by Merck

Life-threatening serotonin syndrome

•Agitation

•Rapid heart rate

•Hallucinations

•Increased body temperature

•Loss of coordination

•Rapid fluctuations in blood pressure

Avoid concomitant use

Serotonin Reuptake Inhibitors

  • Fluoxetine (Prozac)
  • Paroxetine (Paxil)
  • Sertraline (Zoloft) by Pfizer
  • Venlafaxine (Effexor) by Wyeth/Pfizer
  • Escitalopram (Lexapro) by Forest Laboratories (NYSE:FRX)

Life-threatening serotonin syndrome

•Agitation

•Rapid heart rate

•Hallucinations

•Increased body temperature

•Loss of coordination

•Rapid fluctuations in blood pressure

Avoid concomitant use

Tricyclic antidepressants

  • Amitriptyline (Elavil)
  • Nortriptyline (Pamelor)
  • Doxepin

Life-threatening serotonin syndrome

•Agitation

•Rapid heart rate

•Hallucinations

•Increased body temperature

•Loss of coordination

•Rapid fluctuations in blood pressure

Avoid concomitant use

The list does not end here as linezolid is not safe when given with Sudafed, Demerol, epinephrine, norepinephrine, and many more clinically significant medications. Needless to say, linezolid presents challenges for clinicians when potential drug interactions, dosing, and side effects are factored in. These same challenges are not present with tedizolid.

Trius, Linezolid Outlook

Currently, in the United States, the MRSA market is estimated at 1.56 billion dollars per year and 2.5 billion dollars globally. On average, branded MRSA medications such as Zyvox experienced a 20 percent compounded annual growth rate (CAGR) in U.S. sales from 2005-2010 and are only expected to increase. At 613 million dollar in U.S. sales in 2010 and a more conservative CAGR of 10 percent, Zyvox can exceed 900 million dollars in peak annual U.S. sales in 2014. For tedizolid, looking further ahead, peak annual U.S. sales will surpass 900 million dollars and total sales of well over 1 billion dollars. The latter figure takes into account "superiority," global penetration, rapid growth in MRSA cases, increased prevalence of resistance to current treatments such as vancomycin/zyvox, and additional indications/off-label prescribing for pneumonia, bacteremia, and endocarditis. Global penetration of tedizolid will be conducted in partnership with Bayer (OTCPK:BAYZF) for markets in Asia (excluding North and South Korea), Africa, Latin America, and the Middle East. Under this partnership agreement, Bayer will pay Trius 25 million dollars upfront and support 25 percent of the cost for global development. Trius will receive double-digit royalties on net sales in licensed territories and is eligible to receive 69 million dollars on the achievement of certain milestones. Bayer has made a payment of 5 million dollars to Trius for its successful late stage trial.

Formulary acceptance should not be an issue as tedizolid is available in intravenous (iv) and oral formulations. This allows for a more streamlined iv to oral switch as the patient is discharged from the hospital. Not only does this make it easier for the physician, but it also allows for a consistent antibiotic serum level, which is important in the treatment of the infection. Furthermore, the anticipated shorter course of therapy with tedizolid saves the hospital money by allowing for an earlier patient discharge.

Formulary acceptance per company market research suggests that, when priced at parity with Zyvox, approximately 90 percent or greater are moderately to very likely to add tedizolid to its formulary for complicated skin and skin structure infection (cSSSI), pneumonia (hospital-acquired/ventilator-associated), endocarditis, bacteremia, ICU patients, and documented MRSA. In suspected MRSA patients, that percentage decreases to approximately 70 percent. When priced at a significant premium to Zyvox, approximately 60 percent or greater are moderately to very likely to add tedizolid to its formulary for the listed indications. In suspected MRSA cases, that figure drops to approximately 50 percent.

HMOs/PBMs are also on board for the oral formulation. If priced at a significant premium to a course of Zyvox, 90 percent will place tedizolid in Tier 3 with 10 percent in Tier 1. If priced at a modest premium, 60 percent of those surveyed will place it in Tier 2 and 40 percent in Tier 3. If priced at parity with Zyvox, 90 percent of the HMOs/PBMs will place linezolid in Tier 2 and 10 percent in Tier 3. Over time, these figures will change in favor of tedizolid as the usefulness and efficacy is proven in practice.

With a current market capitalization of 150 million, Trius has significant upside. As of September 30, 2011, Trius has 70 million in cash and equivalents and no debt. Shares have been weakened as of late starting with the anticipation of dilution and the formal announcement of a share-offering of 8.6 million shares at $5.25 per share. On top of this, the SEC is reviewing earnings for the third quarter of 2011. Both of these events have no bearing on the prospects of linezolid and to a certain extent, no material impact on Trius. The price decline presents an opportunity for long-term investors to slowly accumulate and/or add to their positions.


Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in TSRX over the next 72 hours.

Disclaimer: All information is provided for informational purposes only and does not serve as investment advice or an offer of management services. There is no guarantee that the information is accurate. All information is subject to change, amendment, and correction without any notice. Any mention of current and past results does not indicate any future expectations or results. All investments are associated with risks and loss of money. Consult with a professional tax, accounting, legal, and/or investment advisor before making any investment decision.

Source: Trius Therapeutics: Weakness Presents Opportunity