By Matthew Willett
Scios Inc.'s deal with Quintiles Transnational Corp. for Natrecor, now pending approval under an amended new drug application, could mark a leap in the evolution of commercialization agreements in the industry.
The arrangement calls for Quintiles, of Research Triangle Park, N.C., to foot a $35 million commercialization tab through its corporate ventures group, PharmaBio Development. Of that funding, $10 million will fill Scios' coffers within the first six months of Natrecor's launch.
Quintiles subsidiary Innovex Inc. will provide a 180-person sales force dedicated exclusively to Natrecor, for which Quintiles expects about a $100 million consideration through a net sales royalty stream over the three-and-a-half year agreement.
And unlike a traditional biotech commercialization deal that sees drug developers' revenues from alliance-commercialized products dry up into a 9 percent to 12 percent royalty stream after the milestones and license fees have come and gone, Scios CEO Richard Brewer told BioWorld Today the profits from Natrecor will continue to flow.
In fact, he said, the new deal turns that that single-digit or lower-teens royalty around.
"What's in it for PharmaBio to do is that they get paid based on a combination of things," Brewer said. "We've agreed to pay royalties beginning in 2003 and ending in 2007 that are in the low teens for the first three years and then the low single digits for the remainder. PharmaBio invests $30 million-plus they'll never get back if we don't do well. They want us to do well early, because that's when the royalty is higher. We wanted them to have, and Innovex is glad to have, skin in the game."
On its side, he said, Scios gets to keep about 50 percent more of the Natrecor profit than it would have in a typical pharma co-commercialization deal.
"When we looked at the estimates of profits before taxes over the next six years and compared the traditional pharma or biotech co-promotion deal to the Innovex deal, what we found is that the revenue, the profits to Scios for six years, in the traditional deal were $275 million for Natrecor," Brewer said. "Those profits are estimated at $450 million with the deal with Innovex, and the reason is that we keep the majority of the profits in the Innovex deal and we would've given up 50 percent of the profit in another deal."
Natrecor (nesiritide) is under FDA review for treatment of congestive heart failure. The recombinant form of B-type natriuretic peptide showed in Phase III trials that it improved both the hemodynamic measures associated with acute decompensated congestive heart failure and alleviated dyspnea, or difficulty breathing.
Scios, of Sunnyvale, Calif., had its original new drug application (NDA) returned in 1999 when the FDA denied Natrecor's approval, pointing to hypotension reports in some patients as the reason. (See BioWorld Today, April 29, 1999.)
That bust turned out to be the boon at the root of this week's commercialization deal, Brewer said.
Earlier this week Scios filed an amendment to the NDA for Natrecor, adding data from its Vasodilation in the Management of Acute Congestive (VMAC) heart failure study. The company said it expects approval during the third quarter.
"The results of the VMAC trial changed everything," Brewer said. "It's extremely unusual for a company to have before launch data indicating that you're better than the standard of care. It just doesn't happen. You just don't have those kinds of studies, but the FDA made us do it. Regardless of the origins of the study, it has tremendous advantage to us in the marketplace."
The commercialization deal harkens back to Innovex's $125 million 1999 deal with CV Therapeutics Inc., of Palo Alto, Calif., for ranolazine, CV's chronic stable angina treatment. Innovex also allies with The Medicines Co., of Cambridge, Mass., for Angiomax marketing and with InKine Pharmaceuticals Co., of Blue Bell, Pa., for Visicol.
Brewer said the tide is turning away from the old-type deals and toward better commercialization solutions for biotechs.
"I believe we're on the cutting edge," he said. "Commercial solution providers have changed radically over the last 10 years, from companies hiring big sales forces, or for big pharma to come in with their excellent track record, doing the job required. There's no reason to think this won't be the wave of the future. If we do as well as we think we'll do, then smaller biotechs will use us an example to say, 'We don't need big pharma.'"