Tuesday, September 27, 2011

The Business of Diabetes: Biodel Linjeta Update

It's been some time since I posted a "Business of Diabetes" update, so today's post is probably overdue. Today's subject is particularly timely since Dr. Errol De Souza, President and CEO of Biodel, Inc., presented this morning (see the presentation deck HERE) at 8:30 AM EST at the 6th Annual JMP Securities Healthcare Conference at the St. Regis Hotel in New York. My experience has proven that a fair number of presentations made at similar investor "events" like these can quite repetitive (for example, if a company presented a month earlier for another investment bank, whether its Morgan Stanley, Goldman Sachs, JPMorgan, Sanford Bernstein, Credit Suisse, Jeffries or any of the others), many presenters are already very well-rehearsed and prepared for questions. This means that often, they may simply re-present the same content, making the Q&A that follows their actual presentations the main point of differentiation (sometimes you can listen to these online, but not always). Still, I always try to review the content from these events when time permits because there may be occasional nuggets of interesting information that are shared. However, we can expect more detail from rivals including Halozyme Therapeutics made tomorrow at the same event.

Truth be told, I already reviewed this morning's JMP Securities Healthcare Conference presentation, and there really wasn't much in the way of new news that wasn't already in the public domain, but my readers may not be aware of where things stand, so if you're interested, you can view the webcast for about the next month by visiting Biodel's investor relations site HERE. I will address the most salient points that people with diabetes may want to know about in this post.

Taking a quick step back, my readers may recall my POST from early 2010 in which I addressed a number of startups eager to stake a claim in the multi-billion dollar insulin market (notably, rapid-acting "prandial" insulins is now approaching $5 billion per year, so there's VERY big money involved). A fair number of the startups I wrote about experienced delays (all for different reasons), one of which was Biodel, Inc.'s Linjeta™ [formerly known as VIAject] which is the subject of today's post and was the first to seek regulatory approval. The other was MannKind's Afrezza® which I will not really address in today's post. Both experienced some delays with the agency many (most?) of us love to hate (although a few of us dislike them for entirely different reasons!): the U.S. FatalFood and Drug Administration.

However, in both of the aforementioned cases, I think it's safe to say that the delays were pretty much the fault of the companies that were seeking product approvals (see HERE for my update on Linjeta). When former FDA Chief Andrew von Eschenbach ran the agency, I don't believe either would have been delayed, but his leadership (thankfully) is history now. Under Andrew von Eschenbach's leadership, the FDA's staff was instructed that the FDA should not be viewed as an agency to protect the public health per se, but an agency to serve the needs of the industries the agency regulated (especially since most of the funding for the FDA now comes from user fees paid for by the drug, biotech and medical device industries except in the case of generics, which are incredibly backlogged) and that the FDA should be working to address the needs of these "clients". While that was good for pharma, and user fees did fund a lot of FDA staffing, the biggest beneficiaries of those fees were pharmaceutical/biotech/med device companies, although few lawmakers seem to agree this means the FDA is on pharma's payroll even though they pretty much are. Fortunately, under the leadership of Margaret Hamburg, the agency is returning to its mission of actually trying to protect the public health. While many complain the FDA has moved too far on the side of caution, especially in comparison to other regulatory agencies around the world such as the European Medicines Agency, I'll reserve judgement on that when I have the benefit of hindsight! Let's just be glad we don't have evidence of recent approvals for truly dangerous drugs like Vioxx or Avandia (so far, anyway) that were approved while Dr. von Eshenbach was still on the FDA's payroll.

Still, more than a year has passed since I wrote my original post on startups in the insulin field, and I think its time for an update on at least one of them since details are finally in the public domain. So today, I'll cover the product that applied for FDA approval first: Biodel's rapid-acting Linjeta insulin formulation.

