Theravance approval does little to ignite shares

It has been three long, and at times very bumpy, years since Theravance first filed a marketing application for its lead drug, antibiotic telavancin. Today, the group’s patience appeared to have been rewarded with the announcement that the FDA had approved the product in complicated skin and skin structure infections (cSSSI) in adults, caused by susceptible gram-positive bacteria, including Staphylococcus aureus, both methicillin-resistant (MRSA) and methicillin-susceptible (MSSA) strains.

The drug is the first approved specifically to target MRSA, which currently is treated with vancomycin, which has been on the market since 1958. The approval will be a welcome addition in the armoury of healthcare professionals who are struggling with the fact that many superbugs are now increasingly becoming resistant to generic vancomycin. It also marks Theravance’s first marketed product and will trigger the payment of a $20m milestone from licensing partner Astellas Pharma.

Long path to approval

Telavancin, now called Vibativ, was first filed in 2006 and there were hopes given the increasing cases of cSSSI infections from MRSA, that the drug would be approved and quickly, but in March 2008 the drug suffered its first set back when the regulator delayed an approval decision due to problems at some clinical trial sites.

Investors’ hopes were kept alive when the FDA advisory committee announced in November that it would be willing to disregard the data from the problem sites. But the regulator remained concerned by the high number of kidney disorders suffered by patients in the Vibativ arm and also the potential for birth defects for pregnant women using the drug.

As such, it was not surprising when this March the FDA issued Theravance with an approvable letter calling for the group to initiate a risk evaluation management scheme (REMS) for pregnant women and also monitor the incidence of kidney problems.

The regulator also said that any label for Vibativ would contain a boxed warning on the risks to pregnant women and that women of childbearing potential must have a pregnancy test before being given the drug. This proviso and also that of warnings of the higher risk of renal side effects in certain groups of patients were, as expected, included in today’s approval.

Sales fears

On a conference call today though, Rick Winningham, chief executive of Theravance, said that this should not harm the drug’s chances as similar monitoring requirements exist for other marketed drugs including Cubicin.

This confidence did not appear to be shared by the market, as Theravance shares were down 3% in early trading at $17.63 as some analysts decided that the limitations on the drug's use could consign it to a last line setting for patients who had failed on vancomycin and Cubicin.

The fears over the drug’s sales, which as RBC Capital Markets pointed out today will be initially slow until the drug gets accepted in hospital dispensaries, have caused forecasts for Vibativ to fall significantly. RBC estimates that it could take up to a year to fully launch the drug. Analysts now expect sales in 2012 to hit $137m, whereas back in March 2007 they were predicting more lofty sales of $350m for 2012. 

Future steps

This pessimism about sales comes despite the fact that Vibativ is also the first novel antibiotic for several years, thanks mainly to the failure of several other competing products over the last two years. At the beginning of 2008 it looked as if the US market might be flooded with a host of new products including Targanta’s ortiavancin, Basilea and Johnson & Johnson’s ceftabiprole, and Arpida’s iclaprim, but one by one they all fell by the wayside.

What could help Vibativ and also Theravance get out of the doldrums is the fact that drug could also be approved in another indication by the end of the year. Vibativ has a PDUFA date of November 26 in the indication of hospital acquired infection and investors will be hoping that a positive recommendation from the regulator will inject some life into the shares. There will also be the prospect of another $10m in milestone payments to be added to Theravance’s coffers.

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