Cadence Turns Attention to Marketplace, as IV Pain Reliever Reaches Goals in Clinical Trials
Cadence Pharmaceuticals can now start turning even more of its energy toward doing what it takes to become a commercial drug company. The San Diego-based biotech (NASDAQ: CADX) said yesterday it passed all three clinical trials it says it needs to satisfy FDA requirements so a new intravenous form of an old standby pain reliever can be cleared for sale in the United States.
Full details on how this drug, acetaminophen, performed will be revealed at an upcoming medical meeting, or in a peer-reviewed journal, Cadence said. The company is working now to put together an application to the FDA, with a goal of submitting it for approval before the end of June. In the meantime, Cadence will start building a sales team to fully exploit this drug, to be marketed as Acetavance. The goal will be to pitch this to hospitals as a safer alternative to opioid-based pain relievers that can be addictive and cause constipation and other side effects. The Cadence product was tested in patients who undergo abdominal surgery, and therefore can’t swallow the usual tablets or capsules, commonly marketed as Tylenol.
Cadence discussed parts of its commercial game plan yesterday on a conference call with analysts. I also got a glimpse of the strategy when I interviewed CEO Ted Schroeder a few weeks ago. He wants to build a team of 150 to 200 sales reps who will reach out to about 2,000 U.S. hospitals—the ones who represent about 80 percent of the pain relief market Cadence is pursuing. Schroeder didn’t get into sales projections on today’s call, but the potential is huge. Acetaminophen is one of the most widely taken drugs in the world, with billions of doses a year. About 2 billion doses a year are given in U.S. hospitals alone. At a price of about $8 to $10 a dose, this product could generate greater than $800 million in peak annual sales in the U.S., he says.
The economic downturn could actually work a bit in Cadence’s favor, because it expects it will be able to recruit some highly experienced sales reps who have gotten axed by other drugmakers. “The competition for talent is not what it once was,” Schroeder said. “It helps us.”
The backstory of how Cadence got ahold of this drug is interesting. It acquired the drug from Bristol-Myers Squibb (NYSE: BMY), which did years of development work to get it toward the proving ground of final-stage clinical trials. When Bristol made a round of cutbacks in 2005, and limited its focus to 10 core therapeutic classes, pain wasn’t one of them, Schroeder says. This was in the wake of safety disaster with COX-2 inhibitor pain drugs, like Merck’s rofecoxib (Vioxx), so it was thought the FDA would apply extra scrutiny to new pain meds. That enabled a startup drug developer like Cadence to harvest this late-stage product candidate in 2006, by shelling out $25 million upfront, agreeing to pay milestones of $40 million, plus royalties to Bristol on product sales that escalate to as much as 20 percent, Schroeder says.
The Cadence CEO comes to this job as a business guy by training. Before he co-founded Cadence in May 2004, he headed up North American sales and marketing for Irish drugmaker Elan. He specialized in selling drugs to hospitals at both Elan and at San Diego-based Dura Pharmaceuticals before it was acquired by Elan.
So Cadence’s strategy has been to acquire late-stage drug candidates that can be sold in bulk to hospitals. It will use a small group of focused sales reps who can pitch it, as opposed to marketing the next impotence drug for the masses that needs thousands of sales reps.
Cadence has a second drug candidate in its pipeline, omiganan pentahydrochloride topical gel, (Omigard), that should give its sales reps something else to promote to hospitals. The second drug is an antimicrobial agent designed to stop infections at the point in the body where catheters get injected. This drug is thought to have almost bleach-like killing power, wiping out bacteria, fungi, multi-drug resistant bacteria, yeasts, molds, you name it, Schroeder says. It kills within minutes, and isn’t absorbed into the body, so it doesn’t provoke an immune reaction, Schroeder says. Results from a final-stage clinical trial of this drug should be available before the end of March, and if successful, Cadence plans to ship off that second new drug application to the FDA within the following three months.
Yesterday, analysts tried to tease out more details on the safety profile of the IV acetaminophen to see if there’s some reason why the FDA might hold up this application. Cadence’s chief medical officer, James Breitmeyer, said the agency’s main concern is that excessive doses of acetaminophen can cause liver damage. This could theoretically happen during a communications mix-up in a hospital, so Cadence plans to propose an additional warning tab on its vials that remind doctors and nurses not to give the IV drug if the patient has already taken the pills.
One insightful question came on yesterday’s conference call from analyst Charles Duncan of JMP Securities. He asked whether the company collected data on secondary goals in its trials, like whether its product could actually help wean patients off opioids. This could be a big selling point to hospitals, which I’m told get really annoyed with treating the constipation that comes with prescribing these drugs. Breitmeyer ducked the question, because he said statisticians are still analyzing data on the secondary goals.
That answer, when it emerges next year, could speak to the drug’s ultimate commercial potential. But from listening to yesterday’s conference call, Schroeder made it seem unlikely the FDA will schedule a public advisory panel to review the drug, as it often does when wrestling with questionable drug candidates. “We don’t think there’s anything controversial here,” Schroeder says.