Where Things Stand Today

On Tuesday, August 16, 2011, the insulin startup Biodel, Inc. presented (see HERE for the presentation) at the Wedbush Securities' 2011 Life Sciences Conference in New York. Although I did not attend, the presentations themselves usually appear on each of the presenters' investor relations department (at least for those companies that are publicly-held) shortly after these events take place, so I try to read through these for clues on where things stand. Typically, more is revealed there than will EVER come from the FDA itself (another practice which I'd like to see change to look a bit more like Europe, but I digress ...).

My experience has proven that a fair number of presentations made at similar investor "events" like these can quite repetitive (for example, if a company presented a month earlier for another investment bank, whether its Morgan Stanley, Goldman Sachs, JPMorgan, Sanford Bernstein, Credit Suisse, Jeffries or any of the others), many presenters are already very well-rehearsed and prepared for questions. This means that often, they may simply re-present the same exact content, making the Q&A that follows their actual presentations the main point of differentiation (sometimes you can listen to these online, but not always). Still, I always try to review the content from these events when time permits because there may be occasional nuggets of interesting information that are shared. I actually found quite a bit of information about Biodel, Inc., so today, I'm sharing a few of those take-aways as an update.

For Biodel, since the FDA move to delay its decision on Linjeta™ earlier this year, the news has been quiet as the company addresses the FDA concerns and prepares for worldwide commercialization. I should note that Biodel's rapid-acting insulin formulation, unlike ALL other competitors on the market today, is NOT a genetically-modifed, man-invented insulin-like molecule that is commonly referred to as an insulin analogue, but regular biosynthetic human insulin which has been made faster than today's analogues thanks to some proprietary technologies (in theory, the same technology could also be applied to old-fashioned highly-purified insulin formulations sourced from abbatoir animals rather than using agars derived from abbatoir animals used in making biosynthetic human insulin and its analogues, thereby making them faster than today's analogues if the company ever chose to offer such a thing -- unlikely, but the point is that the technology makes even old-fashioned insulin varieties work a LOT faster).

Of course, Linjeta is reportedly only slightly faster (we're talking a few minutes faster here: Linjeta starts to work in about 8-18 minutes (8-13 minutes for the formulation used in the company's new drug application with the FDA) compared to about 25 minutes for most of today's rapid-acting analogues, and about 45 minutes to an hour for regular insulin. Whether that's enough to convince insurance companies to pay for it remains to be seen, but Linjeta differs because the way it accomplishes this is not be altering the insulin molecule itself via genetically modification, although as Close Concerns once said, "in this business, time is money". I have long suspected the company viewed Linjeta as an interim product that could be marketed very soon, but sees the real opportunity to get insurance coverage for their product by making today's analogues slightly faster using their technology, which is patent-protected making Biodel itself potential acquisition bait for a big pharma company like Lilly, Novo or Sanofi. At least one analyst has already gone on record as saying Sanofi is a likely buyer because even though its Apidra rapid-acting analogue still enjoys several more years of patent protection relative to Humalog and Novolog, what insurance company will pay a premium for it when generic versions of the other product are expected to become widely available? This means aquiring Biodel may protect its products (and give them some technology for Lantus as well ... see HERE. The other firm he discusses is Halozyme, but that company is slightly behind Biodel from a development standpoint. He has a valid point.

About Biodel and Linjeta™: How It Works Differently From Today's Analogues

Biodel makes regular insulin faster than today's analogues by removing zinc ions via EDTA, which destabilizes the hexamer of insulin; then by adding citric acid (you know, the stuff found in many powdered lemonade formulations which makes them taste "tart") which also happens to masks surface charges on insulin monomers, which in term prevents re-aggregation and facilitates more rapid absorption into the bloodstream (wow, that's a run-on sentence, but I make no apology for it!). EDTA stands for ethylenediaminetetraacetic acid (which is a real mouthful, hence the acronym is more widely used), and its a compound of amino carboxylic acids that's water-soluble. It is used in various drug and biotech medicine manufacturing to bind to metal ions in order to remove these metal ions from various drug formulations which contain them -- I guess one could liken this to a magnetic substance that removes the traces of zinc from the the insulin protein (note: its not really magnetic, but I thought the analogy made sense in this case).

