Some Newsmakers In Pharma Sector - Weekly Wrap

Sat. October 18, 2008; Posted: 10:55 AM

(RTTNews) - The U.S. financial crisis and bail out plans are the sensational headlines doing the rounds. Historically, the pharmaceutical sector is considered to be recession-proof but is by no means immune to the economic crisis. Here's some of what happened on the pharma turf this week.

Investors of Omrix Biopharmaceuticals Inc. (OMRI | Quote | Chart | News | PowerRating), who watched their shares lose 35% of the value last week, following suspension of the company's fibrin pad trial on safety concerns, had a reason to cheer this week. Omrix's liquid fibrin sealant Evicel was approved in Europe on Tuesday, further increasing penetration in the fibrin sealant market. The stock recovered half of what it lost last week and at last check was at $15.

For Orexigen Therapeutics Inc. (OREX | Quote | Chart | News | PowerRating), the fourth U.S. patent issued early this week for its much touted blockbuster obesity drug, Contrave, which is under late-stage development, provides additional intellectual property coverage. With obesity set to remain a leading health problem for years to come, the anti-obesity drug treatment market certainly offers immense opportunities for its players. Currently, none of the marketed anti-obesity drugs are blockbusters.

Eye care company, Alcon Inc. (ACL | Quote | Chart | News | PowerRating) executed two agreements on Tuesday -- a proof of its focus on expanding its research pipeline through targeted collaborations. Alcon is majority owned by NestlÃ© S.A. In April 2008, Novartis AG (NVS | Quote | Chart | News | PowerRating) acquired 74 million shares of Alcon stock owned by NestlÃ© for $11 billion. NestlÃ© remains Alcon's majority shareholder with ownership of about 52% and Novartis owns a minority stake of 24.85%. Novartis also has an option to purchase the remaining NestlÃ© shares and become the majority owner of Alcon, with a stake of approximately 77% and that option is valid from January 2010 until July 2011.

Now that the Appeals Court has also upheld the validity of the 1997 patent litigation settlement between Bayer, the German pharmaceutical giant and Barr Pharmaceuticals Inc.'s (BRL | Quote | Chart | News | PowerRating) subsidiary, Barr Laboratories, Inc. related to antibiotic Cipro, the companies can put the distracting litigation matters behind them.

It is true that Pfizer Inc. (PFE | Quote | Chart | News | PowerRating) has not been maligned as much as that of Merck & Co. Inc. (MRK | Quote | Chart | News | PowerRating) over non-steroidal anti-inflammatory drugs. Pfizer's Celebrex and Bextra belong to the same class as that of Merck's Vioxx, all of which are COX-2 inhibitors. While Pfizer voluntarily withdrew Bextra from the market in April 2005, it continues to sell Celebrex, the only COX-2 inhibitor approved in the U.S. Pfizer, which landed in legal crosshairs over its pain killers, has decided to end the battle by resolving claims involving Bextra and Celebrex.

REGULATORY APPROVALS

Bleeding Edge - Omrix Biopharma's Liquid Fibrin Sealant Gets Approval In Europe

Omrix Biopharmaceuticals Inc.'s (OMRI | Quote | Chart | News | PowerRating) liquid fibrin sealant Evicel was approved on Tuesday in Europe as a supportive treatment in surgery where standard surgical techniques are insufficient for improvement of hemostasis* (Hemostasis refers to a process whereby bleeding is stopped). Evicel is also indicated as suture support for hemostasis in vascular surgery.

Omrix develops biosurgical products that are used to stop bleeding, and passive immunotherapy products for the treatment of immune deficiencies and infectious diseases.

Johnson & Johnson's (JNJ | Quote | Chart | News | PowerRating) subsidiary, Ethicon Inc, which markets Evicel in the U.S, will market the product in the European Union too. The liquid fibrin sealant is marketed as Quixil outside of the U.S.

