I basically agree but there could be news that might not rise to the level of a PR such as that the FDA will reinspect on date x or that the compliance division has decided not to reinspect but will review the file by approximately date y. Best case is there is good news but POZN is waiting for written confirmation from FDA which takes time. Worst case is Compliance Division didn't attend the meeting and there is no news at all. (Even worse case would be that it re-inspected or reviewed the file and determined the facility is still non-compliant but then they'd issue a PR.)
So there are there are things they could say in the Q4 CC that they wouldn't put in a PR.
In the last CC Plachetka said POZN was unlikely to issue a PR after the Type A meeting but instead would provide an update at the Q4 cc in early February. But HZNP announced yesterday that it will report Q4 earnings on February 27. POZN likes to wait until after HZNP reports so that it can include Vimovo US revenues, which account for most of POZN's income, when it reports. It seems unlikely that POZN would wait until late February though so the timeline is looking a little murky at the moment.
As part of the deal last summer transferring US distribution rights to Treximet from Glaxo to PTX, POZN acquired the rights to use the FDA "dossier" from Glaxo. POZN said then and since that that would help greatly in licensing the ex-US rights to Treximet, and that it's been working on a deal to do that. Today's news might be a sign that the deal is closer to completion. The 8-K says Cimag's distribution rights in the named countries (which weren't bringing in much money) will end but POZN can request that the parties negotiate the terms of a deal under which Cimag would continue to supply the product. That suggests that POZN anticipates a continued need for supply pursuant to whatever new deal it negotiates, which could be with Cimag or another company and could involve the named countries and possibly others (potentially could be a global ex-US agreement). So I think it's mildly positive news.
Saying he should have gone after a new supplier 6 months ago is hindsight. He said at the time they'd consider it but the problem didn't rise to the level that it seemed necessary. He also said he had hopes it would be resolved quickly, before the Dec. 30 PDUFA date. Getting a new supplier does guarantee a delay, after all. Plachetka knows how long but since we don#$%$ hard to second-guess. With his 3 million shares he has more incentive to get Yosprala approved than we do.
If the compliance division does its review -- it won't delay forever -- and says there are still problems, that may be the time to get a new supplier. But I don't think getting a new CEO just to do that, and giving that person lots of new stock and options to head a company that has no plans to develop new products, is the way to go. Once Yosprala is approved and partnership deals for it and Treximet are completed, POZN will basically have nothing to do but cash royalty checks. Of course a new CEO might decide to go in a different direction and undertake new development, but I can't see Plachetka putting up with that and I wouldn't want it either.
I don't think we'll be getting a new CEO. Plachetka founded the company, developed all its products (he's a pharmacologist), and as of this year's proxy statement (Form 14A) beneficially owned 4.3 million shares. That included 1.1 million options many of which he may since have exercised, but according to Yahoo's "insider roster" he still owned 3 million shares as of November 18. He isn't going anywhere.
Even if the FDA has it in for Yosprala, which I doubt, it wouldn't be because they don't find Plachetka to be their ideal golfing companion. It would have something to do with one or more big pharmas pushing for a delay. I don't dismiss the notion that regulatory agencies become captive to the companies they regulate, or at least the biggest ones, but I just don't see why any of them would find Yosprala threatening enough to bother with. I suppose it could someday cut into Bayer's sales of aspirin a little but I once looked it up in Bayer's earnings report and aspirin is a very small part of their revenues these days. I really do believe this is a red tape thing caused mainly by the fact that the compliance division is underfunded. Which doesn't mean I'm not upset or a little nervous about how long this may take. We should have a better idea after the Type A meeting. I'm less pessimistic than you about the chances Compliance will participate.
I agree that it would be nice if they spelled out what the problem is, but as far as stating that they're working on it, POZN's position is that they and the supplier have worked on it and are waiting for the compliance division to respond as to whether what they've done is adequate. This is from POZN's PR last week:
"During interactions today with the supplier, POZEN confirmed that there has been no new inspection of the facility from the compliance division at the FDA since last April, and that the facility has received no communication or comment from the compliance division at the FDA with respect to the supplier’s action plan and progress on the plan to address the deficiencies, other than informing the supplier that the matter is under review and that the division has many competing priorities.
“Based on inspections at the site by an expert consultant we retained and our review of all relevant documents and communications with the supplier’s personnel, we believe that the FDA issues raised during the April inspection have been adequately addressed. So, our goal continues to be to do everything we can to assist the FDA compliance division with their review and to encourage them to move to completion of their review as soon as possible since this remains the only outstanding issue..."