Note that zinc has long been associated with insulin. In fact, before the days of geneticially-modified insulin analogue formulations such as Lantus and Levemir, zinc was widely used as an additive to delay regular insulin's action in Lente (meaning Lente and Ultralente) formulations, hence Lente is known generically as "insulin zinc suspsension", but even in non-Lente formulations (particularly in regular insulin, as well as in virtually all analogues), tiny zinc ions remain. These ions are one reason it takes regular insulin so long to be absorbed into the bloodstream.

Technology issues aside, the company (Biodel, Inc.) is now completing a small, additional study in order to resubmit Linjeta for FDA approval. I would describe as follows: to compensate for their botched human clinical trial in India which was supposed to save the company lots of money, but the actual cost savings were nothing more than a mirage, and they would probably would have been better off just doing the entire clinical trials in the U.S., Canada and Europe, but I digress. Of course, this company (as well as the established players) bitch and moan that using regular insulin means it's tough to recruit participants in their rapid-acting insulin trials and are trying to convince the FDA that future trials should be against rapid-acting insulin analogues like Humalog/Novolog/Apidra. I don't agree about that is appropriate, but they are lobbying hard to make that the case, and in Biodel's case, for the newer, fix-up version they're now trialling, they've already proved Linjeta is comparable to regular with the first trial, hence the fix-up trial is a quickie that can be done against Humalog instead of regular because they've already established it's comparable to regular, hence fix-up trial was able to recruit faster against Humalog. Slippery slope? You be the judge on that.

While that's gone on, the company also hired a new CEO named Errol De Souza who I noted above was giving this morning's JMP Securities Healthcare Conference presenation (Solomon "Sol" Steiner who was the CEO since the company's inception in 2003 was Chief Scientific Officer for a period, but he retied late last year and is still on their scientific advisory board ... FYI, Dr. Steiner previously worked for another startup company that was once known as MiniMed, Inc. if that tells you anything, and Dr. Steiner also remains on Biodel's Board of Directors). In addition to Biodel's lead product candidate Linjeta, they also have not one but TWO long-acting insulin formulations, one being an extended version of Lantus, and the other is perhaps more compelling (in my opinion) since it enables adjustment of just how long the basal insulin product will actually work, because not all patients need or want 24 hours of basal coverage, nor do they want a pump device attached to them at all times (or they simply cannot afford such a device). Although Novo Nordisk's Levemir is a competent 8-10 hour insulin formulation, most doctors view it as less appropriate for many patients with diabetes than Sanofi's blockbuster Lantus unless the patient needs less than the typical 18 hours of basal coverage offered by Lantus (few believe either lasts 24 hours as both are advertised to) even though the basal needs vary widely from patient-to-patient.

The primary patent for Lantus expired in 2010, although various other patents will remain in place until 2014 (which is right around the corner in pharma-speak), plus Biodel also has a "stablilized" glucagon analogue now in development (one which would not need to be reconstituted prior to use). While it might not be available soon enough to compete with Enject's GlucaPen [http://www.enject.com/] for hypoglycemic emergencies (that's not yet approved, either, but since it is a device for delivery of an already-approved drug, the FDA review and approval process is likely to be faster ... knock on wood!), and if it gains approval, it could be used for that as well as in a bi-hormonal pump which have been studied in a few clinical trials and have provided patients with superior glycemic management and added security).

So where do things stand with Linjeta Today?

1) Tweak the Formula of Linjeta to Ensure Injection Site Discomfort Matches Competitors

First, Biodel is making some slight changes to Linjeta which company management believes will help it's finished product sell better. To quote this morning's presentation: "It is prudent to incur the marginal cost and time delay to move forward with a new formulation(s) to optimize the product's label." Specifically, a fair number of patients in the clinical trials for Linjeta complained of an annoying "stinging" or "burning" sensation following an injection of Linjeta, and that incidence was higher than with existing insulin analogues. While the stinging was not sufficient to deter continued use of Linjeta in the trial, the company believes it is nevertheless prudent to incur the cost and time delay the ultimate introduction slightly in order to move forward with a slightly modified new formulation(s).

