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Depomed Bear Case: FDA Panel Will Ding Serada

Noven has successfully completed two phase III studies as part of the LDMP clinical development program. Noven, like Depomed, has a Special Protocol Assessment agreement with FDA in place for its studies. In both studies, LDMP significantly reduced the frequency of VMS from baseline to weeks four and 12. On the VMS severity reduction measure, LDMP met the four-week response threshold in both studies and the 12-week threshold in one study. Overall, LDMP missed just one of the nine prospectively defined efficacy endpoints across two studies.

Importantly and unlike Serada, significantly more patients treated with LDMP than placebo were responders at week 24, demonstrating the drug's persistent of treatment benefit. Overall, LDMP reported a safety profile similar to placebo and was well tolerated.

The experts sitting on the FDA advisory panel March 4 will be reviewing Depomed's Serada in the morning and Noven's LDMP in the afternoon. Therefore, these experts will be reviewing both sets of briefing documents ahead of time, and evaluating their contents with respect to the same regulatory criteria.

Let's don our advisory panel hats and consider the two packages for a moment:

Serada: Minimal evidence to support its role in VMS. Dosed twice a day. High patient dropout rates in clinical studies. Failed to meet a single prospectively defined end point in two large randomized controlled studies. Failed to demonstrate significant reduction in frequency of hot flashes beyond four weeks in a third confirmatory study, Failed to demonstrate persistency of benefit at 24 weeks in every study. Overall side effect profile and tolerability issues with gabapentin

LDMP: Plausible rationale for treating VMS. Dosed once nightly. Met eight of nine prospectively defined end points in two large, randomized controlled studies. Significantly reduced the frequency of moderate to severe hot flashes at four weeks, 12 weeks and maintained persistence of effect at 24 weeks. Excellent overall safety and tolerability profile.

Hmm... I know which way I would vote.

One final not: In the extremely unlikely event FDA does approve Serada for the treatment of VMS, peak sales of the drug will be minimal. Here's my generous revenue forecast:

10 million women per year seeking treatment for hot flashes
75% try medication following a doctor consultation. (This is a high estimate.)
30% require an alternative to hormone replacement therapy
5% peak market share for Serada
90% patients given a prescription choose to fill it.
50% likelihood prescriptions are filled with Serada first, instead of generic substitution with gabapentin. (Note: Serada is "extended release" yet needs to be dosed twice daily. There is no evidence that this confers any benefit over generic gabapentin from a managed care perspective so it is likely Serada will have a low-tier formulary status and will frequently be subject to generic substitution.)
Average course of treatment: Three months (Note: 30% of patients failed to complete the studies so there is no reason to believe real world experience would be different. In fact, I would predict a high drop-off rate after the first prescrioption. Serada does not demonstrate persistent effects beyond 4 weeks under clinical trial conditions, so it is extremely unlikely the average course of therapy will be as high as nine months).
Average cost per script: $225
Serada peak Sales Estimate: 10 million potential patients x 75% x 30% x 5% x 90% x 50% x 3 x $225 = $34 million peak sales.

Disclosure: Chaudhry owns March puts in Depomed.
Aafia Chaudhry M.D. is a founding partner at Noesis LLC, an investment-management firm focused on the pharmaceutical and biotechnology sectors. She originally trained in general surgery prior to transitioning into the health-care industry. Aafia has been an active life-sciences investor for the past nine years and is an expert in pharmaceutical life-cycle management strategy. She was formerly president of 81qd, a strategic data-analytics consultancy, and most recently served as vice president of strategic market planning at WebMD Health Corp.
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