Thursday, May 22, 2008

Lundbeck Thanks Myriad For The Memories

Myriad Genetics announced a critical tie-up for its Phase III Alzheimer's drug, Flurizan, with the Danish pharmaceutical company H. Lundbeck A/S on Thursday May 22. In exchange for merely European commercialization rights, Lundbeck has agreed to pay Myriad a generous $100 million up-front, plus an additional $250 million in regulatory milestones as well as escalating sales royalties in the 20-39% range.

Undoubtedly, the deal terms for Myriad's so-called selective amyloid beta-42 lowering agent are rich, but the real upside seems likely to come later, when the Utah-based biotech looks to ink a revenue-sharing arrangement for the product in the US market. Such a deal may seem counter-intuitive given that Myriad has just given up product rights for a considerable portion of the globe--a fact investors won't take lightly. (For more, see our recent take on the value of alliances in the April IN VIVO.)

But in this case, the alliance may play an important and--dare we say it--validating role for Myriad. Consider that Lundbeck currently has the largest CNS sales force in Europe and experience selling Alzheimer's meds. (The company has ex-Japan marketing rights to Ebixa, known as Namenda in the US where it is marketed by Forest Labs). Given this neuro expertise, the company's willingness to pay a hefty price just for EU rights certainly gives the risky Flurizan added street cred.

Moreover, Myriad can now afford to partner Flurizan in the US for a dear but not prohibitive price. That's a situation likely to interest partners who might be interested in a biggish deal but who couldn't otherwise afford world-wide rights. "Flurizan is more affordable to a broader pool of companies and that's likely to increase the possibility of partnering" in the US, says Charles Duncan, an analyst with JMP Securities.

Which ironically means that, with the possibility of multiple bidders, the price for any future deal could go up a bit more than mid-sized companies might want to pay -- even if staying below the threshold of the industry's largest deals.

In the meantime, Myriad pockets a $100 million--about 20% of which will be paid as a sub-license royalty to Encore Pharmaceuticals--and gains access to a ready-made sales force of more than 1300 reps well versed in selling Alzheimer's drugs in the various EU nations. That's critically important, says Duncan, who believes that "Lundbeck's infrastructure in CNS maximizes the sales potential for Flurizan in Europe."

The oral Flurizan seems to work work by dialing down--but not completely inhibiting--activity of γ-secretase, the protein responsible for chopping up amyloid precursor protein into its more toxic form, Aβ42, via an anti-inflammatory cascade. Because it lowers overall levels of toxic amyloid, the thinking goes, Flurizan is able to inhibit the negative cascade of plaque formation and neurodegeneration that follow from its initial deposition.

Results from Phase II studies are certainly tantalizing. Patients with mild forms of the disease who took a once-daily 800 milligram dose of Flurizan did not decline as rapidly as those on placebo as measured by standard cognition tests and assessments of daily living. In addition, a meaningful, but not statistically significant, portion of patients experienced zero decline in cognitive ability after two years on the medication, and in some cases, actual improvement.

Currently, Myriad is conducting two Phase III clinical trials of Flurizan: a US-based study of more than 1600 patients with mild Alzheimer's disease and a second, global trial of more than 800 patients. Results of the US-based study are expected to be announced in about a month with results of the world-wide study coming before the end of 2008.

One reason Duncan is so bullish on today's announcement is that he thinks Lundbeck inked the deal solely based on publicly available clinical data. That suggests to him that Lundbeck has anecdotal information about Flurizan's efficacy in late stage trials based on its own surveys of customers. That's important because it suggests Lundbeck believes strongly in the drug's chances for approval in the EU, if not its overall efficacy. Flurizan is expected to launch in 2010.

If that happens, the consultancy Datamonitor forecasts Flurizan revenues in excess of $1.5 billion in the seven major markets and $470 million in the EU by 2016. Still there's considerable risk associated with the product. It's quite possible given the lack of statistical significance associated with the Phase II trials, that data from the pivotal studies may be subject to interpretation.

Will that be enough to limit approval? Probably not, say analysts such as Duncan. Currently available Alzheimer's treatments such as Aricept and Namenda didn't come with overwhelmingly strong data packages either. Moreover, unlike other late stage, potentially disease-modifying drugs such as Wyeth/ Elan's antibody bapineuzumab, Flurizan is without significant adverse side-effects. (Wyeth and Elan's antibody, for instance, has been linked to severe gastrointestinal bleeding making it more likely that drug will be reserved for severe cases of the disease.)

Given the overwhelming unmet medical need and significant economic burdens of Alzheimer's, Flurizan's safety profile is important -- a safe drug that offers even the potential of slowing the scourge of Alzheimer's is likely to be prescribed.

Undoubtedly that's something Myriad is betting on as it looks for a deep-pocketed partner to help establish Flurizan's US market. Any number of potential suitors might be interested in non-EU rights, including both Forest Labs and Takeda Pharmaceuticals. Meantime, Myriad can rely on the help--and yes, we'll say it again, validation--- of Lundbeck.
Image courtesy of Flickr user .nello via a creative commons license.

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