Little more than a year ago, Transkaryotic Therapies Inc. was in the unenviable position of having to cut staff while its stock dipped following its failure to win FDA approval of Replagal, a treatment for Fabry's disease.
Around the same time, Michael Astrue, once on President Bush's short list of candidates to run the FDA, became president and CEO of the Cambridge, Mass-based firm. Back then, TKT's stock was trading at $5.55. (See BioWorld Today, March 20, 2003.)
Monday the stock (NASDAQ:TKTX) closed at $16.90, down 24 cents.
The shares inched up over the last year for several reasons, but among the most important has been the company's paradigm shift.
"What we've done is really try to focus the company," Astrue told BioWorld Today. "We had too many programs, so we stopped work on a lot of things - for instance our gene therapy program. We focused on what we've done best, in what I think produces the most value to shareholders in the short run, which is protein replacement for rare genetic diseases."
Indeed, with about 350 employees, TKT expects to have three products on the market in 2006, and Astrue believes the firm will reach profitability late that year.
Aside from the enzyme replacement therapy Replagal (approved in markets outside the U.S.), TKT believes it will be selling Dynepo for the treatment of anemia associated with kidney disease and have I2S, also an enzyme replacement therapy, on the market for a rare genetic disorder called Hunter syndrome.
TKT even is winning kudos from Wall Street, said Eric Schmidt, analyst with SG Cowen Securities Corp. in New York, who agreed that the firm has been successful in turning things around. "I think their outlook - based mostly on continuing to grow Replagal [agalsidase alfa] sales outside the U.S. as well as the Hunter trial - is quite promising," he told BioWorld Today, adding that TKT shares are ripe for more growth.
Replagal, launched in Europe in 2001, generated $35 million in 2002 and $57 million in 2003. Astrue expects sales to range between $67 million and $77 million in 2004. (Replagal also is approved in Latin America and other countries, including Canada and Australia, areas in which it has yet to be launched.)
Meanwhile, TKT and Cambridge neighbor Genzyme Corp. recently completed enrollment in a 12-month, 96-patient pivotal trial of I2S (iduronate-2-sulfatase). Astrue believes I2S could be a $300 million drug.
Dynepo Poised To Enter Market In Europe
But TKT's stock got a major boost recently when the firm's partner, Aventis Pharmaceuticals Inc., an arm of Aventis SA, of Strasbourg, France, returned all rights associated with Dynepo (epoetin delta) in Europe and all other territories outside the U.S. Dynepo is a fully human erythropoietin product developed using TKT's gene-activation technology.
Although Aventis retained U.S. rights, TKT's shares rose sharply, up 51 percent, or $6.10, on the news, closing at $18.10 on March 29.
Dynepo was cleared for marketing in the EU in March 2002 but wasn't launched because of disinterest on Aventis' part, Schmidt said in a research note.
Part of the problem is an ongoing patent-infringement lawsuit pitting TKT and Aventis against Thousand Oaks, Calif.-based Amgen Inc. over epoetin products. In the U.S., the matter is with Amgen, and in Europe, the battle is with Kirin-Amgen Inc., the Japanese affiliate of Amgen.
The situation has nearly resolved itself in Europe, though, since patents related to Amgen's product expire in December, paving the way for TKT and generics to hit the launch pad. Amgen's U.S. patents are good until 2016.
Astrue expects to launch Dynepo in Europe in 18 to 24 months. TKT is in the process of establishing contract manufacturing outside the U.S. in order to bring the drug to market in a manner consistent with applicable court orders and regulatory requirements, the company said. (A U.S. court order prevents Aventis from exporting product made in the U.S. for sale in Europe.)
"We have to satisfy the regulators that the product made at the new site is equivalent to the product made at the old [New Hampshire facility]," Astrue said. "That is a fairly standard process when companies upgrade or expand manufacturing."
The European application was supported by studies involving 1,400 dialysis and pre-dialysis patients in which it was determined that Dynepo was comparable to epoetin alfa and was effective in raising hemoglobin and hematocrit levels. In patients treated with Dynepo, there have been no reported cases of pure red cell aplasia, a condition in which the bone marrow fails to produce vital red blood cells and a safety concern with other marketed erythropoietin products derived from Chinese hamster ovary cells, TKT said.
Aventis has completed enrollment for the Phase III work using Dynepo in oncology, possibly producing adequate data to expand the label in Europe.
In a research note released by Leerink Swann & Co., Bill Tanner, an analyst in New York, estimated a third quarter 2006 launch of Dynepo with 2006-2007 revenues of $23 million and $77 million, respectively.
Schmidt told BioWorld Today Dynepo's European success likely will depend on the number of generic or follow-on products that join it in the market.
"If two or three or four [generics] come to market at the same time as Dynepo, that would make for a substantially different dynamic," Schmidt said. "Competition drives down prices, so the more drugs marketed in the same time frame, the worse it is for TKT."
The U.S. path, however, is even more uncertain.
So why would Aventis want out of the European deal? According to David Owens, head of global product communications for Aventis in Bridgewater, N.J., the decision was part of the firm's effort to reprioritize its investments. He described final terms of the renegotiated deal as a win for both parties.
"The amendment [to the contract] gives our willing and able partner the chance to commercialize throughout the rest of the world while we still can maintain rights in the U.S., which is a really key market," Owens said.
Indeed, Schmidt believes the U.S. market could generate 60 percent or more of overall Dynepo sales. The fact that Aventis kept its share of the U.S. rights indicates that the firm believes Dynepo will reach commercialization here.
In November 2000, the FDA refused to file the Dynepo application based on what Astrue called "procedural grounds" related to manufacturing.
Astrue said TKT is considering its partnering options in Europe, adding that the firm already employs a successful Replagal marketing and sales force in that part of the world.
Under the renegotiated deal with Aventis, TKT will pay a single-digit royalty that starts in the low- to medium-range, but would increase to medium-single digits if Dynepo sales increase above the biogeneric level, Astrue said. Aventis also forgave a $15 million to $20 million loan related to litigation expenses. Henceforth, TKT is responsible for all EU litigation expenses and half of future U.S. litigation expenses. Aventis also will delay an $8 million U.S. milestone from the date of FDA approval to the date of first commercial sale. Furthermore, the agreement gives Aventis an option on certain TKT gene therapy technology for one year.