A deal with Astellas to market and distribute the neuropathic pain patch Qutenza in Europe will bolster NeurogesX's cash position, giving the company some breathing room to prepare for regulatory approval and a 2010 launch in the U.S. market.
Qutenza was approved for neuropathic pain in non-diabetic patients by the European Medicines Agency in May and it is pending review at the FDA, with an Aug. 16 user fee date.
NeurogesX is set to get €30 million ($42 million) upfront for Qutenza commercialization rights from the European subsidiary of Japanese drug maker Astellas, according to a deal announced on June 22. In addition to 27 countries in the European Union, the deal covers Iceland, Switzerland, and some countries in the Middle East and Africa. The product will be launched in Europe by the first half of 2010.
Qutenza is a dermal patch packing a high concentration form of synthetic capsaicin (also called trans-capsaicin), which is the substance found in chili peppers. Capsaicin stimulates transient vanilloid 1 receptors in the skin, which in turn subdue overactive pain receptors. The effects are long-lasting, but also reversible, the company says.
As part of the agreement, Astellas also will pay €5 million upfront ($7 million) for a co-development and commercialization option on NGX-1998, a Phase I liquid formulation of the NeurogesX product.
NeurogesX now is eligible for €70 million ($97 million) in sales-based milestone payments and additional option payments for the liquid formulation. Royalty rates start in the high teens and escalate into the mid-20s, the company said during a June 22 investors' call.
Deal gives financial peace of mind
NeurogesX had about $19 million in cash and marketable securities at the close of the first quarter, enough to carry it through 2009, but insufficient to give the company much comfort in making plans for breaking into the U.S. market.
During the call, Chief Financial Officer Stephen Giglieri declined to provide runway guidance, which he says is likely to come in the company's second-quarter earnings report.
"The reason I am hesitant to do that [now] is we will be looking at our development plans and of course that has an impact on our cash runway," he said. "But obviously, putting $49 million into the bank is going to extend our runway fairly significantly."
NeurogesX estimates the potential for each market- the U.S. and Europe- is worth from $300 million to $500 million. Assuming the company receives a 17 percent royalty on net sales in the EU, Lazard analysts project the company could get $110 million in peak sales, including some off-label use in diabetic neuropathy.
In the U.S., Lazard forecasts Qutenza revenues of $40 million in 2010 and $88 million in 2011, with peak sales of at least $400 million in 2015. These figures are based on a treated patient population of 56,000 in HIV-distal sensory polyneuropathy, 256,000 in post-herpetic neuralgia, and 556,000 in diabetic peripheral neuropathy in 2008.
Astellas to foot bill for post-marketing trials
Qutenza, a 179 mg cutaneous patch, was approved in May by the European Medicines Agency for peripheral neuropathic pain in non-diabetic adults. This label includes two of the biggest neuropathic pain conditions- post-herpetic neuralgia, which is caused by shingles, and HIV-DSP, a common neurological problem linked with HIV infection. To get approved in Europe for diabetic neuropathy, the product's third-biggest indication, the company needs to accumulate more data.
Astellas will fund additional studies to support Qutenza marketing and promotion, and will fulfill post-marketing commitments linked to European approval, including a long-term safety study in approved indications.
In the U.S., Qutenza is pending review for post-herpetic neuralgia. Despite the user fee date in August, the company and analysts are expecting delays. After questioning the use of Endo Pharmaceuticals' local pain reliever Lidoderm in the pretreatment phase before Qutenza was applied, the agency requested a small, non-efficacy comparability study of the two treatments. NeurogesX says it has completed enrollment and treated all patients, and hopes to submit the data before the Aug. 19 PDUFA date.
"Although the PDUFA date is Aug. 16, submission of additional data late in a review cycle typically triggers a delay and we would expect this to be the case for Qutenza," wrote Lazard analyst William Tanner in a June 22 note.
During the investors' call CEO Tony DiTonno said the company is hopeful that any delay in the FDA's decision will be relatively short and expressed guarded optimism that an agency action will occur before the end of the year and a launch could happen in the first half of 2010.
Timing of European launch uncertain
Astellas declined to comment on its plans for the European launch, aside from saying that it will take place "as soon as possible." Astellas also is not disclosing its sales and marketing strategy, beyond confirming it will be targeting pain specialists who work in hospitals.
It's possible that that Astellas will launch in Europe in the first half of 2010, not necessarily at the same time of the U.S. rollout, according to NeurogesX executives.
Other compounds approved for neuropathic pain include Lidoderm(lidocaine patch 5 percent), the anti-convulsant gabapentin (Pfizer's Neurontin and generics), Pfizer's Neurontin follow-on compound, Lyrica (pregabalin) and serotonin and Lilly's norepinephrine reuptake inhibitor Cymbalta (duloxetine).
Anti-convulsants and anti-depressants act on the central nervous system and, therefore, have worrisome central side effects including sleepiness, and risk for suicidality, DiTonno pointed out. These medications also require chronic dosing to maintain therapeutic effects.
Qutenza acts locally at the site of pain and is administered for one hour by a doctor, with results lasting 12 weeks. Lidoderm also acts locally but requires much more frequent administration by the patient, raising concerns about compliance, DiTonno maintained. With that product, up to three patches are administered once a day for up to 12 hours (12 hours on and 12 hours off).
Preparing for launch in Europe and U.S.
DiTonno noted that Astellas has pain drugs in its pipeline and will build a pain-focused specialty pharma franchise starting with Qutenza.
Astellas had been working with XenoPort to develop XP13512 (gabapentin enacarbil) in diabetic peripheral neuropathy, but halted a trial in the third quarter of 2008 after an interim analysis showed the drug was unlikely to meet its primary endpoint of pain reduction (1 'The Pink Sheet' DAILY, April 27, 2009).
The company published positive preclinical results for FK1706 in diabetic neuropathy in the journal Neuropharmacology in December 2008. Researchers reported that the compound, a non-immunosuppressive immunophilin ligand, relieved painful neuropathy by changing underlying disease pathology, a different mechanism from gabapentin.
DiTonno declined to comment on which European countries would be targeted first, but he did say that, traditionally, companies focus initially on the UK and Germany because these countries offer the most flexibility on pricing.
In the U.S., NeurogesX plans to build its own sales force of 80 to 100 people to target about 12,000 specialists and will seek a partner to reach about the same number of primary care doctors who prescribe pain medications. "We have already started planning for that and will ramp that up," he said.
- Emily Hayes (e.hayes@elsevier.com)
This article is reprinted from "The Pink Sheet" DAILY –June 23, 2009
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