Richard Sater's  Instablog

Most pharmaceutical companies fuel their growth by creating more product lines within their core strengths.  Entering highly contested therapeutic areas is a risky endeavor, but one a large pharmaceutical company is capable of funding.  Novartis currently has only a moderate presence in Neurology, with modestly successful products including Exelon for Alzheimer’s and Stalevo for Parkinson’s.  Novartis (NVS) is employing several strategies to enter the field of Multiple Sclerosis therapeutics.  Strategies employed include in-house development, early to mid-stage partnering and development of bio-generics.  Further details of current studies and future potential of these agents and others are further explored in reports available through neuropipeline.com.

In-House Development

Novartis is developing FTY-720 and BAF312 as sphingosine-1-phosphate receptor agonists for MS and other indications.  FTY-720 (fingolimod) is furthest along with a second Phase III trial (FREEDOMS) completed in July.  There is a near term catalyst with topline results likely to be released to coincide with presentations on September 10, 2009 in Düsseldorf at the ECTRIMS Congress (European Committee for Treatment and Research in Multiple Sclerosis).    FTY-720 has already reported details of a successful Phase III study (TRANSFORMS) in a large study comparing 2 doses of FTY-720 and Avonex (BIIB).   The oral FTY720 showed a 38% reduction in relapses compared to the interferon and did well with all secondary clinical endpoints.  However, safety issues were raised with 2 deaths due to severe viral infections and the presence of more skin cancers (including melanoma) in the FTY720 treated groups.  In a clinical update in late April 2009 at the AAN meetings, no additional fatalities from other studies of FTY-720 in MS were mentioned. 

Novartis is also developing BAF312 as a follow-up compound to FTY-720 with a similar mechanism of action.  A Phase 1 study to investigate safety, tolerability, kinetics and dynamics was started last year and is likely complete.  No details have been announced.     Some of the perceived risks of FTY-720, might be class-related, and hence about the same in both agents.  Other side effects, including bradycardia and shortness of breath might be improved in a follow-up agent as there are five known SIP receptors and the two agents likely have a different profile.  The clinical effects of these agents may be through SIPR4 and SIPR5, with the smooth muscle and cardiac side effects likely occurring through SIPR1, SIPR2 and SIPR3. 

Early to Mid stage Partnering

Earlier this year, Peptimmune (privately held) and Novartis entered into an agreement giving Novartis an exclusive option to develop PI-2301 for MS.  This agent is similar to Copaxone (TEVA, poly[Y,E,A,K]n) in that it is  copolymer of 4 different amino acids (in this case, poly[Y, F, A, K]n) and works through the same purported mechanisms via MHC class II binding and resultant stimulation and expansion of myelin-reactive Th2 cells.  Two phase 1 studies have been completed and data from the second study in 50 patients with secondary progressive MS will be released at the ECTRIMS meeting later this month.   Proof of concept was achieved in the first phase 1 study of 56 volunteers using an escalating dose cohort design.  A phase II study in relapsing remitting MS may start by the end of the year.  Though still too early to gauge the effectiveness of this product, safety should not be a concern.  If as effective as Copaxone or more effective, it would offer an advantage of being a once a week shot over a daily. 

More recently, Novartis and Opexa Therapeutics inked a deal giving Novartis control of Opexa’s stem cell program, including its Tovaxin MS therapy.  Tovaxin is a personalized T-cell vaccine for relapsing remitting MS prepared by expanding specific subsets of myelin-reactive T-cells.  Attenuated cells are reintroduced with a goal of setting up an anti-idiotype network to shift a TH1 mediated response to a Th2 response.  In 2008, the TERMS phase II study suggested the strong possibility of a therapeutic response similar to that seen with current platform therapies and with no significant side effects.  Initiation of a phase III study in relapsing remitting MS is likely by early next year and will serve as a much bigger catalyst for Opexa than for Novartis. 

Bio-generics 

The generic approval process for biologic agents is more complicated than for simpler products and remains a work in progress at the FDA.  Novartis obtained the right to its own branded version of interferon-beta-1b, Extavia, when it acquired Chiron.  Schering, now part of Bayer (BAYRY.PK), had licensed its version of this compound, Betaseron, from Chiron, and continues to license Betaseron from Novartis.   Extavia is identical to Betaseron, which has been available in the US and elsewhere since the early 1990’s.   Betaseron offers modest efficacy and tolerability with an excellent safety profile.   The FDA granted approval to Extavia in August 2009, allowing Novartis to market its first MS product.

Momenta Pharmaceuticals (MNTA) and its partner, the Sandoz unit of Novartis, submitted an application to the FDA on July 11, 2008 for generic glatiramer acetate (Copaxone, TEVA).   No decision has been announced.  Unlike Extavia, the approval process for generic glatiramer acetate will be more difficult as the product would be bio-similar, not bio-identical. 

Market presence

Currently, Novartis’ only marketable product for MS is Extavia.  Betaseron has a market share under 20% for the treatment of relapsing-remitting MS and has an excellent nurse educator program to enhance compliance and education for patients.  Extavia may not enter the market at a significant discount to Betaseron.  There will be no overwhelming desire to move patients from Betaseron to Extavia unless insurance programs shift more cost to those patients who prefer to stay on Betaseron.  I do not think many patients on other interferons, such as Rebif (MKGAY.PK) or Avonex (BIIB) will switch without significant monetary disincentives from their insurers.  Additionally, Biogen is developing a PEGylated Avonex that may only need to be taken once or twice a month that may be available by late 2013, further cutting into Extavia’s growth potential. 

