Washington Editor

Depomed Inc. CEO Carl Pelzel said there were plenty of reasons to be "excited" about the news that his firm's partner Abbott filed a new drug application (NDA) for DM-1796, an extended-release, once-daily tablet formulation of gabapentin, as a therapy to treat postherpetic neuralgia (PHN) - the type of pain that follows a bout of shingles.

Investors, however, took little notice Wednesday, with shares of Menlo Park, Calif.-based Depomed (NASDAQ:DEPO) barely budging, closing at $3.55, down 3 cents.

But Pelzel argued that the "highly differentiated" product profile of DM-1796, which uses Depomed's AcuForm drug delivery technology - which allows for extended, controlled release of drugs to the upper gastrointestinal tract - places it well above current and future competitors in the PHN space.

"There's been a lot of scrutiny recently from filings from big pharma and small pharma around the fact that they may not provide the kind of real patient benefits that we need in new medications," he told BioWorld Today.

"The days of 'me too' medications is rapidly coming to a close, where you can just take a compound and compare it to a placebo and hope to get reimbursement. Me too products are dead. Product differentiated will always win the day," he declared.

If approved, Depomed's drug would be facing a market already dominated by Pfizer Inc.'s approved PHN drugs, Neurontin (gabapentin) and Lyrica (pregabalin), a drug that has a similar pharmacological profile to that of gabapentin.

XenoPort Inc.'s and GlaxoSmithKline plc's gabapentin drug XP13512, also known as GSK1838262, was expected to be another potential competitor in the PHN space. But the future of that compound is unclear after the FDA, when it rejected the marketing application in February for XP13512 in restless legs syndrome, raised concerns about pancreatic acinar cell tumors in rats in preclinical data. (See BioWorld Today, Oct. 6, 2009, and Feb. 19, 2010.)

"While I hate to see a competitor suffer a setback, I think that is certainly good for our partner Abbott, because I think that it has probably instilled a delay in any future work that either XenoPort or GSK might decide to do on PHN," Pelzel said.

But even if the XenoPort-GSK product "ever sees the light of day" for PHN, Pelzel said he doubted that would "hugely" change the landscape in the space, "simply because our product, at least in clinical trials, has had a milder side effect profile and it is a once-a-day drug. So I think it has really strong advantages."

Drugmakers can no longer depend on direct-to-consumer advertising or large sales forces to be successful with new or reformulated products, he insisted.

"It is really going to depend on whether there is a meaningful clinical difference to patients," Pelzel said. "It is a new day for us. It is the kind of thing that happened in Europe seven or eight years ago, but is just beginning to be seen in the U.S. It's a new hurdle for drugs."

The market for PHN drugs, Pelzel said, has been growing at "7 percent per year, per year, per year," meaning little has changed when it comes to growth in new prescriptions. He noted that prescriptions for Lyrica have actually declined over the past year.

Pelzel blamed Lyrica's lack of sales growth on there being no "strong degree of product differentiation" between it and generic gabapentin. While Lyrica must be taken in dosages of two-to-three time per day, and gabapentin often at four-to-five times per day, DM-1796 is a once-daily medication, he noted.

"But most importantly, our product significantly reduces the side effects associated with both Lyrica and generic gabapentin," he said.

While gabapentin has up to a 30 percent incidence in dizziness, DM-1796 has demonstrated only a 10.9 percent, Pelzel said.

Gabapentin has shown a 20 percent to 25 percent incidence of daytime sleepiness, compared with 5 percent for DM-1796, he said.

"So it makes a real difference to patients," Pelzel said, adding that he expected managed care providers to also take notice of those incidence rates.

"Unless the doctor has a very compelling medical reason as to why that patient should get a product that has been specified, managed care is going to push back, and right now, there really isn't a very convincing message that Pfizer can deliver to encourage use of Lyrica," Pelzel asserted.

"On the other side, however, we have supplied Abbott with a very compelling product profile," he noted.

While Abbott Park, Ill.-based Abbott holds the North American licensing rights to DM-1796, which it obtained when it acquired Solvay Pharmaceuticals Inc. for $6.6 billion last fall, Pelzel said his firm is in discussions on rest-of-the-world licensing for the PHN indication. (See BioWorld Today, Sept. 29, 2009.)

"An NDA filing certainly gives tremendous visibility to that product opportunity and to the profile that a company could take forward into Europe, Japan and other markets," he said.

"We look forward to closing a deal in the rest of world in the very near future," Pelzel added.

He noted that once the NDA is accepted by the FDA, Abbott will pay Depomed $10 million, and if DM-1796 is approved, the company could garner up to $60 million more on its deal.

Depomed also stands to bank royalties of up to 20 percent on sales of DM-1796, he said.

"So it really means a significant cash inflow to Depomed," which Pelzel said would help the firm commercialize its other gabapentin-based product Serada (formerly DM-5689), which is under investigation to treat hormonal hot flashes.

The firm is awaiting finalization from the FDA of a special protocol assessment agreement to begin Phase III testing of Serada, he said.

Now that Abbott has filed the NDA for DM-1796, the firms have instituted a "Chinese wall," or information barrier, to ensure commercial issues on DM-1796 and Serada, which also uses Depomed's AcuForm delivery technology, are kept separate, Pelzel noted.

The companies, however, will communicate on manufacturing issues and FDA questions on the DM-1796 NDA.