Omrix has been significantly expanding the indications of Evicel. In May 2007, Evicel was approved by the FDA as an adjunct to hemostasis in vascular surgery and in January 2008 was approved for general surgical use.

Omrix's stand-alone product, Evithrom, approved in September 2007 for use as an aid to hemostasis in surgery, is the first human thrombin approved since 1954 and is the only product currently licensed.

The company is also developing an innovative fibrin patch that is designed for rapid control of bleeding, including severe or brisk bleeding, and for use on active bleeding sites. Brisk bleeding is a serious unmet clinical need for surgical patients. Last week, Omrix halted a phase two trial of its Fibrin Pad to investigate an incident of post-operative bleeding, which sent its shares down 35%.

Yet another product under clinical development is Adhexil that is being evaluated in preventing and/or reducing post-operative adhesions in patients undergoing gynecological surgery.

IVIG, which has entered phase 1, 2, and 3 trials for approval in the U.S. for treatment in primary immunodeficiency, is one of the company's passive immunotherapy products under development. IVIG is already approved in Israel. WNIG, an antibody-based product that will treat severe infection with West Nile virus is yet another passive immunotherapy product in the company's pipeline.

Looking ahead to 2008, the company remains optimistic of achieving 75% growth in biosurgery sales. Last month, Omrix lifted its total product sales guidance for 2008 to $68 million - $71 million range from its prior outlook of $64 million to $67 million.

Well Shielded - Orexigen's Obesity Product Contrave Gets Fourth U.S. Patent

Tuesday, Orexigen Therapeutics, Inc. (OREX | Quote | Chart | News | PowerRating) received a Notice of Allowance from the United States Patent and Trademark Office for its fourth U.S. patent on its lead obesity product candidate, Contrave. The drug is now in Phase 3 clinical trials.

Contrave combines bupropion SR, an anti-depressant, with Orexigen's proprietary sustained release formulation of naltrexone, a drug for alcohol and opioid addiction. While bupropion triggers an appetite suppression pathway in the brain, naltrexone keeps endorphins from slowing down appetite suppression and weight loss. Through its mechanism of action, it is believed that Contrave is the first obesity drug to address the 'reward' system in the brain that causes food cravings. In a Phase II study, patients who completed the trial lost between 8.0% and 10.7% in body weight over one year. The company expects to submit New Drug Application for Contrave in late 2009.

According to IMS, a database controller, the overall global market for antiobesity drugs in 2007 grew 19% to $1.7 billion, compared to a year before. The adverse side effects tied to the obesity drugs are hindering the development of these drugs. As recently as October 2, Merck halted the development of its antiobesity drug taranabant due to concern over side-effects.

Xenical is the top-selling anti-obesity drug and it generated sales of $538 million last year, down 8% from 2006. Xenical is often associated with side effects like flatulence and diarrhea and these are blamed for the drug's declining sales.

Pfizer's Otenabant, Arena's Iorcaserin, Vivus Inc.'s Qnexa and Orexigen's Empatic are the other anti-obesity drugs under development.

DEALS/LICENSING AGREEMENTS

Eyeing More? - Alcon Inks Licensing Deal With GlaxoSmithKline; Expands Research Alliance With German Biotech

Seeking to bolster its pipeline of eye drugs, Alcon Inc. (ACL | Quote | Chart | News | PowerRating) on Tuesday, entered into a licensing agreement with GlaxoSmithKline plc (GSK | Quote | Chart | News | PowerRating) for global ophthalmic rights to Cilomilast, a phosphodiesterase IV inhibitor. Cilomilast compound, being developed by GlaxoSmithKline, is believed to have the potential for treating dry eye as well as other ophthalmic conditions.

Under the terms of the agreement, GlaxoSmithKline retains all rights to Cilomilast for applications outside of ophthalmic indications and a right to co-promote Cilomilast to some physicians for ophthalmic indications. Alcon made an upfront payment and will make additional payments to GlaxoSmithKline based on the achievement of developmental milestones. GlaxoSmithKline is also entitled to earn royalties for future sales.