If Extavia has little potential for blockbuster status, why would Novartis be interested in this product?  The main reason is that by marketing Extavia, Novartis will be building up a sales force and relationship with prescribing neurologists to allow a more successful launch for FTY-720 and other pipeline products for MS.  I expect the FREEDOMS FTY-720 study to present excellent topline efficacy data against placebo later this month.  Efficacy will likely be better than the current self-injectible medications but unlikely to be better than that of Tysabri (ELN, BIIB).  The uncertainty about adverse effects will need to be addressed by the data release.  If a reasonable balance of risk to efficacy is achieved, submission to the FDA could occur by the end of the year with fast-track approval by summer 2010.  FTY-720 has potential to be a blockbuster and may have efficacy in other autoimmune disorders.  If skin cancers remain a concern, a risk evaluation and mitigation strategy may need to be developed to protect against this adverse event.   Unlike curent FDA approved medications for MS, FTY-720 is an oral agent.  Cladribine (MKGAY.PK), another oral agent, is on a similar timeline for FDA approval.   

Summary

Using all three strategies, Novartis should be able to step into the MS marketplace with Extavia and pick up the pace as FTY720 and other pipeline products are developed.  Because of Novartis’ market cap over 100 billion, these products will only move the share price a few percent as they succeed or fail.  However, they will need to have many solid products in the future to replenish the income from other agents facing patent expirations.

Disclosure:  Long NVS and ELN.  Have served as a consultant or speaker for Biogen, Pfizer, Merck-Serono. 

Large price swings frequently occur when Biotech companies release data from a Phase III study..  If primary endpoints do not reach significance, NDA submission to the FDA is unlikely.  Strong results with good safety data bring the drug one step closer to approval.  Narrow hits and misses or safety concerns result in continued uncertainty until longer term data or a second phase III becomes available. 

These can be binary events for smaller companies that have only one lead candidate, often resulting in price drops greater than 50% or increases greater than 200%.  Larger companies, not dependent on one or two candidates, are unlikely to see price changes greater than 10-20 % after release.  A lag period of 1 to 3 months is common between study completion and topline data release.  More complete data is typically presented at conferences 3 to 6 months later.  Before phase III data is released, bets on a company’s future are placed based on the more limited results from earlier phase II studies.  

BioMS
BioMS (MS on Toronto Exchange and BOMSF.PK on OTC) completed their study of MBP8298 (also known as dirucotide) in late May 2009 and topline data from the MAESTRO-01 study will be released shortly.    This study compared dirucotide to placebo in 553 patients with secondary progressive multiple sclerosis.  The primary endpoint compared the time to sustained worsening of disability using a standard scale.  From Phase II studies, dirucotide appears to be a very safe medicine and needs to be infused only twice a year.    Secondary progressive multiple sclerosis (without relapses) has no current treatment and FDA approval for this indication could lead to sales over 1 billion/year. 

BioMS and Lilly (LLY) entered into a global licensing and development agreement on December 17, 2007 regarding dirucotide.  BioMS received upfront payments of $87 million and will have potential development and sales milestones of $410 million and possible further escalating royalties. 

Multiple Sclerosis
With about 400,000 patients, MS affects more than 1 out of every 1000 Americans.  About 85% present with relapsing remitting MS (RRMS) and half of these eventually develop secondary progressive MS (SPMS).  The other 10-15% present with primary progressive or progressive relapsing multiple sclerosis.   Thus, there are about 160,000 patients in the US and Canada with SPMS.  There are currently 6 FDA approved medicines for MS:  Betaseron (Bayer;BAYRY.PK), Avonex (Biogen Idec, BIIB), Copaxone (Teva), Rebif (Merck KGaA, MKGAY.PK), Novantrone (Merck KGaA and generic) and Tysabri (Elan and Biogen, ELN, BIIB).  These treatments have efficacy for RRMS and some also for the relapses of early SPMS.  However, there are no current medications that are FDA approved for non-relapsing SPMS.  Thus, dirucotide will not effect use of other MS drugs much.

Cypress Bioscience, Inc (CYPB) is a small company with a 287 million dollar market cap that will soon begin to receive royalties for its first FDA approved product.  Savella (milnacipran) was approved on January 14, 2009 by the FDA for the management of FMS (Fibromyalgia Syndrome) and became available at pharmacies on April 28.  This drug will be marketed by Forest Laboratories (FRX), a company that already has a large sales force marketing Namenda for Alzheimer’s and Lexapro for depression and generalized anxiety. 

The American Academy of Neurology (AAN) meeting will be held during the last week of April.  Several pills are in later stages of development for the treatment of multiple sclerosis (MS) and good efficacy data has led to anticipation of FDA approval of one or more of these agents over the next few years.   This report will detail findings on cladribine and FTY-720, the two oral drugs that are furthest along in development and analyze their strengths and weaknesses in an increasingly more crowded arena.    The larger report at www.NeuroPipeline.com adds further details about 3 more oral drugs in development.