Small companies’ struggles sound a warning over in-house drug launches

Data Insights

Getting the regulatory nod is far from the end of the story for a new drug – how its launch is managed is also crucial. This is an area fraught with danger for inexperienced companies, as the pretty woeful track record of the last couple of years shows.

EP Vantage has identified 13 small drug developers that have attempted to launch a novel drug alone either through choice or necessity since the beginning of 2012, and success stories are hard to find (see table below). The experiences of the likes of Vivus, Amarin and ThromobGenics should serve as a warning to those who read climbing drug approval rates as a sure sign of R&D productivity improvements.

Improving fundamentals?

Those who believe that the fundamentals of the sector are improving often point to an increase in drug approvals as evidence; this argument is also made to help explain the investor exuberance that has driven US biotech valuations sky high. But the value of new products reaching the market is just as important as their number, as previous EP Vantage analyses have shown (Friendly FDA ups number of NMEs, January 10, 2013).

2012 was certainly a bumper year for approvals, and was also marked by a strong showing for small companies, 11 of which managed to bring a product all the way to the finish line. These included Salix’s Fulyzaq, approved to treat diarrhoea in patients taking HIV anti-retrovirals, NPS’s Gattex for short bowel syndrome, Exelixis’s thyroid cancer treatment Cometriq, and of course the obesity pill Qsymia from Vivus.

A look at the progress of the companies below found that only Exelixis can be said to be really meeting the market’s expectations. At this stage its drug is approved in a very narrow indication, with broader potential seen in future uses like prostate cancer.

However, to include NPS and Aegerion in the “could do better” group is somewhat unfair, even though both suffered big share price falls after recent third-quarter results. They were seemingly punished for earlier successes, as both raised full-year sales guidance for their newly launched products, but not as high as some had hoped. While their cautious stances would be applauded in another world, the bulls driving the US biotech market clearly did not appreciate this approach.

Worthy of attention?

Of course, several companies on this list would rather not be launching the drug themselves – Amarin and Vivus in particular – but have failed to attract a partner. The reasons for lack of interest are no doubt very similar to the causes of lacklustre demand.

As such, it is perhaps inevitable that certain drug launches by small companies will struggle, because the products themselves were never deemed worthy of attention by larger, more experienced players.

For companies like ThromboGenics, which sells Jetrea in the US and managed at least to find a highly reputable Europe partner in the shape of Alcon for a substantial €75m ($98m) up front, the slow rollout is more worrying. Jetrea, for vitreomacular adhesion, represents a big shift in treatment paradigm and it has to be wondered if a bigger player could have made a bigger impact.

Of course a slow launch does not necessarily rule out commercial success in the future. But the almost constant flow of bad news and missed expectations from the few small companies that do manage to bring a drug to market will do nothing for sentiment at this end of the sector.

While the bull market rages in the US, this probably does not matter – although NPS and Aegerion are feeling the fallout of sky-high expectations. But as the fervour fades, as it must do eventually, scepticism about small companies’ ability to deliver will be harder to ignore. And for those investors enthusiastically backing early-stage companies on the promise of climbing drug approval rates, the clear message is to head for the exit if a partner fails to appear.

Success stories are hard to find among small company novel drug launches
Consensus sales forecast ($m)
FDA approval date Product Company Approval time (mths) First US launch Comment 2013 2014
06/03/2012 Surfaxin Discovery Laboratories 94.8 tbc Yet to launch 1 9
17/07/2012 Qsymia VIVUS 30.6 17/09/2012 Launch disappointing  40 112
26/07/2012 Vascepa Amarin 10.0 28/01/2013 Launch disappointing  35 43
09/08/2012 Marqibo Spectrum Pharmaceuticals 13.0 03/09/2013 Only launched in September - -
17/10/2012 Jetrea ThromboGenics 6.0 14/01/2013 Launch disappointing  37 86
29/11/2012 Cometriq Exelixis 6.0 24/01/2013 Launch on track 17 32
14/12/2012 Iclusig ARIAD Pharmaceuticals 2.6 31/12/2012 Launch just about meeting expectations until drug pulled 51 124
21/12/2012 Gattex NPS Pharmaceuticals 12.7 21/02/2013 Upped guidance but still disappointed 29 92
21/12/2012 Juxtapid Aegerion Pharmaceuticals 9.7 31/01/2013 Upped guidance but still disappointed 40 154
31/12/2012 Fulyzaq Salix Pharmaceuticals 12.6 30/06/2013 Delayed launch, then guided down expectations for H2 sales 7 25
26/02/2013 Osphena Shionogi 10.1 30/06/2013 Launch just about on track, but concerns exist 55 120
13/03/2013 Lymphoseek Navidea Biopharmaceuticals 4.4 01/05/2013 Launch just about on track, but concerns exist 2 10

To contact the writer of this story email Amy Brown in London at AmyB@epvantage.com or follow @AmyEPVantage on Twitter

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