Specifically, the pH of Linjeta used in clinical trials was around 4; most other insulin analogues are closer to zero, so the new formulations will have a "neutral" pH, which the company has data showing will reduce injection site discomfort. What's behind the injection site discomfort? The company believes it is caused by the EDTA used to remove the zinc ions, so the company is now undergoing trials with either calcium disodium EDTA or disodium EDTA + calcium, which it believes reduces injection site discomfort, as both had significantly reduced injection site discomfort in other studies.

In other words, the company wants the launch version of Linjeta they plan to market to be fully comparable to the alternatives as far as injection site discomfort. These changes have delayed the finished product from going to market slightly, but are likely in the best interests of becoming a true competitor in the field. Also, the delay is marginal, because it can be class 2 resubmission, which the company expects will result in a 6-month review time, and is already being reviewed by the FDA now.

2) Trials To Position Linjeta Against Humalog and In Insulin Pumps

Beyond that, Biodel has also undergone some additional clinical trials against Humalog (insulin lispro rDNA origin) and also in insulin pumps, so the product will be ready to market in all scenarios current competiton can. In other words, if trials against Humalog work as anticipated, then Linjeta can advertise that it works better than a key analogue competitor, and the pump trials will enable Biodel salespeople to promote its use in pumps (rather than an off-label use as many analogues were promoted initially; in recent years the FDA has cracked down on off-label promotions for drugs). Neither is a big deal, since doctors can prescribe most drugs for uses that are not specifically approved, but having these studies will enable Biodel salespeople to promote this insulin in a manner that is consistent with this insulin's label. Personally, I don't see this one as really necessary because every endocrinologist I've ever seen prescribed insulin analogues "off-label" (meaning before they had approval for use in insulin pumps), and I would not expect anything different with Linjeta, but they're doing the trials anyway, which will enable the products to be marketed -- legally -- for use in insulin pumps.

Both of these items should position Linjeta to be promoted from almost the minute it is approved head-to-head with its key competitors. However, a word of caution for anyone who is thinking of investing in Biodel: note that while these moves are smart business moves, the party may not last long, because the new healthcare law mandates that the FDA outline a way for "follow-on" versions of biotech medicines including insulin analogues. As Medco's CFO (although an offer to acquire Medco was recently made by rival Express Scrips) believes we will see generic versions of Humalog, Novolog, and Lantus by 2015, see my post on that HERE for details), and it's been written into a law that's been on the books for over a year now and the FDA is due to release guidelines for follow-ons anytime according to the press. This means we may FINALLY see follow-on versions of various insulin formulations in the next few years, which I see as a big threat to the oligopoly Lilly-Novo-Sanofi have enjoyed for the last 30 years. Although I still have concerns about follow-ons (or "biosimilars"), my belief is that the world will ultimately be a better place when the choices for patients are expanded ... provided the choices are made by patients and their doctors, not penny-pinching insurance companies.

Challenges Ahead

Biodel is on record (in one of the company's SEC filings, though I don't recall which one) in noting to investors that "since Biodel started the Linjeta program in 2005, Sanofi, Novo Nordisk and Halozyme have all announced programs or active in-licensing efforts in the ultra-rapid-acting insulin space" (although truth be told, Halozyme has been planning to enter this space via partnerships for quite a while). Nevertheless, it may be a challenge to gain traction in this market with insurance companies growing increasingly penny-pinching, but company management appears cognizant of what they're up against. Some analysts believe that many biotech startups in this space would likely be acquisition bait for companies like Sanofi Aventis, which faces patient expirations on its key insulin products Lantus and Apidra but lacks much to protect this franchise thanks to their own lack of investment in it (I already noted this, but again, you may refer to that article HERE which positions these both Biodel and Halozyme favorably to be acquired by the company. That remains to be seen, but these companies are eager to have a slice of the growing worldwide insulin market.

