The Value of an SPA for Avanir Pharmaceuticals

| About: Avanir Pharmaceuticals, (AVNR)

There are only two companies that will be up for FDA approval for their products in the second half of the year that have an SPA (special protocol assessment) with the FDA. Those companies are Avanir Pharmaceuticals (NASDAQ:AVNR) and Vivus Pharmaceuticals (NASDAQ:VVUS).

VVUS has a PDUFA date of October 28th for Qnexa® which treats weight loss. Avanir has a PDUFA date of October 30th for Zenvia™, which treats pseudobulbar affect. Key safety and tolerability data from the Vivus, Inc. special protocol assessment (SPA) that was not evident at the recent FDA Advisory Panel meeting is present for Avanir (AVNR) into their PDUFA date. VVUS has their SPA in a crowded but profitable market of weight loss and obesity. Avanir has their market in an often under-recognized and undertreated condition of uncontrollable laughing and crying known as PBA (pseudobulbar affect).The Avanir SPA has an emphasis on safety and tolerability to go along with the efficacy data that was clearly demonstrated in the recent STAR trial.

This article will discuss what an SPA is, the value of an SPA, and why Avanir is in a unique position leading up to their approval date in the 4th quarter of this year.

What is a special protocol assessment (SPA)?

An SPA is a definitive agreement between the FDA and a company which addresses all aspects of the design and analysis of a trial before the start of it With the SPA. The FDA presents a signed agreement that states if the trial is run exactly as designated in the SPA and the results are positive, then they (the FDA) will approve the drug. This is immensely important for any company regardless of its size.

This SPA agreement can assure companies and investors that if several million dollars are invested in a late-stage trial, then the FDA will not come back and punish the company for not having the endpoints that were identified as being needed in order to conduct a successful trial for approval. A company’s compliance with the FDA’s request makes investors feel confident in that the company has done its homework and been in communication with the FDA in its efforts with the FDA to gain approval.

With regards to the two companies, analysts at Jefferies & Co. recently (July 1st) gave AVNR a buy rating and a $10 target price and a week later (July 8th) reiterated their hold on VVUS with a target price of $9 one week prior to the July 15th Advisory Panel Meeting. They recognized the safety concerns the panel would encounter for Qnexa while other analysts expected a more positive outcome. Jefferies was spot on with their analysis on VVUS, as they will be with Avanir.

While the FDA panel agreed that the Vivus product, Qnexa, has solid efficacy data, the meeting mainly focused on five safety issues. The safety issues were: the affect of Qnexa on pregnant women, the chance of cardiovascular risks, psychiatric events, cognitive events, and metabolic acidosis.

The safety concern of the FDA Advisory Panel was evident on July 15th as the panel voted 10-6 in favor of Qnexa being not approvable.

Vivus could state that the FDA’s request for long-term safety data (greater than one year) was not in the SPA, and that their agreement was that one year of safety data was enough. Vivus was met with the safety challenges by the Special Advisory Panel Members, not those that they worked with through the SPA trial design.

If the FDA wanted more long-term data, why wasn't that requested as a part of the SPA? The challenge is that the specific concerns that the FDA had with regard to the safety data such as cardiovascular issues and increases in heart rate were not adequately addressed in the SPA in from the clinical trials it seems. Most SPAs deal with only three types of protocols: 1) Animal carcinogenicity, 2) final product stability, and 3) Phase III Clinical Trials intended to support an efficacy claim.

The problem with #3 is that there was not a need to support the already demonstrated efficacy claim. What was needed was the safety and tolerability data in the agreement with the FDA in the SPA. SPAs are usually binding with the FDA but can be considered non-binding in certain situations.

The only time the binding agreement is rendered non-binding is if:

  • A substantial scientific issue essential to determining safety or efficacy of the drug has been identified after the testing has begun.
  • Public health concerns are unrecognized at the time of the protocol assessment (occur later)
  • Relevant data, assumptions are found to change or are false
  • Sponsor does not follow the clinical study protocol

Avanir looks to have a stronger and broader SPA with the FDA. They had a Phase III study and STAR trial, with FDA guidance on clinical endpoints, that covered not only efficacy but also safety and tolerability questions. These questions specifically addressed the FDA’s concerns in 2006 with regard to their approvable letter to the company. These questions focused around safety and tolerability, not efficacy.

To address these questions, the STAR trial was designed and recommended by the FDA as a single confirmatory Phase III clinical trial of Zenvia to address the concerns of the FDA. Those concerns were adequately addressed as I will discuss in future articles focusing on the efficacy and safety of the STAR trial. What was also discussed from 2nd quarter earnings call is that the review division and team within the FDA are the same ones that reviewed the previous application in 2006. They are the same reviewers, same group, in the neurology division of the FDA. Avanir has been having ongoing and active discussions with the FDA, leading up to the approval date, since 2005. These points discussed is the value of an SPA for Avanir as we move into October!

Disclosure: Author is long AVNR, ALXA

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