Astrazeneca plc acknowledged receipt of a complete response letter (CRL) from the FDA on its new drug application (NDA) for sodium zirconium cyclosilicate, an oral suspension designed to treat hyperkalemia (HK). The candidate, better known as ZS-9, was the prize in Astrazeneca’s 2015 acquisition of ZS Pharma Inc. for $2.7 billion. (See BioWorld Today, Nov. 15, 2015.)
The London-based pharma said the CRL referred to “observations arising from a pre-approval manufacturing inspection,” emphasizing that the FDA did not request additional clinical data. Nevertheless, the rebuke represented a stinging setback for Astrazeneca, as it provided additional lift for competitor Relypsa Inc., whose Veltassa (patiromer) gained FDA approval last year to treat the same condition.
On Friday, Relypsa’s shares (NASDAQ:RLYP) spiked 27 percent in early trading before ebbing during the day to close at $18.06 for a gain of $1.46, or 8.8 percent. More than 15 million shares were exchanged, or about six times the company’s three-month moving average.
Astrazeneca’s shares (NYSE:AZN) closed at $29.88 for a loss of 7 cents.
ZS-9, which had a May 26 PDUFA date, was considered all but certain to gain approval. The insoluble, non-absorbed compound was designed with a structure that preferentially traps potassium ions, enabling high in-vitro binding capacity for potassium ions even in the presence of competing ions. At the time of ZS Pharma’s acquisition, Sean Bohen, Astrazeneca’s chief medical officer, told investors during a conference call that ZS had “been very transparent with us,” providing in advance clinical data that were subsequently presented at the American Society of Nephrology Kidney Week in San Diego.
During Astrazeneca’s first-quarter earnings call last month, Bohen made only a passing reference to the compound, noting the company had “relatively typical interaction to date with regard to approaching that PDUFA date.”
In a research note following the pharma’s earnings call, Morningstar analyst Damien Conover predicted that ZS-9 would be among a trio of 2016 product launches that would help offset generic headwinds to Astrazeneca’s older drugs.
The pharma had already ascribed a peak sales forecast of $1 billion for the compound. Thomson Reuters Cortellis projected 2016 sales of $615.4 million.
In March, the FDA conducted a pre-approval inspection of the Texas manufacturing facility operated by ZS Pharma – now an Astrazeneca subsidiary – “as part of the normal review process for a new medicine,” Astrazeneca spokeswoman Michele Meixell told BioWorld Today. That inspection identified “observations in operational manufacturing practice and quality.” Meixell said the company is working with the agency to address its concerns and is confident of a “timely” resolution.
Astrazeneca insisted that it remains committed to advancing ZS-9 in the U.S. to treat HK, which occurs in approximately one-fourth to one-half of patients with advanced chronic kidney disease and/or chronic heart failure, potentially leading to cardiac arrest and death. Applications for the compound also are under review in the EU and Australia.
In a Relypsa note issued after disclosure of the ZS-9 CRL, Cowen and Co. analyst Eric Schmidt offered additional details, writing that the CRL cited three remaining manufacturing citations after nine were previously resolved. Astrazeneca, he said, views the remaining manufacturing citations, which relate to process and quality issues, as “non-systemic” and “expects to resubmit the ZS-9 NDA within three to six months under a class II review, which would be expected to be followed by a six-month FDA review period.”
Leerink Partners LLC analyst Seamus Fernandez called the CRL “clearly a disappointment” but still placed the probability of approval at 80 percent.
“We continue to expect ZS-9 to have a more attractive clinical profile than Veltassa,” he wrote. “Based on discussions with key opinion leaders, ZS-9 appears to have better dosing frequency (once-daily vs. twice-daily with Veltassa), a faster onset of action, and better stability on the shelf.” (The FDA approved Veltassa for once-daily dosing.)
‘will have to show signs of improved uptake’
ZS Pharma was flying high after pricing its 2014 IPO above the range and raising $107 million when Astrazeneca scooped up the company for $90 per share. Comparisons between ZS-9 and Veltassa heated up with the latter’s approval in October 2015, though Relypsa CEO John Orwin told BioWorld Today at the time that it was “probably not appropriate” to judge the two side by side since no head-to-head trials were done. (See BioWorld Today, June 19, 2014, and Oct. 23, 2015.)
Relypsa showed only a hint of gloating after the ZS-9 CRL.
“The rejection of any potential new medicine by the FDA can be disappointing for patients and doctors,” spokeswoman Charlotte Arnold told BioWorld Today, adding, “We are pleased that we are able to offer them the first medicine to treat hyperkalemia in more than 50 years.”
A day earlier, Relypsa disclosed that it submitted a supplemental NDA requesting a label update for Veltassa based on results of phase I drug-drug interaction (DDI) studies in healthy volunteers. The company expects a six-month review.
Veltassa’s approval came with a boxed warning about DDIs that took the Redwood City, Calif.-based company by surprise. Relypsa maintained that the FDA relied on in vitro studies that showed Veltassa binds not only to potassium but also to “about half the drugs that we studied,” Orwin said at the time, adding, “What we don’t know is whether that in vitro binding will translate into any human DDI effect.”
The restriction, together with a botched press release from the agency that mischaracterized the grounds for Veltassa’s approval, prompted Relypsa’s shares to fall by 27.2 percent following the drug’s approval.
The company is confident it now has the ammunition to strengthen Veltassa’s market position. The DDI studies showed no impact to absorption with any of the drugs tested when dosing with Veltassa was separated by three hours and no clinically meaningful reduction in absorption for the majority of drugs tested when co-administered with Veltassa, according to Arnold.
“We look forward to working with the FDA with the goal of updating Veltassa’s label to reflect these data,” she said.
With ZS-9 sidelined for now, a less restrictive label would help Veltassa achieve greater short-term traction that could give it greater staying power. The drug, launched in December 2015, accounted for less than $600,000 in net revenues during the first quarter. Cortellis forecasts 2021 sales of $207.2 million.
In a note earlier this month on the drug’s April sales, H.C. Wainwright analyst Ed Arce pointed out that 4.8 percent fewer patients started taking Veltassa with a free starter kit in April than in March. He added, however, that “we expected some lumpiness in the early launch trajectory,” cautioning investors not to read too much into a single month of data.
“We continue to view these early months as building a base for later growth, as the sales force continues to do the heavy lifting of medical education to overcome physician inertia and expand the long-standing therapeutic paradigm for hyperkalemia from episodic to chronic treatment,” he wrote.
In his Relypsa note, Schmidt predicted the CRL will provide the company a one- to two-year head start in the U.S. HK market, boding favorably “for the drug’s ability to preserve its longer-term market share.”
The outcome of Relypsa’s sNDA filing on the DDI data could be critical, he added, as Astrazeneca “has already proactively submitted DDI data to the FDA. Hence AZN is hopeful that ZS-9 might be approved with an initial label that addresses this potential concern.”
With Veltassa off to a slower start than predicted, Schmidt said, Relypsa must prove that it can run, and grow, the HK show in the face of a competitor setback.
“The primary focus of investors has turned from the relative (which drug is better and will take more share) to the absolute (how big is this market and how fast will it materialize),” he wrote. “[Veltassa] will have to show signs of improved uptake before investors buy into the view that the hyperkalemia marketplace could be worth [more than $1 billion].”