However, in today's presentation, just as I suspected, the very same technology used in Linjeta is also planned to expedite today's rapid-acting analogues to make them slightly faster -- most likely when the patents expire beginning next year. However, we shouldn't expect this to deliver significant speed increases (like those we see with regular) given that these molecules are already genetically-modified to prevent the insulin molecules from forming hexamers which delay absorption because the hexamer must equilibrate back into monomer form in order to bind to the insulin receptors. Most likely, this will enable the company to gain insurance coverage which could be a more difficult sell for today's version of Linjeta, although there is no doubt the company will work to make that happen, too. After all, it will be a few more years before they can market more rapid-acting analogues, and the company will need to start generating revenues if investors have anything to say about it.

Bottom Line: (sorry, this one isn't a link) The steps needed to gain regulatory approval are already well underway, although the commercial launch of Linjeta may be delayed slightly to make the finished product more marketable. Biodel expects be able to sell a slightly less "painful" version of Linjeta upon approval, and also expects to have approval to market this insulin for use in insulin pumps from the get-go. New management is very experienced in working with the FDA and has revealed that the FDA does not expect further delays once the fix-up trial results are ready. Biodel management also seems quite confident in their strategy, and has secured additional funding to keep things moving. What's more, because the company has a considerable scientific staff in Germany, we're likely to see it launch pretty much concurrently in both the U.S. and Europe barring any unforseen (and nondisclosed) issues. If I had to guess, I would say we could see an FDA New Drug Application (NDA) decision by early 2012, and we can anticipate they will be ready to start marketing Linjeta very shortly thereafter (remember, the company outsources the actual manufacture of rDNA insulin to Merck's Organon unit, and a few other subcontractors including Albany Molecular Research/Hyaluron who manufactures the vials they will use for Linjeta and and Wockhardt Ltd. who makes the insulin pen they plan to sell [after a few unnamed modifications Biodel made to the product design which I am guessing is to enable 1/2 unit dosages) and these suppliers are already being reviewed for approval by the FDA as I write this.


Jenny said...

Thanks for a very insightful and instructive post!

Given how price-sensitive insurers have become (mine won't pay for Apidra at all nor for pens unless you are blind) is it possible that the fast-acting R insulin could be sold at a generic price from the get-go, on the theory that it would allow it to replace the more expensive analogs and hence sell to many times more customers?

Scott S said...

Jenny, that's a great question. Right now, its hard to say, but I would guess that one way to get Linjeta on the formularies on many healthcare plans is to hit the established players where it hurts most: price. The big manufacturers (Lilly, Novo, Sanofi) have been aggressively raising prices on insulin (analogues in particular) in recent years, which has created an opportunity for a startup to market products at better costs to insurance companies. This explains why Lilly was able to snag the Walmart Relion Insulin branding business from Novo last year; Novo got too aggressive on price increases, and Lilly has been losing market share in insulin since they don't yet offer a truly long-acting insulin formulation. Novo recently lost the United Healthcare account even though Lilly cannot offer them a basal because they offered United a better deal. Money talks and when the competition does not act in collusion, the winners are those who pay for insulin. Having rambled on, I will keep an eye out for any indication Biodel gives on pricing strategy; its a compelling question.

Anonymous said...

Hi, I think there are a couple of areas to clear up:
1) the "pump" trial being canceled is not related only to the pump. they did not see adequate results for the formulation, administered by pump or by subcutaneous injection.

2) due to #1, all formulations that have been in any phase 1 study are now thrown out. they are trying to determine which one they may want to do a new phase 1 with at some point.

basically, things are starting from scratch. major disappointment.

Anonymous said...

thanks for the interesting post.
Has Biodel actually submitted a new application for approval for Linjeta? A corresponding press release I can not find on the homepage of Biodel.

Thank you!

hospice care said...

Treatment doesn't have to be complex. It also needs to be widely available across the community.