If a compound doesn't work as a drug, then why not try marketing it as a nutraceutical? This is the thinking (or lack of it) behind Neurochem's (Nasdaq: NRMX) plan for former lead drug Alzhemed after it failed in phase 3 testing last year.
Alzhemed was being studied in two phase 3 studies up until last year. In June, Neurochem started to give hints that the drug had failed in the first of these clinical trials, and the company later canceled the second study and announced it would try to market Alzhemed as a dietary supplement instead of as a drug. Yesterday, Neurochem got one step closer in this plan to sell Alzhemed as a supplement after hiring someone to lead its new nutraceuticals division.
The idea behind marketing Alzhemed as a supplement, rather than a drug, is that the active ingredient is found naturally in some foods; therefore, Neurochem's hope is that it might be able to escape the heavy regulation and drug-approval process that new therapeutic drugs have to go through. Before you start thinking Neurochem is onto a great new strategy to bring compounds to market in the U.S., though, please let me dispel the myth.
Even if the FDA does let Alzhemed (or whatever Neurochem plans to call it) pass as a supplement and not a drug, there will be little economic profit in it for the company. As with many other supplements and foods, Neurochem won't be able to patent-protect Alzhemed (the supplement/nutraceutical) to keep other companies from making similar versions of it. If Alzhemed does have even mediocre success as a supplement, then plenty of other supplement makers will also come out with similar versions of the compound. Also, Neurochem won't be able to make any health claims about the potential benefits of Alzhemed for Alzheimer's patients when it is selling the compound, so there will be no chance for Neurochem to develop the market for the drug.
Neurochem first plans to launch Alzhemed as a supplement in Canada, and then eventually bring it to the States. Other supplement makers, including NBTY (NYSE: NTY) and even China-based American Oriental Bioengineering (NYSE: AOB), have had some success with their products, but one-supplement-wonder Neurochem is not going to compete effectively against these much more experienced and larger rivals.
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