Novartis trials could be distant turning point for Tekturna

Analysis

News that Novartis is conducting two large additional trials for Tekturna, could on first glance indicate that Speedel had won a David style victory over its Goliath-like licensing partner over what it saw as the Swiss group’s rather half-hearted attempts to accelerate sales of the blood pressure lowering drug.

Speedel’s disappointment with Tekturna sales has recently spilled onto the pages of national newspapers, and previously seen the small biotechnology company voice its concern about the marketing efforts Novartis is putting behind the drug.

But on closer examination the decision to start the trials has less to do with pester power from Speedel, but cold hard business sense from Novartis, which has pointed to less than stellar performance of its own anti-hypertensive drug, Diovan, when it was first approved in the US back in 1997, but last year commanded sales of $5bn.

Olav Zilian, analyst at Helvea, agreed that Novartis had most probably already slated the trials. “These trials are so huge they would have planned them some time in advance and would have a very precise idea of what they wanted to analyse and they would not take the financial risk of running these trials just because of their licensing partner.”

Payment on results

Some of the reasons why Tekturna, which is starting to be called "Tekturkey", has disappointed are the overly optimistic expectations of analysts, perhaps fueled by the company being initially less than open about royalty rates for the product.

More important is the US reimbursement process, which has seen healthcare insurers demand out-come based access to drugs, only paying when superior efficacy is demonstrated over existing treatments.

By clinically proving the increased benefits of Tekturna in difficult to treat patients and in terms of protecting organs the group is hoping to see prescriptions pick up, as doctors who already have an arsenal of similarly priced drugs switch once improved efficacy is proved.

The two latest trials announced yesterday will evaluate if the effect of the drug in cardiovascular morbidity and mortality in patients with acute and chronic congestive heart and what its effects are in patients with or without high blood pressure and other risk factors.

Tekturna is already involved in an 8,600 study that will hopefully show that the drug, which is known as Rasilez outside of the US, delays heart and kidney complications in diabetes patients who are at high risk of suffering cardiovascular and renal events. The study is expected to read out in 2012.

Lack of catalysts

It is unsurprising that Speedel has been kicking up a fuss about Tekturna, at the moment it is the only source of revenues for Speedel, as well as accounting for $761m of the company’s total NPV of $763m, according to EvaluatePharma's NPV Analyzer. Its poor performance has also hit the company’s shares hard, which have fallen 57% over the last 12 months, as the disappointing sales figures have rolled in.

Tekturna also needs to prove itself a success in the new set of trials because if it does not the failure will impact on a large chunk of Speedel’s pipeline. Three out of five products in development are follow-on rennin inhibitors, meaning that if big brother Tekturna fails to come up with the goods in ASPIRE trials, his siblings are going to find it very hard to attract potential partners.

But the very long time frame of the ASPIRE trials means that unless one of the follow-on rennin inhibitors show the ability to reduce blood pressure significantly above existing treatments, then there are few short-term catalysts for Speedel shares and David may have to wait on Goliath.

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