Assistant Managing Editor

The good news is that Lemtrada (alemtuzumab), the hotly contested drug at the center of negotiations in Sanofi SA's buyout of Genzyme Corp. earlier this year, hit its primary endpoint in the first Phase III study in multiple sclerosis (MS).

The bad news is that the data were not as impressive as they needed to be to position the drug as a major player in the increasingly competitive MS field, making future payouts on the contingent value rights (CVRs) attached to Lemtrada sales milestones even more of a long shot. Investors dumped the publicly traded CVRs (NASDAQ:GCVRZ), which fell 37 cents, or 14.6 percent, to close Monday at $2.17.

The inclusion of CVRs proved crucial in the final acquisition terms, after Paris-based Sanofi and the Cambridge, Mass.-based biotech were unable to agree on the value of Lemtrada in MS. Genzyme disclosed market research late last year forecasting anticipated peak sales of the CD52-targeting drug of $3 billion to $3.5 billion. Sanofi, citing the growing competition such as recently approval oral MS Gilenya (fingolimod, Novartis AG), plus others coming up quickly behind, projected a more modest $700 million in peak sales for Lemtrada. (See BioWorld Today, Oct. 15, 2010.)

So, on top if its $74-per-share bid, valued at about $20. 1 billion, for Genzyme, Sanofi agreed to pay up to another $14 in CVRs. There is $1 connected to 2011 production levels of enzyme replacement therapies Cerezyme (imiglucerase) and Fabrazyme (agalsidase beta), but the remaining $13 are tied to Lemtrada.

Pending positive data from the second Phase III trial of Lemtrada, expected in the fourth quarter, the drug's approval could come in early 2012. An FDA nod would win CVR holders $1 per share, but many analysts have been skeptical from the get-go that the CVRs would end up paying out the $12 connected to sales milestones. Those include: $2 per CVR if net sales of Lemtrada after launch exceeds $400 million within specific periods per territory; $3 if global net sales exceed $1.8 billion; $4 if global net sales exceed $2.3 billion; and $3 if global net sales top $2.8 billion. (See BioWorld Today, Feb. 17, 2011.)

Analysts bullish on Genzyme pointed to the promising five-year data presented at the American Academy of Neurology meeting in Hawaii from a Phase II trial, showing that an estimated 72 percent of patients in the Lemtrada arm were relapse-free compared to 41 percent in the Rebif (interferon beta-1a, Merck Serono SA) arm. About 87 percent of patients on Lemtrada were free of sustained accumulation of disability vs. 62 percent in the Rebif group.

But results from the first Phase III study, dubbed CARE-MS I , fell short of those numbers, though the first primary endpoint reached statistical significance. The study, which enrolled 581 patients with early, active relapsing-remitting MS, demonstrated a 55 percent reduction in response rate compared to Rebif over the two years of the study (p < 0.0001).

The second primary endpoint, however, showed that 8 percent of Lemtrada patients had a sustained increase in their Expanded Disability Status Scale score vs. 11 percent of patients on Rebif, missing statistical significance. Sanofi attributed that miss to the fact that very few patients in the study had accumulated disability at the rate seen in earlier studies.

In short, Lemtrada's efficacy appears similar to that of Gilenya or Biogen Idec Inc.'s Tysabri (natalizumab), and Oppenheimer & Co. analyst Bret Holley wrote that Lemtrada could be "an immediate option in JCV antibody-positive patients or in longer-term Tysabri patients."

Tysabri has been linked to progressive multifocal leukoencephalopathy (PML), caused by the activation of the JC virus in immune-suppressed patients on the drug, and that safety concern has limited its use and required careful monitoring in patients, especially those on the drug for more than a year.

Lemtrada has had its own immune-suppressed safety worries. Five-year Phase II data showed antibody-mediated autoimmunity issues, such as a 30 percent risk of developing thyroid disorders. A small percentage of patients also developed immune thrombocytopenia.

Data from the two-year CARE-MS I study showed less than 20 percent of patients with autoimmune thyroid-related adverse event and less than 1 percent with immune thrombocytopenia, and Sanofi reported that no Lemtrada-treated patient dropped out of the study due to an adverse event.

Still, doctors consulted by Deutsche Bank analysts indicated that it might be a slow sales rampup for Lemtrada. Doctors "state they will feel comfortable once Lemtrada has been on the market for three to four years," wrote analyst Robyn Karnauskas, noting that the PML issues did not emerge for Tysabri until after that drug had hit the market.

The Phase III study also required monthly testing, "which will likely have to be implemented in real-world practice," she noted, a requirement that "downplays the annual dosing benefit" of Lemtrada.

But the biggest obstacle to Lemtrada's commercial success – and the realization of the sales-related CVRs – is the growing competition in the MS field.

First, there already are the current blockbusters: Avonex (interferon beta-1a, Biogen Idec Inc.), Betaseron (beta interferon 1b, Bayer AG), Copaxone (glatiramer acetate, Teva Pharmaceuticals Inc.), Rebif and Tysabri. And the next-generation oral MS drugs are poised to capture a share of the market, starting with Gilenya, which gained FDA approval last fall. In studies, Gilenya reduced relapses by 52 percent compared to one year of injectable interferon beta-1a. (See BioWorld Today, Sept. 23, 2010.)

Following Gilenya are Cambridge, Mass.-based Biogen's BG-12 (dimethyl fumarate), which hit its endpoint in its first Phase III study, though detailed data have not yet been released; Teva's laquinimod, which cut annualized relapse rates by 23 percent and reduced disability progression by 36 percent in its first Phase III trial; and Sanofi's own teriflunomide, which so far has shown a 31 percent reduction in relapse rates in Phase III testing.

Merck Serono's cladribine is out of the picture, after the Darmstadt, Germany-based firm decided against launching a new clinical trial to address issues raised in a March complete response letter. (See BioWorld Today, March 3, 2011.)

Further data from all potential competitors are expected later this year, but the Lemtrada data and competitive landscape clearly ha left some investors already wondering if Sanofi paid too much for Genzyme in the first place.

Shares of Sanofi (NYSE:SNY) fell $1.41 to close Monday at $38.36, though the big pharma firm also disclosed other news, including its divestiture of its dermatology unit to Mississauga, Ontario-based specialty pharma firm Valeant Pharmaceuticals International Inc. for $425 million, plus the fact that the European Medicines Agency intended to widen its review of arrhythmia drug Multaq (dronedarone) on reports of severe cardiovascular events in some patients.