EP Vantage Interview - Orexo focusing on deals ahead of royalty ramp up
News from Sweden’s Orexo has been coming thick and fast this year, from the acquisition of a British drug delivery company, to phase II trial results from a lead compound, and FDA approval for the group’s second product to reach the market.
Signs are that pace could continue. Torbjorn Bjerke, Orexo’s chief executive, told EP Vantage last week that partnering talks are underway over several early-stage R&D projects. Not all the news this year has been taken well by the market, shares in the company dropped 27% in March, a situation that could clearly go into reverse if Mr Bjerke manages to find some big pharma partners as planned.
Nonsensically, it was US approval for Edluar, Orexo’s under-the-tongue formulation of insomnia drug zolpidem, that prompted the share price drop, although negative phase II data a week later for OX914, a PDE4 inhibitor, added to the declines. The lack of a superiority claim on the label for Edluar, which meant the company only received a $5m milestone payment from US marketing partner Meda, rather than the $30m that was widely expected, was the source of the disappointment.
Victim of success
In a way, Edluar was a victim of its own success. The formulation works 30% faster than standard zolpidem, sending people to sleep on average in only 20 minutes. The difference was so great from the generic pill that the regulator decided it wanted to see results from a second phase III trial to confirm the effect, before allowing a label claim.
The drug is now on track to be launched later this year, meaning that other than sales related milestones, which commence at $20m when annual sales hit $150, there are no further lump sums on the way for Orexo from Edluar.
Although the company has enough cash to last well into 2010, the smaller Edluar payment means delivering deals on the other compounds has become more important.
“Due to lower than expected milestone the share price has dropped, the company now has to prove it can out-license other projects to secure its cash position until revenue streams are high enough from Edluar and Abstral,” Gustaf Vahlne, an analyst with SEB Enskilda, said.
Abstral is a fentanyl-based product for breakthrough cancer pain, which like Edluar was developed using Orexo’s sublingual delivery technology. It is currently receiving marketing approvals across Europe, where it will be marketed by Britain’s ProStrakan, and jointly by Orexo in the Nordic region.
Big pharma partners
Mr Vahlne is confident that Orexo can deliver at least one deal this year, specifically on OX17. The drug is a combination of a proton pump inhibitor and an H2 antagonist, being investigated in gastroesophageal reflux disease (GERD). Earlier this year the group announced an exclusive development agreement for the programme, with what is thought to be a big pharma partner, and a full deal is expected this year.
Clearly, the market for PPIs, like Nexium, and H2 antagonists, like Zantac, are huge, even though both segments are fast being genericised. Hopes for a significant deal for OX17, which is ready to go into phase III, are high.
Other earlier stage projects are also the subject of partnering talks, including Orexo’s PDE4 inhibitor programme. The field is certainly high risk; despite years of research no substantial product has made it to the market, aside from two small drugs; Bayer’s Rolipram, an antidepressant, and Spazmonet made by Slovenian generics group Krka for GI spasms.
Most of the research into PDE4s is in COPD and severe asthma. The negative phase II results announced by Orexo last month were in allergic rhinitis, but Mr Bjerke said he does not believe the failure will put off potential partners.
“If we had positive results on this we would have been able to add something, but not that much. The focus is on COPD and severe asthma. What was positive about the trial was the safety profile, which differentiates us from other PDE4 programmes out there,” he said in an interview.
The safety profile of PDE4s, which restricts the dosage possible and therefore crimps efficacy, has hobbled most programmes in the past. Orexo’s highly potent candidates, which includes several in pre-clinical development, and more favourable safety profiles, could give them the edge, Mr Bjerke believes.
“Our preference would be that one partner takes them all, but it is possible that we get one for respiratory and one for non-respiratory indications,” he said. “There are very active talks going on.”
Another area of licensing activity is its arachidonic acid franchise, still in pre-clinical stages, which have shown promise as a new class of drug for asthma and COPD. “We want to get a strategic partnership with big Pharma to maximise the potential and decrease our spending. This is another important area of work for us right now,” Mr Bjerke said.
With Edluar and Abstral approved, the potential for Orexo to develop into a self sustaining company is clear. For the next couple of years, however, milestones will remain important, particularly for investors, as the reaction to the Edluar payment shows. With numerous options available, there appears to be a good chance that Orexo will deliver.