Forest, Cypress win approval for new fibromyalgia drug

After a nail biting deferral of approval by the FDA at last October’s PDUFA date, a green light has finally been given for Forest Laboratories' and Cypress Bioscience’s milnacipran, a selective serotonin and norepinephrine dual reuptake inhibitor, for the management of fibromyalgia.

To be branded Savella, the drug will be the third product to be approved for the relatively newly-recognised symdrome, which causes chronic, widespread pain and is estimated to affect anything between four and twelve million people in the US. Big blockbusters Lyrica and Cymbalta, from Pfizer and Eli Lilly respectively, have already won approval in the indication, but analysts believe the new pill’s unique mechanism of action will enable it to compete and capture a sizeable enough market share to make a meaningful difference to both Cypress and Forest.

Shares in Cypress, which is essentially a one-product company, were trading 25% higher at $9 in early trade, a 12-month high. After a short delay last year, approval this year was anticipated by analysts (Event - Cypress seeking pain relief with milnacipran approval, September 24, 2008). Those analysts covering Cypress have pencilled in royalties of $13m this year, rising to $120m in 2014.

Develop the pipeline

Forest bought US rights to the drug in 2004 in a deal worth $200m-$250m. The breakdown of upfront payment and milestones was not released, but since then Cypress has booked $40m in revenues, the majority of which will have come from Forest as part of the deal. A further milestone on approval is likely, and analysts have forecast revenues of $34m this year, which should help the company develop its pipeline, which was enhanced by the acquisition of Proprius Pharmaceuticals last year for $37.5m.

The approval is not insignificant for Forest, which was trading 6% higher at $25.5 in early trade. Savella is seen as the company’s second-biggest revenue growth driver over the next six years. In 2014 sales are seen reaching $463m, according to consensus forecasts from EvaluatePharma, which would make it the specialty pharma group’s third biggest-selling product that year.

Value added

Based on consensus forecasts, to Forest Savella is worth $240m, according to EvaluatePharma’s NPV Analyzer, still a long way behind its big products Lexapro and Namenda. They are both worth more than $1bn to the company. However, they lose patent protection in 2012 and 2013 respectively, therefore Savella is set to become much more important in the years to come.

Analysts covering Cypress appear to be far more optimistic about the drug. Consensus sales forecasts put the drug's value at $472m, signficantly higher than even the company's new market capitalisation today of $342m, suggesting a fair degree of scepticism about Savella's potential may exist.

With the significant milestone of FDA approval under their belts, attention can now turn to commercialisation. With fibromyalgia still little understood and hard to diagnose, whether the indication generates the sort of sales being forecast for any of the drugs now available remains to be seen.

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