Biotech companies have a number of pivotal challenges in going from a promising compound to commercially viable products.
Biotech companies have a number of pivotal challenges in going from a promising compound to commercially viable products. Todd Campbell, with The Motley Fool, writes, “It requires an entirely different set of experience to navigate the world of private and public payers and a big investment in sales and marketing to convince doctors to prescribe drugs.” With that in mind, he looks at three biotech companies that will be facing the challenge in 2018.
Headquartered in Boston, Keryx focuses on developing and commercializing drugs for renal diseases. In 2014, the U.S. Food and Drug Administration (FDA) approved Auryxia as a phosophorous binder for kidney dialysis patients. It was a slow launch marred by manufacturing problems and what was already an established market.
On Nov. 7, 2017, the FDA approved Auryxia for another indication, treatment of iron deficiency anemia in adults with chronic kidney disease (CKD), not on dialysis. This is a bit of a do-over for Keryx, to see if they can re-launch the drug more successfully in a different patient population.
Campbell writes, “There’s some reason for optimism, given that the non-dialysis market opportunity is much bigger than the dialysis opportunity. Keryx Pharmaceuticals’ ability to spark sales growth this year (Auryxia’s sales totaled $38.2 million through the first nine months) suggests that new insurance reimbursement is helping support prescription volume and physicians’ experience with Auryxia already could make it easier to convince them to prescribe Auryxia in its new indication.”
Based in New York City, Synergy focuses on the gastrointestinal market. In January 2017, the FDA approved Synergy’s Trulance for chronic idiopathic constipation (CIC). The company is waiting for the agency to approve on Jan, 24, 2018, use of the drug in irritable bowel syndrome with constipation (IBS-C). It’s faced tough competition from Ironwood and Allergan‘s Linzess, which is approved for both CIC and IBS-C. Trulance only brought in $2.3 million in the second quarter of 2017, while Linzess sales for 2016 were $626 million, up 38 percent from 2015.
On Nov. 13, Synergy announced the pricing of an underwritten offering of 21,705,426 shares of its common stock, with the accompanying warrants to buy an aggregate of 21,705,426 shares of common stock at a combined price to the public of $2.58 per share.
The question becomes, is the market big enough for Linzess and Trulance? Campbell writes, “Investors sure hope so, because Synergy Pharmaceuticals has issued a lot of stock and taken on a lot of debt in hopes that Trulance will become a winner. If an approval in IBS-C doesn’t result in a spike in sales in 2018, it could put the company and its investors under pressure. Synergy Pharmaceuticals accumulated $96 million in long-term debt and it spent more than $50 million on operating costs in Q3 alone.”
Located in Burlington, Massachusetts, Flexion is working on developing non-opioid pain killers. The FDA approved Zilretta for osteoarthritis (OA) of the knee on Oct. 6. The company launched the drug commercially on Nov. 20. It had hired and trained more than 100 sales reps.
“We have assembled a remarkable team of Musculoskeletal Business Managers, and last week they concluded their training at the Zilretta national launch meeting,” said Michael Clayman, Flexion’s president and chief executive officer, in a statement. “We have already begun the process of informing and educating physicians about the important role Zilretta can play in the management of OA knee pain. With its extended-release microsphere formulation, we believe Zilretta holds the potential to disrupt the current treatment paradigm, and we are thrilled that it is now broadly available for the millions of Americans confronting this relentless disease.”
With a national opioid epidemic and medical professionals and the government urging something be done about it, the time would seem to be right for Zilretta. Campbell notes that, including hyaluronan injections, physicians perform about 8 million knee injections every year, and Flexion claims that it could net $500 per injection for Zilretta. “However,” he writes, “there are risks to overcome for management to deliver on that market opportunity. For instance, Flexion Therapeutics has to convince providers to stockpile Zilretta without a specific Medicare reimbursement code or widespread commercial payer reimbursement. Eventually, that headwind should ease, but that could take time and push out any meaningful sales to 2019.”
For all three companies, a balance needs to be struck between a fast and successful launch and using up all their cash. None of these companies have big pharma partners, which increases the risk, but also increases the reward.