In addition, Alcon expanded its existing drug research alliance with Origenis GmbH, a privately owned German biotechnology company. The partnership focuses on the discovery and development of the small molecules that might one day have a role in the treatment of eye diseases.

In 2007, Alcon earned $1.6 billion and generated sales of $5.6 billion. Due to the continuation of a more favorable currency environment than originally expected, Alcon boosted its per share earnings outlook for 2008 to range between $6.48 and $6.54 from its prior guidance of $6.24 - $6.30 per share. The total sales for the year are now expected to be between $6.46 billion and $6.51 billion, up from $6.17 billion - $6.27 billion, projected earlier.

End Of The Long Wait - FDA Grants Final Approval To Eisai's Cancer Drug

Tuesday, the FDA granted final approval to Eisai Corp. of North America's Ontak solution for use in patients with cutaneous T-cell lymphoma, or CTCL whose malignant cells express the CD25 component of the interleukin 2 receptor. The final approval was based on the data from the largest eight-year, Phase III clinical trial that evaluated the overall efficacy and safety of Ontak in certain patients with CTCL.

However, the FDA issued a complete response letter for a separate efficacy supplement that included data from patients with CTCL whose malignant cells did not test positive for the CD25 component of the IL-2 receptor.

Eisai Corp. of North America is a subsidiary of Japanese drugmaker Eisai Co. Ltd.

Ontak was granted accelerated approval in February 1999 and has been marketed since then. Ontak was acquired by Eisai from Ligand Pharmaceuticals Inc. in 2006.

CTCL is a rare form of cancer in which T-cells, cells that the body uses to fight infections, become cancerous and affect the skin. CTCL can also spread to other organs in a small number of patients and it affects about 20,000 people in the United States.

The FDA issued a complete response letter for a separate efficacy supplement that included data from patients with CTCL whose malignant cells did not test positive for the CD25 component of the IL-2 receptor.

LAWSUITS

The Much-awaited Verdict - Appeals Court Upholds Federal Court's Decision On Barr-Bayer Cipro Patent Litigation Settlement

Though Bayer Corp. and Barr Pharmaceutical Inc.'s (BRL | Quote | Chart | News | PowerRating) subsidiary, Barr Laboratories, Inc. settled the patent litigation related to antibiotic Cipro, long back in 1997, the companies were hit by a series of class action lawsuits, which challenged the validity of the settlement between a patent holder and a generic drug manufacturer. The Appeals Court ruling on Thursday brings to an end the long-pending pharma antitrust case.

The active ingredient ciprofloxacin hydrochloride in Bayer's antibiotic Cipro was issued a patent in June 1987. The drug was approved by the FDA in October 1987. Following the patent expiry of Cipro in December 2003, Bayer sought additional six-month exclusivity.

Generic drug firm Barr Pharma filed an abbreviated new drug application, or ANDA for Cipro in October 1991 and challenged the validity of the patent covering the drug.

In January 1992, Bayer filed a patent infringement suit against Barr challenging Barr's application to market and sell generic Cipro. When the suit was still pending in the court, the FDA gave tentative approval to Barr's application for generic Cipro. Being the first to file the ANDA, Barr was entitled to get 180-day exclusivity period.

Meanwhile, Rugby*, a rival generic drug manufacturer and a subsidiary of Hoechst Marion Roussel, or HMR entered into a 'Litigation Funding Agreement' with Barr in March 1996. As per the terms of the agreement, Barr agreed to share equally with Rugby any rights and profits from the sale of generic Cipro in exchange for Rugby's assistance in funding the patent litigation with Bayer.(* Rugby was acquired by Watson Pharmaceuticals Inc.(WPI) in 1997).

