“Sell more Acthar” is the loud and clear message from Questcor Pharmaceuticals’ chief executive, Don Bailey, when questioned by EP Vantage on the company’s main strategic goals.
An odd rallying call one might think considering the drug in question has been around since the 1950s, yet even after all these years Mr Bailey believes Acthar still has some way to go to fulfil its potential. Acquired from Aventis in 2001 for just $100,000, Acthar currently generates annual sales of around $100m, from use in orphan drug diseases such as infantile spasms (IS) and flares in MS. However, Mr Bailey is hopeful a renewed promotional effort, along traditional lines of more sales reps knocking on doctors' doors, will take Acthar to the next level.
Questcor currently has a sales force of 38 reps but Mr Bailey is aiming to expand this to bolster what he sees as a fairly straightforward sales process: “Principally it’s about knocking on doors and word of mouth, getting doctors and patients to talk to each other”, he says.
The range of doctors that these reps can formally talk to could increase in the next few months if the FDA formally approves Acthar for the treatment of IS. Although Acthar is already used as the standard of care in treating IS, given the product has been around so long it has never actually received official regulatory scrutiny or approval in this setting. Approval would allow Questcor’s reps to call on child neurologists as well as general neurologists.
On May 6 an advisory committee voted 22-1 in favour of approving Acthar in IS and the FDA is due to issue its final verdict by the drug’s PDUFA date of June 11.
While approval by June 11 may seem a foregone conclusion, Mr Bailey admits that the advisory committee raised a few issues, such as the need for a REMS and guidance on retreatment for relapses. The FDA’s verdict is therefore largely dependant on the regulator’s view on whether these issues need to be addressed before or after approval.
Investors certainly seem to think approval is almost in the bag. Shares in the California company have doubled so far this year, touching a record high of $9.77 a month ago and valuing the company at around $590m.
According to consensus forecasts from EvaluatePharma, Acthar sales could reach $245m by 2016, giving the product a net present value of $1bn; quite a return on the $100,000 originally invested and after removing the 1% royalty on sales that Questcor now owes to Sanofi-Aventis.
Mr Bailey estimates that formal FDA approval in IS could increase Acthar sales by 20% over the next two years, a modest increase given the drug is already the standard of care in this illness. Mr Bailey had no comment on whether approval would have any impact on the price of the drug, which currently has an annual cost of around $135,000 per patient, according to Oppenheimer analysts.
The high price of Acthar is an aspect that has attracted criticism in some circles but Mr Bailey is adamant it is necessary to ensure the drug remains on the market.
Questcor managed to acquire Acthar on the cheap largely because Aventis was about to withdraw the product because of a number of manufacturing problems which the FDA wanted fixed.
Questcor therefore stepped in and had largely fixed the manufacturing issues by 2004, but continued to lose money for the next three years, struggling to generate revenues any higher than $10m while making annual losses of $10m-$15m.
So in 2007, when Mr Bailey became Questcor’s chief executive, the company took a leaf out of Genzyme’s orphan drug pricing manual and significantly increased the price of a single vial of Acthar from $1,600 to $23,000.
Although Mr Bailey admits this price hike was “very difficult and controversial at the time”, the company gradually convinced payers and doctors this was a necessary evil to turn the drug into a commercially viable product. In one fell swoop the company had transformed itself into a profitable business.
Pipeline within a drug
With Questcor almost completely reliant on the regulatory and commercial success of Acthar, are there any moves to broaden and therefore de-risk the company’s product portfolio?
“No” is Mr Bailey’s unequivocal answer, citing the potential growth from Acthar from existing indications as well as follow on uses.
Derived from pig pituitary glands, Acthar is essentially a porcine version of adrenocorticotropin hormone (ACTH), very similar to human ACTH which stimulates the adrenal gland to produce a number of chemicals such as steroids.
The exact mode of action of Acthar is unknown but it has a wide range of uses, including IS, MS flares, ALS, traumatic brain injury, Crohn’s disease and myasthenia gravis.
As such, Mr Bailey claims the drug is effectively a pipeline in itself.
Then there is the potential for generic competition to Acthar, but again Mr Bailey believes this remains a minimal threat and even if a competitor emerged he is confident it would simply create a duopoly situation, hardly catastrophic he says.
Acthar is a polypeptide, yet to be fully characterised with an unknown mechanism, extracted from pigs through a trade secret process. It is unlikely therefore that a competitor would be able to develop a similar product, especially one derived from animals given the recent safety scares with heparin and concerns over rotavirus vaccines.
It is possible a competitor could therefore go down the non-natural chemical route, but either way, Mr Bailey says the company is preparing for such an eventuality by developing an improved version of Acthar, although he was not prepared to elaborate on the nature of such a product.
With potential to expand the Acthar franchise and plans in place to combat any future competitor, Questcor and its investors seems content for now with this strategy, or as Mr Bailey so succinctly puts it once more: “our focus is Acthar, Acthar, Acthar”.