BB&T Executive Editor
Drug/device combinations increasingly have been promoted as offering new med-tech opportunities and expanding markets for both sectors. But that combination is susceptible to the same failures as any product, and the complexities of device/drug combinations may increase the potential risks.
That could be one of the take-aways from last month's decision by Pfizer (New York) to abandon Exubera, the first FDA-approved inhaled insulin. The decision was unfortunate not only for Pfizer but also for Nektar Therapeutics (San Carlos, California), which had a critical role in developing the specific drug formulation and the inhaler device to deliver it, and to Nektar's parent, West Pharmaceutical Services (Lionville, Pennsylvania).
The expectations for Exubera had been huge, given an inhaled insulin's potential for freeing those with diabetes from the daily use of needles to inject insulin.
When Exubera received FDA approval in early 2006, it was hailed as a product with big-blockbuster potential. Analysts had said it might grow to be a $10-billion-a-year product, and with Nektar receiving 10% to 20% of this for sales and royalties, it was potentially a blockbuster for both companies.
But Exubera had gathered in less than 1% of the overall insulin market.
And the inhaler that Nektar had developed for the product, a tube-like device slimmer but longer than a tennis ball can — and reminding some of looking like a marijuana bong — was counted among the several reasons why uptake of Exubera was so miniscule.
With Pfizer's decision to drop all further efforts to market the insulin product, it will take a $2.8 billion charge, including a write-off of $661 million in Exubera inventory and return marketing rights to the product to Nektar.
The company and sector observers provided a variety of reasons for the product's early failure and Pfizer's decision to abandon the product:
- inability of the system to provide dosage consistency;
- reported slight decrease in breathing ability by those using the drug/device system;
- standard needle insulin delivery systems becoming easier and less painful to use and so stronger competitors in this market;
- lack of insurer reimbursement;
- a price point about double that for injected insulin ($5 vs. $2-$3);
- and the user-unfriendliness of the inhaler system, requiring manipulation of a blister package and handling of the large inhaler.
Howard Robin, president/CEO of Nektar, in a statement responding to the moves, said that the company "has been very disappointed in Pfizer's performance in marketing Exubera." He said that Pfizer had "publicly acknowledged its organizational difficulties and resulting poor performance" in product launch, which he suggested had resulted in abandoning the product.
He said that the company is evaluating various options in the wake of Pfizer's action and that it continues "to believe Exubera is an important advancement for diabetic patients."
The company made no reference to any difficulties with or reactions to use of the inhaler system.
Nektar is one of two tech groups of West Pharmaceutical, which also issued a statement.
Donald Morel Jr, PhD, West's CEO and chairman, said he was "surprised and disappointed" by Pfizer's decision and that it too was evaluating its options in the aftermath of the action. "The actual effects on our business will depend on how Nektar decides to proceed in the wake of this change," he said. "We will continue to work with and support Nektar as they evaluate their options."
While Nektar's statement did not report the amount of its investment in the product, West, in its statement, said that investment was about "$15 million of current assets and production facilities, which it believes are fully recoverable, and approximately $13 million of intangible assets." West said that any potential for impairment will be evaluated as information becomes available concerning Nektar's plans for Exubera.
Nektar noted that it provides a variety of revenue sources and a pipeline of other therapeutic products to defray the impact of Pfizer's move.
The abandonment of Exubera underlines ongoing products by Pfizer, which has been considered one of the pharma giants.
The company has cut its workforce by 11,000 over the past year. During its analyst call to report the Exubera move, it said that pharmaceutical sales had fallen 4% to $11 billion for the quarter and that sales of Lipitor, a major seller used to treat high cholesterol, fell 13% as the result of patient shifts to a generic competitor.----
Ethicon enters gastric banding sector with Realize approval
With U.S. commercialization of a new adjustable gastric band — an implantable device intended to treat morbid obesity — a second company has entered the country's gastric banding market. Ethicon Endo-Surgery (Cincinnati) last month reported FDA approval for its Realize Adjustable Gastric Band, indicated for those with a Body Mass Index (BMI) of at least 40 kg/m2, or a BMI of at least 35 kg/m2 with one or more co-morbid conditions. This represents an application for those adults who are morbidly obese and who have failed more conservative weight-reduction alternatives, such as supervised diet, exercise and behavior modification programs, the company said.
