The dreaded FDA complete response letter, so often seen as a major setback and perceived negatively by investors in afflicted companies, was Monday welcomed with open arms by shareholders in Amylin Pharmaceuticals (AMLN) and Alkermes (NASDAQ:ALKS), sending shares in both companies to 12-month highs; in early morning trading Amylin stock gained 9% to $22 while Alkermes rose 11% to $13.50.
Although the FDA has essentially rejected the application to approve Amylin, Alkermes and co-partner Eli Lilly’s (NYSE:LLY) once-weekly version (Bydureon/Byetta LAR) of the already approved twice-daily diabetes therapy, Byetta, the relatively benign looking response letter appears to have removed significant uncertainty over the product’s approvability, with safety issues a particular concern (Event - Victoza approval could pave the way for Byetta LAR approval, February 4, 2010). Amylin hopes to respond to the FDA’s requests, over labelling, REMS and manufacturing issues, within the next few weeks although the likely classification of the response, Class I or II, remains unclear.
As ever with these complete response letters, the devil is in the details and what Amylin has revealed so far appears encouraging to the companies and investors alike.
The FDA has requested that ongoing discussions over Bydureon’s label and Risk Evaluation and Mitigation Strategy (REMS) are finalized, and is seeking clarification over existing manufacturing processes for the product.
Importantly, the FDA has not asked for any new pre-clinical or clinical trials, and given some negative press reports last week over potential deficiencies at Amylin’s Ohio manufacturing plant, the company stressed these have been addressed and that the regulator's request for manufacturing clarification is unrelated.
Of these issues, which should normally have been resolved within the standard 10-month review period, agreement on the product’s label and associated REMS appear the most awkward and could have significant implications for Bydureon’s eventual commercial success.
Novo Nordisk’s (NYSE:NVO) Victoza, the second GLP-1 agonist to reach the market after Byetta, was recently approved by the FDA with a black box warning on its label over thyroid c-cell tumours and an extensive REMS to monitor this risk.
As such, until these label and REMS issues have been cleared up, Bydureon’s commercial potential and the overall competitive environment for GLP-1s in general remains uncertain.
Nevertheless, Amylin is hopeful of a swift response to the FDA, although on a conference call Monday management would not be drawn on the likelihood of the FDA classifying it as Class I, with a three-month follow-up, or a Class II, which takes up to six months to review.
However, even a Class II submission, which some analysts have indicated is most likely given historical examples in which finalizing a REMS is required, would mean a delay to approval until October this year.
Amylin expects to launch Bydureon within two months of approval, suggesting that the drug could still be on track to become one of the biggest product launches this year (Which of 2010's launches will be future blockbusters?, January 19, 2010).
The companies are naturally hoping that Bydureon builds on the existing patient population for Byetta while its dosing advantage and hopefully more benign safety profile enables the drug to capture a greater share of the overall market.
As the table below shows, the switch over to Bydureon is expected to be rapid as sales of the overall Byetta franchise are expected to reach blockbuster status this year or next and then almost double by 2014.
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