In January 1997, Bayer, Barr, HMR, and Rugby entered into an out-of court settlement. Under the terms of the settlement, Bayer made an initial payment to Barr and HMR of $49.1 million. In turn, Barr acknowledged the validity of the patent covering Cipro, and agreed not to market the generic version of the drug until its patent expired.

In 2000, approximately 38 class action complaints were filed by Wisconsin residents who purchased the antibiotic ciprofloxacin hydrochloride from Bayer under the brand name Cipro. The complaint alleged that consumers paid inflated prices for Cipro as a result of an unlawful agreement between Bayer and the generic drug manufacturers.

According to the complaint, from January 1997 to December 1998, Bayer increased the price of Cipro by 16.7%, one of the largest increases for any prescription drug in the United States. However, a federal court in 2005, granted summary judgment in the companies' favor and dismissed the antitrust claims of the consumers against the companies.

Following the appeal on the ruling of the federal court, the U.S. Court of Appeals, which took up the case, upheld the federal court judgment. In its ruling, the Appeals Court stated that there was no evidence to prove that the 1997 settlement between Bayer, Barr, HMR, and Rugby prevented other generic drug manufacturers to the challenge the validity of the Cipro patent. In fact, four other generic manufacturers -Ranbaxy, Mylan, Schein, and Carlsbad filed Paragraph IV ANDAs and initiated challenges of the validity of the patent, the Appeals Court noted.

Pain Relief - Pfizer Settles Claims Over Non-steroidal Anti-inflammatory Pain Killers

Friday, Pfizer Inc. (PFE | Quote | Chart | News | PowerRating) announced that it will pay $894 million to settle personal injury claims, state attorneys general settlements and consumer fraud class action claims involving its non-steroidal anti-inflammatory pain medications Bextra and Celebrex. According to Pfizer, the settlement will resolve over 90% of known claims alleging heart attacks, strokes or other injuries.

Bextra approved by the FDA in 2001 was prescribed for osteoarthritis, menstrual cramps, and adult pain management. In 2005, Pfizer voluntarily withdrew Bextra from the U.S. market due to safety concerns over an increased risk of cardiovascular events in patients using the drug for acute pain treatment. Bextra came under fire and a number of lawsuits were filed against Pfizer.

Merck's Vioxx was the first drug in its class to be linked to a significant increase in heart attacks and strokes. Vioxx, a blockbuster drug was pulled off the market in September 2004 and a number of lawsuits were filed against Merck for injuries caused by Vioxx. In November of 2007, Merck paid $4.85 billion to settle claims over injuries linked to Vioxx.

Celebrex was approved by the FDA in December 1998 for relief of joint pain of osteoarthritis and adult rheumatoid arthritis. The first Celebrex lawsuit was filed in December 2004 against Pfizer, alleging that "Pfizer negligently marketed Celebrex despite the fact that the risk and effect thereof on the body were so unreasonably high and severe." In the years that followed, a number of Celebrex lawsuit claims were filed against Pfizer. However, the plaintiffs' lawyers failed to present reliable scientific evidence to prove Celebrex can cause heart attacks or strokes at its most commonly prescribed dose.

In August 2005, the FDA ordered that Pfizer's Celebrex should carry a black box label, warning of increased risks of heart attack and strokes. Due to the controversy surrounding COX-2 inhibitors, sales of Celebrex plummeted 48% to $1.73 billion in 2005 from $3.3 billion in 2004. However, sales of Celebrex have continued to recover, with the drug generating $2.04 billion in 2006 and $2.29 billion in 2007.

Nearly two years after suspending its Celebrex advertisements, Pfizer commenced airing Celebrex ads in April 2007. The 21/2-minute TV commercial for Celebrex is five times longer than most TV ads, which explains the risks and benefits of Celebrex.

Though Celebrex also belongs to the same class as that of Vioxx and Bextra, the FDA believes that the benefits of Celebrex outweigh the risks - the reason for allowing the drug to remain in the market.

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