Post-Provigil Cephalon aims to realise pipeline dreams and branded generics
This article was originally published in Scrip
Cephalon CEO Kevin Buchi exuded optimism for the company’s central nervous system business this year as he announced 2010 results on 10 February. Mr Buchi, named to the top job on December 23 after five months filling the role in an acting capacity during the final illness of company founder Dr Frank Baldino, updated the company’s overall guidance on expected total sales in 2011 to the $3.015-3.095 billion range -- $8.70 to $9. a share. That is up from the $2.96-3.04 billion expectation announced in October.
The stronger predicted total is fuelled entirely by increases in the projections for its wakefulness aids, Provigil (modafinil) and Nuvigil (armodafinil). Indeed, company estimates for the products are now in the $1.45-1.49 billion range. Late last month the company reported that a mandated post-approval trial for Nuvigil had shown statistically significant improvement in combating excessive sleepiness associated with shift work -- both in the latter part of the job stint and on the workers’ journey home -- and no serious adverse events; Cephalon is planning to use those results in a major marketing campaign for the drug.
2011 guidance for sales in Cephalon’s other sectors remain unchanged: $540-570 million for pain treatments, primarily Fentora (fentanyl buccal), $570-600 million for oncology drugs, where Treanda (bendamustine hydrochloride), indicated for chronic lymphocytic leukaemia and relapsed indolent B-cell non-Hodgkin’s lymphoma increased sales by 53% last year, and $420-450 million for other products.
Although overall results for the fourth quarter of 2010 slipped a bit -- the $93.6 million net profit was down 3% from the October-December 2009 figure -- when excludable items related to acquisitions and write-downs are subtracted, the earnings per share were healthily ahead of what analysts had expected. The basic adjusted earnings were $2.19, against the analysts’ consensus target of $1.93.
further down the road
But a big question mark hangs over Cephalon’s prospects for 2012 and beyond: the loss, in 14 months, of US patent protection for Provigil, which, despite the fact that the company currently is putting no sales effort behind the brand, contributed $1.2 billion of its total portfolio sales last year.
Cephalon has worked to switch users of Provigil to its newer Nuvigil, but late last summer altered its strategy to concentrate on getting new patients -- especially those on shift work -- onto the drug. Today only about 20% of Nuvigil sales are from conversions from Provigil, Buchi told analysts and investors in a 10 February conference call. He said that once Provigil loses exclusivity, the company will make an authorised generic version, but acknowledged that sales for the product will nose-dive. He also hopes to win FDA approval to use the drug to treat major depression in patients with bipolar disorder; the drug is now often prescribed off-label for that condition.
Mr Buchi made clear that he is banking on drugs in the pipeline to provide salvation for the loss of the Provigil patent; Cephalon has five Phase III trials planned for this year. About 80% of the target enrolment has been achieved for a trial of Treanda to treat non-Hodgkin’s lymphoma and enrolment is underway for Cinquil (reslizamab) for adult eosinophilic asthma, with a target launch in 2014.
However, according to Mr Buchi, “the largest opportunity" in its pipeline is Revascor, an allogenic stem cell product being developed in collaboration with Mesoblast Ltd. The compound is aimed at congestive heart failure and myocardial infarction, with a target to begin a Phase III study early in 2012. The companies announced last month that interim results from a Phase II study of the product in 60 CHF patients more than cut in half the percentage who developed severe adverse cardiac events, from 99.3% of those in the control group to 44.4% of those receiving a single injection of Revascor.
Beyond new products, however, Mr Buchi is counting on expanded sales of drugs already in its inventory. Sales in Europe came to $659 million in 2010 and he foresees a doubling of that figure in 2011, thanks to the branded generic business acquired last April through its purchase of Mepha and the introduction of branded drugs in such markets as the Netherlands, Poland, and the Czech Republic.
Cephalon is looking for further acquisitions as well, Mr Buchi said, but is concentrating on smaller one-product targets.
other developments
The earnings announcement capped a busy week for Cephalon.
On Tuesday, 8 February, the company inked a deal with Lundbeck under which the Danish pharma firm will take over registration and commercial rights in Canada and Latin America for a number of Cephalon products. The deal covers Provigil and Fentora for both geographies and Nuvigil, Treanda, and Trisenox (arsenic trioxide) in Canada alone. The companies announced only that “Lundbeck is to pay double-digit royalties on sales,” but Frank Andersen, an analyst at Jyske Bank estimated that the payments will be between 20% and 40%. He projects Lundbeck’s sales of the drugs will reach $100 million annually.
Then on Wednesday, 9 February, Cephalon announced that it had acquired an option on a treatment for coeliac disease being developed by Alba Therapeutics. Cephalon is providing $7 million and a line of credit to allow Alba's larazotide acetate, a tight junction modulator, to proceed to a Phase IIb trial. If the results of that trial prove satisfactory to Cephalon, it will pay an additional $15 million to acquire all of Alba’s assets relating to the drug.