Just got this from WSJ. Opened at 96!!!
Agouron Gets Ready To Sell Viracept, Fight Merck
By Jesse Eisinger
NEW YORK (Dow Jones)--Dying patients are waiting for the drug. Merck & Co. (MRK) is gearing up to fight it. Wall Street is wondering just how well it will sell.
The drug is Viracept, Agouron Pharmaceuticals Inc.'s (AGPH) powerful new protease inhibitor for the treatment of AIDS. The Food and Drug Administration approved the drug for adults and children Friday, and Agouron has said it can put the drug on pharmacists' shelves next week.
''I have patients who are waiting for it,'' said William Powderly, an associate professor of medicine at Washington University at St. Louis who was one of the lead investigators on the Viracept trials. ''I think it will be very competitive as the first-choice protease inhibitor.''
Establishing the drug in the marketplace won't be easy. And Agouron is going at it alone.
The small biotechnology company out of La Jolla, Calif., will deploy its sales force of about 125 people into a market crowded with pharmaceutical giants. Merck dominates the protease market, with about a 75% share of the roughly $500 million market. Hoffman-La Roche's protease drug has almost all the rest of the market, with Abbott Laboratories' (ABT) version an also-ran.
And things should get even more heated in about a year. The major AIDS power, Glaxo Wellcome PLC (GLX) - which has a greater than 50% share of the nearly $1.5 billion AIDS therapy market today without a protease inhibitor - is rushing to bring its member of the class, discovered by Vertex Pharmaceuticals Inc. (VRTX), to market by the second quarter of next year.
Agouron will argue that Viracept is the best yet of the protease inhibitors, a new class of drugs that has changed the course of the AIDS epidemic. The protease inhibitors attack a key enzyme that HIV needs in order to replicate. When used in combination with other types of AIDS drugs, the new drugs can stop the progress of the virus in many patients.
In many respects, Agouron is in an enviable position upon entering the market. How did it do it?
For one, the drug appears to be a good one. Viracept and Merck's Crixivan seem to be about equally effective in keeping the amount of virus in the blood down to, in some cases, undetectable levels. Agouron's drug appears to be more convenient, have fewer and less-severe side effects and have resistance advantages.
Not all good drugs from small companies make it, however. The biotech company is hoping that for AIDS drugs, marketing might matters less than having a good product. David Crossen, an Agouron bull who covers the company for Montgomery Securities, said the market is defined by ''hyper-educated consumers and hyper-educated doctors.''
AIDS activists indicate that there is indeed more optimism among patients and a corresponding eagerness to try new drugs, even if they come from unfamiliar sources.
New hope has ''people excited and talking about the new drugs,'' said Bill Bahlman, a member of the ACT-UP spinoff group, The Treatment and Data Committee of New York. Bahlman said that with the continued successes - as opposed to the major setbacks of the early days of the epidemic - ''it's becoming like the computer industry: the Pentium may be good, but wait six months and something better will come along.''
The market has caught a case of jitters about Agouron's commercial prospects. Agouron has about one million shares shorted, on a base of 13 million outstanding. The stock has fallen from a late-February high of 101 to the high 70s. The stock closed Thursday at 75 3/4.
''I'm a firm believer in marketing muscle, and Merck's got a lot of muscle,'' said David Molowa, an analyst for Bear Stearns & Co. ''I don't think the drug is differentiated enough.''
The efficiency with which Agouron brought its drug to market has impressed the AIDS community. While rival Vertex's compound bogged down in Glaxo's bureaucracy, Agouron was able to speed its drug through the clinic in about three years. By the time the Glaxo drug, known as 141, emerges from the clinic it will have been about five years. That's evidence, some argue, that small research organizations are more efficient than large multinationals. The early data on Glaxo's 141 suggest it is a superior drug, however, both more convenient and more efficacious.
Powderly, of Washington University, said Agouron ran its trials ''effectively, quickly, and efficiently,'' determining what data would make a good impression. He said the company ran a fairly liberal compassionate-use program to get some patients the drug before it received full approval from the FDA. That created ''awareness of the drug as well as experience among physicians.''
