SangStat's Cyclosporine Pushes Company Toward ProfitabilityBy Jim Shrine
Special To BioWorld Today
SangStat Medical Corp.'s first product approval Tuesday of SangCya, a cyclosporine formulation, was an important one, and marketing clearance by the FDA is expected to lead the nearly 10-year-old company to profitability.
"This is clearly the most significant event in the company's history," Donald Ellis, senior research analyst at BancBoston Robertson Stephens, in San Francisco, told BioWorld Today. "This is what we've been looking for, although it was delayed two quarters from my original approval and launch projections. They got the label they wanted and now will go out and fight in the marketplace."
SangCya has been judged bioequivalent to Novartis AG's Neoral, used to prevent rejection in solid organ transplants. The U.S. cyclosporine market is about $500 million to $600 million, and worldwide sales totaled $1.35 billion in 1997. SangStat's drug will be the first to compete with Novartis' cyclosporine franchise, and the company's stock (NASDAQ:SANG) gained 32 percent in two days - $4.88 Tuesday and another $2 Wednesday, closing at $28.562.
SangStat, of Menlo Park, Calif., said it will launch SangCya within a month and price it 20 percent less than Neoral, or about $4,800 per year per patient instead of $6,000. There are about 140,000 transplant recipients in the U.S. and 250,000 worldwide who must use immunosuppresive therapy daily to prevent rejection.
Basel, Switzerland-based Sandoz Ltd. (now Novartis AG, also of Basel) introduced the cyclosporine product Sandimmune in 1983, and Neoral in 1995. About 70 percent of patients now are using Neoral, but only about 5 percent of those use the liquid formulation of Neoral. SangCya is a liquid formulation.
Revenues Projected To Break $100M In 1999
Analysts' time line for SangStat profitability is more aggressive than the company's one-year projection. Approval is expected shortly of Thymoglobulin, a T-cell-specific antibody used to reverse acute rejection episodes. It already is approved in Europe and annual sales of $25 million are expected, said Philippe Pouletty, SangStat's chairman and CEO. Thymoglobulin, he said, will be ready for launch one month after U.S. approval.
Ellis is projecting SangStat's 1999 revenues from all products at $111.4 million. Alex Zisson, an analyst with Hambrecht & Quist, in New York, is expecting SangStat to turn profitable in the second quarter of 1999, depending on the timing of Thymoglobulin approval. And Viren Mehta, a managing member at New York-based Mehta Partners LLC, anticipates that SangStat will capture about 15 percent of the $1.3 billion cyclosporine market.
Pouletty told BioWorld Today his company doesn't want to show only equivalence between SangCya and Neoral. Instead, he wants to show SangStat's product is superior. To that end, SangStat plans a study next year comparing SangCya and the company's approved dispensing device, CycloTech, to Neoral capsules. The hand-held device is designed to aid compliance by managing and tracking dosing information.
Trial endpoints in the study will include graft rejection, graft survival and patient survival, Pouletty said, with initial results expected by the end of 1999.
"One of the hottest topics in transplantation is non-compliance," Pouletty said. Between 15 and 25 percent of patients don't take medications as prescribed, and 90 percent of those patients lose their grafts.
Novartis Patent Challenge Possible, Say Analysts
There is some speculation Novartis will challenge SangStat's patent position, but analysts said success is unlikely, partly because SangStat patents covering SangCya already have issued.
"We're very optimistic about the market acceptance of SangCya," Pouletty said, citing cost, trial results, the dispensing device and the company's strong presence in the transplant community through trials, peer-reviewed articles and its mail-order pharmacy program targeting transplant patients.
Mehta said the key issue will be "the rate of uptake for SangCya. Immune suppression therapy is critical to transplant patients. Once they are stable on their current regimen, the question is: How reluctant will they be to switch over?"
In any case, getting its first drug on the market "builds momentum [for the company], both financially and morale," Mehta said.
Pouletty said persuading patients to switch drugs will not be a major issue. Novartis proved as much by converting most patients from Sandimmune to Neoral, which is 16 percent cheaper. He attributed the small percentage of Neoral patients using the liquid formulation to the fact that it is 8 percent more expensive than the capsules.
Cost and compliance are the key issues for transplant patients, Pouletty added, and these are the areas in which SangStat believes it holds the advantage. n