Clearly Plachetka does know what the issues were in connection with the first CRL. I can't remember whether he said last week that he doesn't know or that he doesn't know whether compliance has any issues with the changes the manufacturer has submitted. He may just not have been clear. As to why he hasn't disclosed the name of the manufacturer, maybe the manufacturer has asked him not to because it might cause problems with the other companies they currently sell aspirin to. I agree that wouldn't be a good enough reason but it could be an explanation.
Yes there are, or at least were, a lot of red flags. But on the other hand, the only hurdle now involves manufacturing aspirin. By a manufacturer that already makes it for a bunch of other drugs. In a way that the FDA isn't sufficiently concerned about to halt the sale of those drugs. There are no clinical issues. So this WILL be resolved, it's just a matter of when. I don't know how long it will be. But I do think that once the compliance division signs off, the reviewing division will approve fairly quickly, despite the new 2 or 6 month PDUFA date, because it's already reviewed the prior NDA which will be basically the same as the new one.
While it's possible that Sanofi pulled out because it expected a further delay, it's also possible it did so due to the new CEO and changed priorities, and that Plachetka's selling was due to his sense that Sanofi could bail for those reasons. Plachetka has said he won't be selling anymore and PAR, which owns a ton of POZN and presumably is on top of things as much as anyone, added recently. So at this point I personally plan to hold on. Obviously I could be wrong.
Interesting info. It suggests that maybe the reason the FDA issued a new CRL instead of extending the PDUFA date is that this situation didn't fall within any of the categories that can allow an extension. In the end it may not matter all that much. To get approval after the CRL POZN will have to file a new NDA but as Plachetka said during this week's call that won't take much time because the new NDA will be almost identical to the last NDA. The FDA will then announce a new PDUFA date that's either 2 or 6 months later, but once the compliance division finally signs off on the facility -- whenever that may be -- the reviewing division can always grant approval without waiting for the PDUFA date. So in a best-case scenario the compliance division will okay the facility in the near future and approval will follow shortly thereafter. In that case, issuance of the new CRL would turn out to be no big deal. Of course, in a worst-case scenario the compliance division will continue to drag its heels or, worse still, will say the facility is still not in compliance. I'm optimistic but then I've been optimistic for over a year now.
Not sure what your point is. The PR refers to the inspection of "an active ingredient supplier" not of the manufacturer of Yosprala. Plachetka disclosed yesterday that the active ingredient supplier provides the aspirin for Yosprala.
Yes, it's been 8 months since the first CRL was issued and it could be 8 months to resolve the second one. But the supplier has made changes to comply with the first CRL and informed the FDA of the changes, and the FDA has never responded or re-inspected. So the possibility exists that it simply hasn't reviewed the changes yet and that when it does it will find them satisfactory, as POZN, based on both its own inspection and the inspection of an independent auditor it hired, believes they are. In that case, the FDA approval could occur much sooner than 8 months from now. The compliance division would notify the supplier and the reviewing division that the facility is now acceptable, the reviewing division could give POZN a 2-month review period, and it could approve Yosprala even before the 2 months are up if it wanted to.
You may say that if the problem is that the compliance division hasn't reviewed the changes yet the FDA could simply have extended the PDUFA date instead of issuing a new CRL. Perhaps, but the compliance and reviewing divisions are independent, and when the reviewing division saw that the December 30 PDUFA date was approaching with no word from compliance that the facility was now acceptable, it may simply have issued a new CRL as a matter of routine. There's no guarantee that review of the changes will now occur quickly and that approval will soon follow, but it's possible and there's also no guarantee that it will take another 8 months.
The aspirin supplier doesn't manufacture Yosprala, it just supplies aspirin as it does, according to Plachetka, for lots of other drugs that contain aspirin. Yosprala is manufactured by a company called Patheon, as you can see by reading the "forward-looking statements" at the end of yesterday's PR or by reading POZN's SEC filings. Patheon also manufactured Vimovo until AZN took over manufacturing after FDA approval. Vimovo combines immediate-release esomeprazole with naproxen whereas Yosprala combines immediate-release omeprazole with aspirin, so the manufacturing processes are similar. POZN has never hinted that the CRLs for Yosprala relate to anything other than the aspirin supplier.
Plachetka said yesterday that the FDA is required to agree to a Type A meeting within 30 days. He said the key will be whether the reviewing division, which POZN deals with, will also bring in the compliance division, which has been dealing with the supplier on the manufacturing issue. If the compliance division attends that should flush out what the status of the manufacturing issue is and how any remaining problems can be resolved.
