To save cash, NitroMed Inc. is halting sales and promotional activities for its heart failure drug BiDil (isosorbide dinitrate and hydralazine hydrochloride), the first drug approved in the U.S. for a specific racial population, African-Americans.
However, CEO Kenneth M. Bate assured patients and health care providers that while marketing activities will cease for the drug, BiDil will remain on the market.
"We plan to keep BiDil available through all ordinary channels like many other drugs that are not actively promoted," Bate said Tuesday night during a conference call. "We will seek to assure that patients who are presently on BiDil continue to have access to the drug and will seek to continue to have the first status on health plans and hospital formularies."
While the firm "worked intensely" in 2007 on redirecting it sales and marketing efforts for BiDil, which resulted in an increase of new prescriptions by about 9 percent from the third quarter to the fourth, "the capital and the markets are not currently available to us on favorable terms" to sustain BiDil's sales force and marketing activities, Bate said.
The company also is eliminating 70 of its 90 jobs, he noted.
Lexington, Mass-based NitroMed had doubled its sales force last year to pump up profits for the drug, which had been sharply slower than predicted. (See BioWorld Today, May 3, 2006, and April 3, 2006.)
"We hired experienced, successful sales representatives," Bate said. "Our early sales and prescription performance during the fourth quarter of 2007 was very encouraging, and the result of the fourth quarter performance is that we are quite comfortable today in stating that BiDil is promotionally sensitive."
But, he said, the firm was "forced to face economic reality."
"Ultimately, despite the best efforts of the entire organization, the results of our efforts have not been sufficient as to be sustainable," Bate lamented.
NitroMed will record restructuring charges of about $2.5 million to $3 million in the first quarter of 2008, he said. As of Sept. 30, the company reported a cash position of $38.2 million.
The firm has retained the investment banking firm Cowen and Co. LLC, of New York, "to advise us on strategic options to maximize shareholder value," Bate said. "We welcome their counsel and analysis. Assuredly, nothing is off the table at this time, and all strategic options are possible."
Analyst Robert Uhl, of Arlington, Va.-based Friedman, Billings, Ramsey and Co., predicted that NitroMed's hiring of Cowen could lead to the sale of the drug manufacturer. He calculated that a takeover valuation for NitroMed of $1.78 to $2.77 per share, or $82 million to $127 million.
Despite BiDil's dreary sales, NitroMed is moving forward with its program to develop and commercialize its once-daily, extended-release formulation of the drug, Bate told investors and analysts.
"To date, the program has gone well, and we have not experienced any surprising obstacles," he said. "We are continuing our development of BiDil XR because it is our belief, and we have recent physician research to support this belief, that a once-daily formulation of BiDil will provide a level of convenience and compliance necessary to enhance the brand over the long term."
The FDA agreed at a Dec. 10 meeting that the firm's proposed clinical development program was acceptable, and that if successful, the study results would be adequate for approval of the commercialization of BiDil XR, Bate maintained.
"We believe that we can finalize the formulation this year with the goal of initiating pivotal bioequivalence trials in 2009," he said. The company anticipates filing an approval application for BiDil XR in 2010, Bate added.
But analyst Liana Moussatos of San Francisco-based Pacific Growth Equities LLC said "time-to-potential approval" for BiDil XR is "too long to benefit NitroMed."
Analyst Jennifer Chao of New York-based Deutsche Bank North America said the outlook for BiDil "remains extremely uncertain, at least in the near-to-medium term."
The pessimistic outlook for BiDil, NitroMed's only marketed product and revenue source, puts shares of the firm "at significant risk," Chao added.
However, she noted the upside risks for NitroMed include the "better than expected BiDil sales and positive clinical catalysts and news flow."
Shares of NitroMed (NASDAQ:NTMD) rose 7 cents, to close at 97 cents.