Pressure on Forest management eases with IBS pill’s approval

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With the US approval of Linzess, Forest Laboratories continues the climb back up its steep patent cliff. The irritable bowel syndrome and constipation drug has shown that the New York group’s pipeline can perform, helping to relieve pressure on the management team to pursue a trade sale.

Given that the FDA had bypassed an advisory committee for the pill known generically as linaclotide, approval seemed rather a safe bet; shares of Forest were up slightly yesterday while those of partner Ironwood Pharmaceuticals fell 2% to $12.42. With launch expected in December, Linzess’s trajectory will be closely watched to see whether it will indeed help Forest steer an independent course.

Unexpected

Approval triggered an $85m milestone for Ironwood, a useful fee as the partner is in the process of adding a sales force of 160 people focusing on gastroenterologists as part of its co-promotion deal with Forest.

The only hiccup with the approval was an unexpected black box warning against paediatric use, an issue that will be clarified further with a post-marketing study. The label states that Linzess use is barred in children under the age of six and should be avoided in those between six and 17.

Deaths in neonatal and juvenile mice dosed with Linzess raised questions about safety in young humans. In trials to be carried out next year, the company hopes to test the hypothesis that underdevelopment of gastrointestinal systems makes young mice more vulnerable to dehydration than young humans. Other post-marketing safety commitments include studying Linzess’s antigenic properties and effects in lactating women.

In any case, analysts did not appear to be too concerned with the black box. In a conference call following the announcement, management at Massachusetts-based Ironwood said the pill had not been tested in children and they had not sought approval in that population, so the black box will not likely affect its sales.

Competing

Facing a market that has a great deal of over-the-counter and generic competitors, Ironwood management said the target population consisted of 10 million patients who have sought treatment but have not experienced relief. Thus a significant part of the job will be to convert patients now using laxatives or other over-the-counter medications.

The biggest on-patent branded prescription competition comes in the form of Amitiza, the Sucampo drug that has stumbled since approval and was the subject of an arbitration battle with Takeda, a marketing partner (Arbitration-scarred Sucampo needs to salvage Amitiza partnership, July 9, 2012).

Analysts from Leerink Swann note that Linzess will be launched with some marketing advantages including a demonstrated effect on abdominal pain, once-daily dosing and no limitation on treatment duration. Amitiza is dosed twice daily, while the now-withdrawn Zelnorm was limited to 12 weeks’ duration.

Pricing will be competitive, with $6-$7 a day mooted as compared with $7-$9 for Amitiza.

Looking to the launch

Thus with few surprises from the approval, focus will turn to the launch ramp for Linzess, critical to validating Forest management’s steadfast refusal to consider selling the company (After proxy battle Forest has questions to answer, August 17, 2012).

With the $2bn-a-year depression drug Lexapro losing patent protection earlier this year and the threat that $1.6bn-a-year Alzheimer’s medication Namenda will go in 2015, Forest needs its new products to meet or exceed expectations. Approval of a COPD drug, Tudorza Pressair, was a good beginning, with Linzess a resounding follow-up.

The two blockbusters losing patent protection will result in nearly $3bn in lost sales by 2018, while the two new products introduced this year account for less than half of this. There is no doubt that any signs of Linzess’s underperformance would be a blow to Forest’s strategy and might reinvigorate the activist investor Carl Icahn, whose accumulation of new Forest holdings triggered the adoption of a poison pill takeover defence this week.

To contact the author of this story email Jonathan Gardner in London at jonathang@epvantage.com

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