The company has built up ''a tremendous amount of good will toward Viracept,'' said Powderly.
Small and smart research shops sometimes cannot move products off the shelves, however. In what could presage trouble in the marketplace, some doctors and activists say that Agouron's compassionate-use program was flawed, contradicting Powderly. Activist Bahlman said it was delayed until late last year and too restrictive.
''They stumbled. They promised expanded access from the get-go,'' Bahlman said. In the end, ''we had to push hard to get them to go forward with it,'' he said.
Agouron hopes that those bugs are worked out before the actual launch of Viracept. In the launch, Agouron's sales force will tout two potential advantages of Viracept. First, the drug appears to be more convenient and have less-severe side effects than its major competitor. Crixivan needs to be taken strictly every eight hours and without food, a barrier to compliance. The drug can also cause nausea and vomiting. In a small percentage of patients, on the order of 5%, Crixivan can cause kidney stones; to prevent them, patients need to drink a lot of water.
Though it needs to be taken three times daily, Viracept stays in the body at a steadier level and doesn't have to be taken strictly every eight hours. It also can be taken with food. Viracept's worst side effect is severe diarrhea, which caused about 2% of patients in the clinical trials to drop out. A high percentage of Viracept patients have loose stools, but patients can control that with diarrhea medications, the company says.
The second advantage Viracept appears to have concerns what happens to patients who become resistant to the drug. Early data suggest that if a patient on Viracept becomes resistant to the drug, he or she can switch to another protease inhibitor. The others don't have this advantage, Agouron claims. If more data support the theory, Viracept may well become the first choice in the class, so that patients who fail on the drug can take another.
''It's a reasonable hypothesis, but it's still just that,'' cautioned researcher Powderly.
But Merck will mount a serious campaign against Agouron, observers anticipate. Merck doesn't only have more money and sales people than Agouron, it also has reams more data on Crixivan than Agouron has on Viracept.
Agouron only has data on the impact of Viracept on ''surrogate markers'' for the disease, for example, how much it reduces the amount of virus in the blood and how much it boosts or maintains the CD4 count, the amount of a patient's white blood cells. It is widely accepted that surrogate markers indicate how the disease is progressing.
But Merck has information on how well patients survive on Crixivan, which Agouron doesn't have yet for its drug. Crixivan, which has been on the market since early last year, reduces AIDS-related deaths and disease progression by about 50%, a recent study showed.
Merck will claim that Crixivan is the most potent when used alone and is also well-tolerated, especially if patients stay hydrated. Merck will also emphasize that diarrhea, Viracept's main complication, is less benign than Agouron would lead doctors, patients, and investors to believe.
Agouron's data ''seems to indicate their drug is not as potent,'' said Michael Seggev, a spokesman for the drug giant. ''Efficacy is going to be predominantly related to how potent a drug is.'' Merck will also counter Aguoron's resistance claims. The company says that it takes longer to build up resistance to Crixivan than to Viracept.
Agouron officials wouldn't comment for this story.
Some doctors are likely to be swayed by Merck's defense.
Speaking of Crixivan, Dr. Frank Graziano, an AIDS specialist at the University of Wisconsin-Madison, said, ''That's my first choice, and it will remain that way until I see more data.'' He concedes that he is ''a little more conservative'' than many of his colleagues.
Montgomery's Crossen expects few patients to switch to Viracept from Crixivan, but he expects the Agouron drug to get a substantial number of patients going on protease inhibitors for the first time. Those who can't tolerate Crixivan will probably choose Viracept, he predicts.
Crossen estimates that of the 170,000 patients on an AIDS therapy in 1996, 75,000 were on protease drugs. He expects that 125,000 patients will be on protease drugs by the end of 1997.
The analyst thinks that Agouron will be able to sell $350 million worth of Viracept in the U.S. during its fiscal 1999, garnering a 15% share of the protease inhibitor market. That would bring in $82.6 million in net income, or $5.16 a share. He projects the company selling $20 million of the drug, its first product, in fiscal 1997 ending in June, for a loss of $38.6 million, or $2.82 a share. He foresees sales of $165 million in fiscal 1998, for a profit of $4.7 million, or 29 cents a share. |