Ethicon, a business of Johnson & Johnson (J&J; New Brunswick, New Jersey), joins Allergan (Irvine, California) in an effort to entice morbidly obese patients to use gastric banding, a less-invasive alternative to bariatric surgery. The FDA cleared Allergan's Lap-Band in 2001.
In the Realize Band procedure, a soft, adjustable silicone band is wrapped around the stomach to create two chambers — a small upper stomach with a narrow opening to the lower stomach. After the procedure, the upper stomach is able to hold only about four ounces of food, which limits food intake, makes patients feel full faster and longer, and slows digestion.
Once the band is in place, surgeons attach the Realize Injection Port to the abdominal wall underneath the skin using the Realize Injection Port Applier, which can be done in less than a minute, according to the company. The Realize Injection Port allows doctors to inject or remove saline to tighten or loosen the band. The tighter the band, the more quickly the upper stomach fills up and the less food a person can eat. Adjustments are made periodically based on the patient's individual needs, the company said.
In effect, the Realize "works like the Lap Band," Ed Phillips, MD, principal investigator in the multi-center U.S. trial with the Realize Band, told Biomedical Business & Technology.
Phillips, director of the Center for Minimally Invasive and Bariatric Surgery at Cedars-Sinai Medical Center (Los Angeles), said that comparing the two gastric bands is a bit like comparing a Ford to a Chevy, with slight differences in the way the two devices are constructed. With both bands now available, he predicted that there will probably be some head-to-head trials to compare the two.
Larry Biegelsen, med-tech analyst for Wachovia Capital Markets, in a research note said that Wachovia expects the global banding market to reach $1 billion in 2011, up from $320 million this year. Biegelsen said that J&J is expected to gain 50% of the market share by 2011. Factors that should help the U.S. market growth stay robust, according to Biegelsen's note, include the "vastly underpenetrated" U.S. population of bariatric surgery candidates. According to Biegelsen, less than 1% of the 15 million Americans who would qualify for bariatric surgery have it done.
The note said that increases in penetration into the obese population sector should be driven by increased awareness of surgical options for patients through Allergan's and J&J's marketing efforts; broader insurance coverage; the potential for expanded indications; and recent positive outcomes data.
In the Realize Band trial, the 228 patients who completed the three-year trial lost an average of 42.8% of excess body weight, 35% lost at least 50% of excess body weight and 10.5% lost 75% or more of excess body weight, Ethicon said.
The most commonly reported adverse events after surgery during the trial were nausea, vomiting, constipation and gastroesophageal reflux, known as GERD. Nine patients, or 3.3%, experienced a serious adverse event related to Realize Band use that was considered "unanticipated."
Phillips said, "This procedure, combined with the proper support system and a commitment to dietary and lifestyle changes after surgery helped these patients achieve long-term weight loss and improvement in many obesity-related conditions."
Marketed as the Swedish Adjustable Gastric Band outside the U.S., the Realize has been available overseas since 1996 and has been used by more than 100,000 patients worldwide to help manage their weight, Ethicon said.
But a changing trend in bariatric surgery in Europe could spell trouble for the U.S. gastric banding market, Biegelsen noted.
"Our contacts indicate that gastric banding is falling out of favor in key markets, including Germany and Switzerland, due to long-term complications," Biegelsen said. "The Lap-Band has been available in [Europe] about 10 years longer than in the U.S., and we understand that complications that emerge at four to five years post-op have discouraged some [European] surgeons from continued use. Surgeons are moving to more invasive procedures including gastric bypass, gastric sleeving, and duodenal switch.
Biegelsen said that gastric sleeving might emerge as a threat to the banding market in about three years when it receives insurance coverage. Gastric sleeving is more invasive than banding, but it has shown improved weight losses of 40% to 60% at one to two years, Biegelsen said. Gastric sleeving also has lower comparable side effects to banding, he noted.----
Medtronic ICD lead failures attracting the inevitable ... lawsuits
Over the past two years, failures of implantable cardiovascular devices have had two inevitable results: declining confidence in these devices — and lawsuits. Just days after Medtronic (Minneapolis) said it would stop selling its Sprint Fidelis implantable cardioverter defibrillation (ICD) leads — wires that attach the devices to the heart — the lawsuits parade began. As a result of the cracks in the leads, patients implanted with the device either received jolting shocks when it falsely detected that the user needed a shock, or the device failed to provide the defibrillation that was needed.