The problem isn't with Patheon. They manufacture the end product Yosprala, but it consists of two active ingredients, aspirin and an immediate release formulation of omeprazole. The CRL relates to the supplier that provides the aspirin to Patheon. Plachetka said on the call today that he can't disclose its name but it supplies aspirin for use in many other drugs which the FDA has not recalled and which are continuing to be imported. In a way it's reassuring that the problem is with the aspirin and not with the way Patheon manufactures Yosprala, which sounds more complicated.
One more thought on this. Even if we assume (which I doubt is the case) that the FDA is playing games here, and is purposely stalling approval with the Reviewing Division acting as good cop and the Compliance Division as bad cop, there's got to be a limit to how long it can hold Yosprala off the market when it's not recalling other drugs that use aspirin made by the same supplier. The inconsistency is just too glaring.
We'll probably never know whether POZN management could have done more or whether Sanofi's withdrawal or managements' stock selling had anything to do with expectations of a further delay. POZN's story is that they could never communicate directly with the FDA's compliance division that's in charge of manufacturing approval, that they did everything they could to make sure the outside supplier did communicate, and that they forwarded the results of independent audits they arranged to the FDA. So they didn't sit idly by, and some things are just beyond your control, especially when you're dealing with the FDA.
The main positive is that the issue the holding up approval would seem to be the easiest thing imaginable to fix, namely properly manufacturing aspirin. People have been successfully manufacturing aspirin for awhile now.
By a supplier that already manufactures it for a lot of other drugs that are currently on the market and that the FDA has not recalled.
Bizarre, but it does seem likely that the FDA Compliance Division just didn't have the resources to do a re-inspection of the supplier, which is located somewhere outside the US, in time. Though as Jason Napodano asked, why then didn't the FDA just extend the PDUFA date instead of issuing a CRL that will require a new filing with a two to six month review period.
Discouraging, obviously, especially since the timeline is unpredictable now, but it's hard to believe that this problem can't be straightened out on the next go-round.
There have been a couple of studies this year questioning whether the benefits of long-term use of aspirin to prevent a heart attack or stroke outweigh the risks including, as you say, the risk of GI toxicity which Yosprala would dramatically reduce. But none of the studies, as far as I know, questions the value of aspirin for people who have already had a heart attack or stroke. POZN's NDA application for Yosprala is for that population, that is, for people requiring "secondary prevention." POZN's revenue projections are based on that population, which is 24 million in the US (POZN assumes 5% would use Yosprala). There are currently about another 25 million people in the US who take daily aspirin for primary prevention, which is the group the recent studies relate to, but the use of Yosprala by those people would be off-label.
I've owned POZN for years and actually don't think your numbers are crazy. POZN's projections, as stated in various presentations over the years, have been as follows: 24 million people in the US take daily aspirin for secondary prevention of heart attack or stroke (the indication for which they're seeking approval). POZN assumes that 5% of those 24 million, or 1.2 million, will take Yosprala. At $1 a day that works out to $438mm gross revenue. If you assume a 30% royalty (which doesn't strike me as outrageous if the product is approved), that works out to $131 million a year. If the royalty is less than 30% that number goes down but if more than 5% of the 24 million people take Yosprala, or if the price is slightly higher than $1 a day, the number goes up. And that's just for the US, so worldwide royalties could be around $200mm, or more than $6 a share. They'll still have some minimal administrative expenses so call it $5 a share. Given that POZN is a small company and its revenue stream is somewhat unpredictable, investors might ask for more than a 5% yield, but even at 10% (which is too high) you still get to a PPS of $50. Of course it would take a few years of hopefully increasing sales to get there.
I await the brickbats and catcalls but I'm just working from the company's sales numbers which on the surface seem reasonable.
I think if they can get $20 a share they'll do a sale, otherwise they'll partner. If Yosprala performs in line with POZN's supposedly conservative projections, the buyer will be getting a steal for $20. But my sense is Plachetka is a pretty conservative, "bird-in-the-hand" kind of guy so he would take a $20 offer. I can't see him taking less given how Vimovo is performing, the probably near-term deal for ex-US rights to Treximet, and of course the US and foreign potential for Yosprala.
Napodano lists a slew of companies large and small that he thinks Yosprala would be a good fit for. The big ones include Eli Lilly, J&J, Bristol, Bayer, Daiichi, and Takeda. He also thinks they can complete a deal, of whatever nature, in the first half of 2015.
I think that's reasonable because, among other things, Plachetka said this morning that Sanofi is handing over all pre-launch materials it prepared. That would presumably include marketing studies that would make it easier for a prospective partner/buyer to value Yosprala as well as materials that would expedite product launch after a deal is done.
Of course, all depends on getting FDA approval on December 30.