Cephalon: Commentary

From NI, January 2008>Cephalon's revenue picture continued its dynamic growth. Provigil is approaching the billion dollar sales mark. The buccal opioid analgesic Fentora, whose ease of use (not to mention dental superiority) makes it more attractive than Actiq, is attracting the hoped-for transition of users from Actiq. However, Cephalon plans to expand it to neuropathic pain, a context where highly abusable opioids are not, and will not ever be, a preferred option. As was noted earlier, Cephalon's marketing panache has not made much of a dent in the resistance to their marketing of Alkermes' overpriced and underpowered anti-addiction drug, Vivitrol. Until they bring it down from an end-user cost of more than $10,000 per year, payors (or patients) will remain loath to reimburse for such a marginal treatment. Towards year-end, they announced that their oncology drug Treanda outperformed the current standard of care. But the big story was the $425 million settlement regarding the marketing misconduct charges

7bru it comes to marketing practices. This is very much a reflection of CEO Frank Baldino's 'take no prisoners' attitude towards business, and--we suspect--life in general. Given that Cephalon has already been cited as playing fast and loose with off-label advocacy vis-a-vis Provigil, one might have thought that they might exercise a bit more caution and self-restraint. No such luck. During Baldino's presentation at JP Morgan, he began to discuss his positive expectations for Vivitrol, the anti-addiction treatment developed by Alkermes, now being marketed by Cephalon. Baldino, whose presentation had already involved a rather condescending animation (it turns out that "breakthrough pain" looks a lot like little volcanoes) and then put on what was essentially a videotaped infomercial. Dr. George Bright, of the "Adolescent Health Center", informed the rapt audience that Vivitrol is his first line of attack against alcohol abuse, with the video depicting a boy in his late teens receiving Vivitrol and a good-talking-to, at what may have indeed represented the aforementioned "Adolescent Health Center." The problem with this is that Vivitrol is only approved for adult populations, it was neither tested nor labeled for pediatric populations, which in our book, includes 'adolescents.' One might even wonder if Cephalon intended to subliminally convey the potential of off-label prescribing for adolescents. Given that the common conjecture is that Sparlon's unpleasant and admittedly unfair treatment by the FDA may have been a not-too-subtle form of payback for Cephalon's past indiscretions, this does not strike us as a savvy regulatory strategy.•

Readers with an interest in such matters might consider reading Walter Armstrong's profile of Cephalon CEO Frank Baldino PhD, just published in Pharmaceutical Executive, which we consider a well-written and balanced portrait of a rather complex individual. NI was interviewed for that piece, and while we have not yet heard from Cephalon directly, we understand from other sources that this has only added fuel to the fire of Cephalon's discontent with NI Research.

One note: Mr. Armstrong at one point refers to the interviewee laughing "fondly"--the correct word would be "ruefully."

http://www.pharmexec.com/pharmexec/content/printContentPopup.jsp?id=408472

From NI, January 2007

Actiq's replacement, Fentora, received approval just in time for Cephalon to launch a prescriber-switching campaign prior to generic 'Actiq's debut in 2007. One other disappointment is the Vivitrol for alcohol abuse depot medication, partnered with Alkermes. NI has commented in the past on the minimal clinical benefit provided by Vivitrol, and the substance abuse markets--and their pharmacy benefits managers--seem to have agreed. Vivitrol's first full quarter of sales totaled just $1.1 million. We expect payor resistance to continue: the drug is overpriced given its lackluster efficacy. Towards the end of the year, Cephalon signed a R&D partnership with Ambit involving kinase inhibitors. Cephalon has been pursuing this angle for ten plus years without any discernible payoff. With their resources, one would think that they could show more R&D creativity.

1H Comment/from the July 06 NI

The most important development for Cephalon during 1H:06 was that they were able to settle with Teva, Ranbaxy, Mylan, and Barr, buying themselves Provigil exclusivity until 2012. While they claimed that these agreements were not 'material', we suspect that the price went up with each one, and would not be cheap by our standards. But given the Provigil/Sparlon/Nuvigil group's billion dollar potential, it was undoubtedly worth it. The FDA threw a wrench into Cephalon's plans and valuation with its red flag on Sparlon, claiming that it could have been associated with a case of Stevens-Johnson syndrome. That now does not appear to have been the case, and we expect Sparlon to be approved for ADHD. Whether a black box warning would deter prescribers well-acquainted with Provigil''s strong sfety record is questionable; this is the downside of having pretended that Sparlon is a "new drug", now they'll have to remind everyone that it isn't. In January we said "If Barr chooses to settle during 2006, that would be a most bullish indicator for Cephalon". It is indeed. We are somewhat more cautious about the prospects for Vivitrol, Alkermes' naltrexone depot version Cephalon will sell. Premium pricing and very modest clinical impact may blunt the trajectory of its market debut. Cephalon has added 500 Takeda representatives to their Provigil detailing task force, though this may benefit Takeda (trying to sell Rozerem) more than it benefits Cephalon. Shortly before the end of June, Cephalon announced that Gabitril had failed in its Generalized Anxiety PhII, which was not overly surprising, we had long wondered whether a dose low enough to avoid sedation could be an effective anxiolytic. Turns out it was not. However, a good 'Approvable' letter, as opposed to a bad 'Approvable' letter, was received regarding Actiq's successor, buccal fentanyl tablets, known as Fentora. Good 'Approvable' means that they don't have to run any more trials, and replacing generic-bound Actiq's contribution to the bottom line is much more important than inventing something new for Gabitril.

Comment on the FDA AC Vote Against Sparlon: 3/24/06

When is a Black Box Warning not good enough?

A: When the disorder in question is a high-profile target for those who claim that psychotropic medications are overprescribed and that medications are being used as a quick fix by parents too self-absorbed to parent adequately--and when the FDA wants to up its safety 'street cred' without fear of a backlash. Of course, those who have dealt with ADHD children in schools, clinical practices, or in their homes tend to not doubt the reality of the disorder, but it's an easy target for skeptical observers of the pharma industry. Cephalon's Sparlon had been disingenuously (and perhaps to their own ultimate disservice) proclaimed as an "important new drug", instead of seeking supplemental approval on the basis of what it really is, a label extension for Provigil. Perhaps it would not have made any difference: the FDA was informed of a single Sparlon case of the rare dermatological disorder Stevens-Johnson-Syndrome (SJS) eighteen months ago, they reviewed all available adverse event reports for Provigil as well. Three cases out of approximately one million in the FDA database, three million people have taken Provigil in total. There is no hint of a SJS epidemic. One cannot be certain whether that one case out of 660 was the statistical fluke, or whether there is something else going on--though the SJS expert commented that it is unlikely to be dose-related. One can make a case for a black-box warning, although even that seems dubious. But to recommend 12-1 against approval (and ironically, the one vote for approval was from the only dermatologist on the AC, who one would think would be more attuned to the SJS risk issue); is to essentially tell parents that stimulants are safer--which is an absurdity. Now the FDA's Robert Temple wants Cephalon to test Sparlon for four to six weeks in 3000 individuals before going forward. We will see how long that takes.

But for now, the FDA can brag to its critics that it has made a stand against those greedy pharma companies, that it is in no one's pocket, and that safety comes second to nothing. That will offer little solace to the parents of children with ADHD whose kids cannot tolerate stimulants, and do not benefit from the ineffectual Strattera. Those children can continue to flounder in school and with life in general--there's no rush. The FDA has all the time in the world.