Leonard Stavish and Kelly Liusi allege in a complaint that the lead wire portion of the defibrillator was defective, because of cracks that develop in the wire. A lawsuit is also being filed on behalf of three patients who reside in Puerto Rico.
The Sprint Fidelis wires are supposed to deliver electrical jolts from stopwatch-sized defibrillators implanted in the chest to regulate faltering heartbeats. The devices are used in people at risk of cardiac arrest, the biggest killer in the U.S. Plaintiffs are suing for their own damages and as representatives of a class of all users of the device. Suit was filed in the federal court in Minnesota, site of a previous mega suit against Medtronic for an earlier implantable cardiac defibrillator recall.
Patients claim they received as many as 47 dangerous jolts even though their heart was not calling for help.
The Minneapolis lawsuit seeks a court order requiring the company to pay for diagnostic and corrective treatment and monitoring for as many as 100,000 patients who have the devices. The suits allege that Medtronic was aware of the fault in the lead of the Sprint Fidelis, which came on the market in 2004, but did not issue warnings, and that the lead was defectively designed. It is also alleged that the device violated consumer protection laws in the states where the plaintiffs reside.
The FDA said it first notified physicians in March about the fracture rate and the proper method for implantation. Both Medtronic and the agency are recommending against surgical removal of the leads, saying that the risk of replacing the device exceeds the risk of a lead fracture.
The FDA approved the Fidelis defibrillation leads in September 2004.
Many are saying this will be of tremendous impact to not only Medtronic but to all other companies that develop ICD leads.
"I believe that this new Medtronic litigation will follow the pattern of the previous litigation. It is unfortunate that Medtronic did not learn a lesson from it and stop sales much earlier than it did. The medical community published reports about this defect and Medtronic refused to act on it," said Hunter Shkolnik, representing several plaintiffs in the case.----
Boston Sci in 13% cuts, in continuing effort to restructure
In still another move designed to deal with big debt and stagnating device sales, Boston Scientific (Natick, Massachusetts) said it will eliminate about 2,300 positions worldwide, or about 13% of an 18,000-person, non-manufacturing workforce baseline as of June 30. The company said it believes the move will eliminate about 10% of its total expenses.
The reductions will be initiated immediately and are expected to be completed worldwide by the end of 2008, the company said. Lay-offs outside the U.S., it said, will be initiated following completion of information sharing and consultations with required bodies.
In addition, the company said it expects another 2,000 employees to leave the company in connection with its previously reported divestitures, including plans reported in August and July to sell off its cardiac surgery and vascular surgery businesses, its fluid management business and the auditory assets of Advanced Bionics (Valencia, California).
The company said it expects the reductions in staff to result in total pre-tax charges of $450 million to $475 million, or 20 cents to 22 cents per diluted share.
These mostly cash charges will be recorded primarily as restructuring expenses, with a portion recorded through other lines of the income statement. From $275 million to $300 million will be recorded in 4Q07, the remainder expected to be recorded throughout 2008 and 2009.
Coupled with the head count reductions are plans to restructure several businesses and product franchises, the company said, in order "to leverage resources, strengthen competitive positions, and create a more simplified and efficient business model."
As part of the plan, the peripheral interventions and interventional cardiology businesses will be combined under a single management structure to create a more integrated business focused on interventional specialists, while enhancing technology and management efficiencies.
The company said the electrophysiology business will be integrated with the cardiac rhythm management business to better serve the needs of electrophysiologists by creating a more efficient organization. In another move, the oncology business and its four franchises will be restructured.
Three will be integrated into other businesses within Boston Scientific, and the oncology venous access franchise will be combined with the fluid management business, which the company expects to sell.
And finally, the company's international group will be consolidated from three regions to two.
Boston Scientific also earlier in the month liquidated its 13.3% stake in Cyberonics (Houston) for $48.6 million. The company sold 3.57 million Cyberonics shares for $13.60 each, according to a filing with the SEC.