SMALL MIAMI FIRM AWAITS FDA GO-AHEAD CHOLESTEROL DRUG COULD BE A BIG WINNER
Glenn Singer Business Writer
07/15/2001
South Florida Sun-Sentinel
For a small drug company, success or failure can hinge on one product.Miami-based Kos Pharmaceuticals Inc., which already has seen its shares increase significantly, might be on the verge of having a blockbuster drug in the hottest sector of the market -- cholesterol reduction.
The company also might be on the verge of profitability.But there always is the possibility that Food and Drug Administration reviewers will find fault with studies of the drug's efficacy or the new drug application.
That could at best delay the medication and at worst kill it.If the FDA approves the new product, called Advicor, Kos will be the first to bring to market a combination drug -- one with two active ingredients -- for those with cholesterol and triglyceride problems.It's actually a mating of the company's only product on the market -- a controlled-release form of the B vitamin niacin called Niaspan - - with a generic version of a drug from a class
called statins.
The actual statin is called lovastatin, generally known by its brand name, Mevacor. It's made by Merck & Co. and loses patent protection this year. Several companies, including Andrx Corp. of Davie, are lined up to produce their versions of lovastatin, but only Kos has a combination in the works.
That's because there is no other FDA-approved, once-a-day niacin prescription drug.Advicor actually does more than reduce LDL, or bad cholesterol. Because of the niacin, it raises HDL, or good cholesterol, and it lowers triglycerides, or fats in the blood, as well, according to data submitted to the drug agency.After one study of the experimental drug, the director of cholesterol research at the Veterans Affairs Long Beach Healthcare System in
California reported that it reduced LDL by an average of 45 percent, increased HDL by an average of 41 percent and reduced triglycerides by an average of 42 percent.
Those results, put forth last year, came after patients were followed for a year."The numbers are very impressive," said Jeffrey Kraws, senior pharmaceutical analyst at Gruntal & Co. in New York. While statins generally lower bad cholesterol appreciably, they are nowhere near as effective as Kos' product in raising good cholesterol and reducing triglycerides, he said.Based on current sales trends and new, aggressive guidelines, the market for
cholesterol drugs is explosive.
Currently, 13 million Americans take prescription drugs to lower cholesterol. But that number could triple following a report by a government panel in May that focused on identifying and treating lipid disorders beyond LDL cholesterol to reduce heart attacks."The new guidelines suggest that a more aggressive treatment strategy, such as niacin in combination with an LDL-lowering statin may significantly reduce heart disease rates for many patients,"
said Dr. Thomas Pearson,of the American Heart Association's Task Force on Risk Reduction.$15 million gamble.
Named for the Greek island on which Hippocrates, the father of medicine, was born, Kos is based on the 25th floor of an office building overlooking Biscayne Bay.
It was founded in 1988 by two former Key Pharmaceuticals Inc. executives, Michael Jaharis and Daniel Bell, who left Miami-based Key after it was sold to Schering- Plough Corp. in 1986.Kos went public on the Nasdaq stock exchange in 1997. It lost $35.3 million in 2000, spending $26.5 million on research and development. The company has about 500 employees and its stock, which reached a 52-week high of $39.50 on June 29, closed Friday at $27.54, down
$2.61.Shares have fallen in nine of the last 10 trading days, perhaps on investor concerns that the FDA will grant Merck a six-month extension on its Mevacor patent.
A decision is expected this week.Kos had produced Niaspan at a plant in Hollywood, but in April announced the niacin product and Advicor, if approved, would be made entirely at a site in Edison, N.J. The Hollywood facility will be dedicated to research and development.To get Advicor before the FDA reviewers, Kos spent $15 million and conducted clinical trials involving some 1,200 patients. Costs were considerably lower and the trials less exhaustive
than for most drugs because each active ingredient in Advicor previously had been approved individually by the FDA.While Kos might find smooth sailing through the regulatory process, the history of small pharmaceutical and medical device companies rolling out potential blockbuster products isn't always rosy.
For example:Praecis Pharmaceuticals Inc. of Waltham, Mass., which is collaborating with behemoth Amgen Inc., received word from the FDA that its application to sell a prostate cancer drug was "inadequate." Wall Street pummeled the stock, knocking it down $6.66 to $16 the same day. It now trades in the $12 range, after selling as high as $47.94 in October.Boca Raton-based Nabi received a setback early this year when the FDA would not approve its
application to sell a vaccine to prevent Staphylococcus aureus infection.
Nabi had set a goal of proving the vaccine lasted 12 months, but was able to demonstrate its efficacy over only 10 months. The FDA asked for a new clinical trial with a less lofty goal, sidelining the vaccine for at least a year.TCPI Inc. of Pompano Beach, which has been developing a bloodless glucose monitor to check blood sugar levels through skin patches, filed for bankruptcy earlier this month. Having failed to find a partner, saddled with debt
from product development and lawsuits and unable to persuade shareholders to authorize additional shares, TCPI ran out of money. Its shares, which traded as high as $22.38 in 1996, now are quoted at just over a penny.
For Kos, if all goes well, Advicor could send revenue skyrocketing and enable it to develop a pipeline of other products.Niaspan has seen sharp growth, with this year's estimated sales of $60 million up 66 percent over the previous year as many cardiologists and other physicians prescribe it to complement statin therapy. Kraws estimates $110 million in sales of the drug next year.He also conservatively estimates that Kos will generate $53 million as
its share of net income from Advicor sales next year.
Bell, the company's president and chief executive officer, said that in five years he hopes to gain a share of between 8 percent and 15 percent of what is projected to become an $18 billion market.That means between $1.4 billion and $2.7 billion.Approval could come as soon as late summer or early fall this year, and a launch is expected early next year. But profitability for Kos won't come as quickly as might be expected.Marketing armyWithout a
sizable sales force to "educate" doctors, Advicor, like most drugs, won't gain widespread acceptance.
So Kos first must add hundreds of sales representatives, known in the trade as "detail" men and women. They're the people with large briefcases full of samples, who wait in doctors' offices for a few minutes with the physician.Many doctors first learn about new products from drug company representatives, who often push just one product at a time to spread the word quickly and generate demand."It is essential to grow the sales force -- to make a major
investment in education," Bell said. "Because of that, the analysts think we will break even in 2003."To help pay for the marketing effort, Kos entered into a partnership to bolster the sales force."Given the market potential, a partnership was absolutely necessary," Bell said.
So Kos got married to a 1,000-pound gorilla in the industry -- DuPont Pharmaceuticals Co., which didn't have a statin product. As part of a strategic alliance approved by the Federal Trade Commission in June 2000, DuPont invested $20 million, with as much as $27.5 million more to come when Advicor gets FDA approval.Much of the initial investment will go toward beefing up the Kos sales force. DuPont and Kos will share marketing costs and profits.
But in a recent twist, Bristol-Myers Squibb Co. agreed last month to buy DuPont Pharmaceuticals for $7.8 billion. That raises some questions about the future."In my opinion, Kos can take back the agreement or negotiate with Bristol-Myers Squibb," analyst Kraws said. "I imagine Bristol-Myers would want to hold on to any product it could. But certainly Kos is in the driver's seat.""We're hopeful, but all we can do now is wait," Bell said. |
