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Stuart Garfield
Blair Jackson, Alkermes’ vice president of business development, says that the addiction medication market is tough to refuse.
Friday, July 11, 2008
Big pharmas target addiction as depression drugs come off patent
By Ryan McBride
A healthy dose of group therapy and strong personal commitment are the standard ways to fight addiction. But more and more companies in the pharmaceutical game, including biotech firm Alkermes Inc., of Cambridge, think the way to kick that addiction is through a dose of their drugs.
Millions of Americans are hooked on everything including booze, cigarettes, cocaine and even cheeseburgers — and drug-makers are filling their research and development pipelines with potential treatments for such addictions. With mixed results, Alkermes (Nasdaq: ALKS) and several pharma companies have launched a handful of drugs to help patients quit drinking or smoking.
Last week Alkermes, which markets the anti-alcohol dependence drug Vivitrol, revealed positive results of early tests for drug candidates that could become treatments for obesity and other “impulse-control disorders.” But the jury is still out on whether the addiction market is ripe for growth, given the slow sales of Vivitrol and the lukewarm reception of such drugs among physicians and cost-sensitive health insurers, industry insiders say.
“I think it’s (drug companies) trying to uncover rocks to create new markets that are already there,” said Scott Henry, a biotech analyst for Roth Capital Partners LLC, an investment firm in Newport Beach, Calif. Henry added that the drug industry views the addiction market as relatively untapped despite the large business opportunity.
It’s no secret that large drug firms such as Pfizer Inc. and Eli Lilly & Co. are hungry for future products to replace existing blockbuster drugs that are expected to lose patent exclusivity over the next several years. Indeed, both Pfizer and Eli Lilly are in midstage clinical trials for drugs to treat alcohol dependence. And industry giants Johnson & Johnson and Bristol-Myers Squibb Co. are in the hunt to launch anti-alcoholism drugs as well. Other firms are nearing the market with treatments for cocaine and opioid addictions.
When Alkermes began development of Vivitrol in the late 1990s, relatively few companies were interested in the addiction-drug market, said Blair Jackson, Alkermes’ vice president of business development. “I think if you look at the marketplace as a whole, you are looking at a resurgence in the market for addiction medications,” he said.
The market for alcohol-dependence drugs is small yet fast-growing. Global sales of such treatments were projected to be nearly $100 million in 2007 and were expected to more than triple by 2016, according to figures published in 2006 by drug market research firm Datamonitor Ltd. of London. Factoring in sales of treatments for nicotine dependence and the like, Henry said, the annual anti-addiction pharmaceutical market stands at close to $1 billion.
Vivitrol, however, has fallen way short of revenue expectations since Alkermes and Frazer, Pa.-based biopharmaceutical firm Cephalon Inc. launched the product in 2006. Alkermes reported Vivitrol manufacturing revenue of $6.5 million in fiscal 2008 ending March 31, down from $16.8 million in fiscal 2007. The low revenue has been attributed in part to the cost of the drug — more than $10,000 per year — compared with around $1,000 per year for older alcohol-dependence treatments.
Nalan Ward, a psychiatrist and medical director at the West End Clinic, an addiction treatment center at Massachusetts General Hospital in Boston, said she has been prescribing pharmaceuticals to augment group therapy and other counseling for alcoholics for five years or so. And although Alkermes is just across the Charles River from MGH, its treatment hasn’t caught on at the hospital.
Ward said that Vivitrol has clinical utility because one injection of the drug lasts in a patient’s system for a month — but supplies of the treatment must be kept refrigerated and health insurers prefer not to pay for it, making it difficult to prescribe. Indeed, Vivitrol is an extended-release formulation of the generic anti-addiction drug naltrexone, which Ward said is one of the more common pharmaceuticals her clinic prescribes.
With a bevy of new anti-addiction treatments headed for the market, Ward said she is concerned that the drugs could send the wrong message to patients.
“My worry is that these medications only help to a certain degree, and they are not a cure, clearly,” Ward said. “At the same time, I am worried that they (pharma companies) will push it as a cure.”
Beyond reformulation, Alkermes eyes its own molecules
With the market for anti-addiction treatments heating up, Cambridge biotech firm Alkermes Inc. has altered its normal approach to drug development to seize this business opportunity.
In the case of both products the firm has on the market — schizophrenia drug Risperdal/Consta and alcohol-dependence treatment Vivitrol — Alkermes took drug compounds developed by other companies and reformulated them with its drug-delivery technology, which extends the life of pharmaceuticals in the body.
Now the company is developing drug molecules of its own for the addiction market. There are three proprietary molecules, called opioid receptors, in the firm’s pre-clinical pipeline for treating addiction. Meantime, the company last month began a Phase 3 clinical trial of Vivitrol to treat opioid dependence.
“This appears to be a transition for (Alkermes), saying that ‘We want to be in alcohol addiction,’” said Scott Henry, a biotech analyst who covers the company’s stock for Roth Capital Partners LLC.
However, Alkermes (Nasdaq: ALKS) has not abandoned its strategy of leveraging its drug-delivery technology to form partnerships with pharmaceutical firms. The company generated $95.2 million of its total $240.7 million in fiscal 2008 revenue from Risperdal/Consta, which is marketed through a partnership with a pharma subsidiary of health-care products giant Johnson & Johnson.
Henry said that most of the value of Alkermes lies in such partnerships, yet the company’s move into developing anti-addiction medicines offers high-potential rewards with limited risk.
-- Ryan McBride
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