After four years fortune smiles on Avanir


It took four years, some patience, and nearly $100m but Avanir Pharmaceuticals is poised to launch its treatment for involuntary emotional outbursts in patients with neurological disorders. Nearly four years to the day after the FDA sent Nuedexta, formerly known as Zenvia/AVP-923, back to the California group for new clinical trials, the regulator has approved the first drug for pseudobulbar affect (PBA).

Avanir shares doubled on the news today, reaching a four-year high of $5.00 in early trade. Buoyed by a label allowing physicians to prescribe the product for PBA secondary to a wide variety of neurodegenerative conditions, the company is going it alone and aiming to launch in the first quarter of 2011.

Clean bill of health

Nuedexta has received a rather clean label, an endangered species in this era of heightened safety concerns. The FDA appears to have laid aside specific cardiac worries as the label will contain no boxed warnings. Nor did the regulator order a risk evaluation and mitigation strategy (REMS) for the drug, a combination of the cough suppressant, dextromethorphan, and the anti-arrhythmic, quinidine.

FDA’s 2006 approvable letter sought more work on Nuedexta over concerns about prolongation of the QT-interval in the electrocardiogram, which can put patients at risk of potentially life-threatening arrhythmia. The earlier submission had been at a dosage of 30mg dextromethorphan and 30mg quinidine, whereas the approved combination is for 20mg and 10mg, respectively (Event – Avanir's AVP-923 decision prompts mixed emotions, October 15, 2010).

The new label does however warn of dose-dependent QT prolongation and cites existing QT prolongation as a contraindication.

Such a clean label should give some hope for Avanir meeting lofty sales expectations. Consensus forecasts from EvaluatePharma put 2016 sales at $495m, giving it a net present value of $826m.

Today’s share price increase looks set to boost the company’s market capitalisation to over $450m, still lower than the drug's NPV potential. Meanwhile prior to this news analysts’ price targets sat at $8-$10, double today's share price.

Launch funding

Given the spike in Avanir shares, it would not be surprising to see the company go to the equity markets for funds. Since the FDA’s initial rejection of Nuedexta the company has raised in $91.6m in share sales over four rounds, not to mention selling all rights to its marketed product FazaClo to Azur Pharma $42m upfront.

In an investor call, Avanir's chief executive Keith Katkin made no such overtures about another share offering. He said the company has $39.4m in cash and short-term equivalents, sufficient to fund the launch.

However, with the market capitalisation having doubled, the temptation to strike while the iron is hot and seek a fresh injection of cash is likely to be too much to resist.

Uncontrolled expression

Described as an involuntary emotional expression such as uncontrollable laughing or crying disproportionate to the seriousness of the triggering event, PBA related to neurological diseases has only been recognised in the last ten years. And although the label specifies that trials of Nuedexta were in patients with amyotrophic lateral sclerosis and MS, it does not restrict the drug to those conditions as PBA can affect people with such conditions as traumatic brain injury and stroke.

Mr Katkin said the FDA had told Avanir it would get a non-restrictive label if the group could prove its efficacy in two subpopulations. “We want to make sure that physicians make the correct diagnosis irrespective of underlying conditions and that they know there is this first and only treatment for PBA,” Mr Katkin said.

To create awareness in the patient community about the $3,000-$5,000-a-year therapy, Avanir funds the US PBA patient advocacy foundation. Among clinicians, the company has conducted pre-marketing work using an advance sales team of seven and says there is high awareness of the condition among specialists in neurology, geriatrics, geriatric psychology and rehabilitation. 

When Nuedexta launches, 75 sales representatives will target 15,000 specialists identified as high prescribers of such key neurological treatments as Rilutek for ALS.

The news that FDA wants more clinical trials can often be the death knell for a drug. For a therapy to come back with no boxed safety warnings and a fairly unrestrictive label is uncommon. Fortune has smiled on Avanir; now the challenge will be convincing the wider medical community and payers of the need for Nuedexta. 

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