Transitioning from clinical-stage drug developer to commercial-stage drugmaker isn't easy. Putting the right team in place can be expensive, negotiating reimbursement with insurers can be challenging, and convincing doctors to prescribe new drugs can be tough. In 2018, we'll find out if Flexion Therapeutics (FLXN), La Jolla Pharmaceutical (LJPC), and Portola Pharmaceuticals (PTLA) can overcome these obstacles. Will their new drugs reward investors?
Nixing knee pain
The widespread use of opioids by patients suffering from chronic pain has contributed to the opioid crisis, and that's got healthcare providers eagerly anticipating new treatment options that may reduce the need for painkillers like oxycodone. Flexion Therapeutics' new treatment for osteoarthritis of the knee, Zilretta, is one such alternative.
The company won FDA approval of Zilretta in October and it plans to begin marketing it to pain management doctors soon. Results from clinical trials suggest that quarterly Zilretta injections reduce knee pain better than quarterly corticosteroid shots or hyaluronan injections, potentially lowering the need for opioids. Estimates show that about 40% of osteoarthritis pain patients also take opioids as rescue medication when the benefits associated with corticosteroid shots wear off.
Zilretta appears to have an edge over existing treatment options, but Flexion Therapeutics will have to overcome some obstacles. For example, unlike corticosteroid shots, Zilretta has to be reconstituted prior to use. Reconstitution is simple, but it's still an extra step for providers. Also, convincing providers to stockpile Zilretta could be difficult until there's a clear path to Medicare and commercial reimbursement. Reimbursement challenges should disappear with time but will be a headwind, at least for a little while.
The market opportunity associated with this launch is undeniably big. Overall, Zilretta's addressable market includes about 8 million knee injections annually, and Flexion thinks it can fetch about $500 per shot.
Pumping up pressure
After La Jolla Pharmaceutical reported positive phase 3 results for Giapreza as a treatment to boost blood pressure in shock patients earlier this year, the FDA came through with a speedy review and an early approval in December.
La Jolla Pharmaceutical is still training its sales team, but it expects to begin selling Giapreza in March 2018. If conversations with hospitals go well, Giapreza could help hundreds of thousands of patients who don't respond to existing treatment options, including vasopressors.
In trials, Giapreza helped more patients achieve an average arterial pressure of at least 75 mmHg, or a 10 mmHg increase from baseline, within three hours, without the need for additional vasopressors. In other words, Giapreza could be a lifesaving treatment. Currently, about 300,000 people who are admitted to hospitals with shock don't respond to existing options, and there's a high mortality rate for those non-responders.
Portola Pharmaceuticals' Bevyxxa is a factor Xa anticoagulant approved to prevent venous thromboembolism (VTE) in acutely ill medical patients who are being discharged from hospitals following a serious medical event, such as heart failure, stroke, and infection.
Currently, Lovenox is given to these patients for six to 14 days to reduce their risk of VTE, but clots are still common in this patient population, and sadly, so are deaths. There are an estimated 24 million acutely ill medical patients hospitalized annually in the G7 countries (the seven largest advanced economies in the world), and VTEs cause about 100,000 deaths per year in the United States.
Bevyxxa works differently than Lovenox by inhibiting factor Xa, a key clotting factor, and in trials, Bevyxxa outperformed Lovenox. In patients given Bevyxxa for between 35 and 42 days, there were fewer cases of VTE than there were in the Lovenox control group. Because drugs that inhibit factor Xa are already widely prescribed for use in other indications, it might not be very hard to convince doctors to prescribe Bevyxxa, and Bevyxxa could end up being a multibillion-dollar drug someday. Prior to losing patent protection, Lovenox was generating nearly $3 billion in sales. Xarelto and Eliquis, two factor Xa inhibitors that are currently on the market, are also multibillion-dollar drugs.
The thread connecting Flexion Therapeutics, La Jolla Pharmaceutical, and Portola Pharmaceuticals is that each of their drugs targets a large enough market to make it a top seller. Because none of these companies markets any medicines yet, the potential to profit from launching Zilretta, Giapreza, and Bevyxxa is big. But because we have yet to see how well the companies will execute on their launches, these stocks remain risky.