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Jazz Pharma - FDA Panel Prep

Here's what to expect from Jazz Pharma when an FDA panel reviews the company's fibromyalgia drug on Aug. 20.

PALO ALTO, Calif. (

TheStreet

) --

Jazz Pharmaceuticals

(JAZZ) - Get Jazz Pharmaceuticals Plc Report

brings its experimental fibromyalgia drug JZP-6 in front of a U.S. Food and Drug Administration advisory committee on Aug. 20. This panel of outside experts is being convened to review the clinical efficacy and safety data on JZP-6 and vote on whether to recommend the drug's approval.

I will be live blogging the Jazz FDA panel (stay tuned for details), but in the meantime, here's what you need to know about this important, upcoming event:

I heard Jazz is trying to get the "date rape" drug approved for fibromyalgia? True, or is this just some stupid message-board rumor?

True. Jazz's lead pipeline drug JZP-6 is a close chemical cousin of gamma-hydroxybutyric acid, or GHB, which has been used medically in the past as a general anesthetic but is also abused recreationally as an intoxicant and gained notoriety (not to mention the attention of law enforcement) as a date-rape drug.

The U.S. Drug Enforcement Agency classifies GHB as a Schedule 1 drug, which means it's highly abuse-able, has no medical use and can't be prescribed legally.

C'mon, the hyper-conservative FDA is never going to approve GHB for a legitimate medical use these days.

Guess again. Jazz already sells JZP-6 under the brand name Xyrem for the treatment of narcolepsy and to reduce cataplexy (a related condition causing weak or paralyzed muscles.) The FDA approved Xyrem in 2002 with the DEA's assent as a Schedule III, or "limited use" drug. Xyrem is also approved and sold in Europe. Today, the drug does about $100 million annually in sales.

Interesting. So, Jazz is now seeking to expand Xyrem's approval to the treatment of fibromyalgia. If Xyrem is already approved, why the controversy this time around?

Because Xyrem/JZP-6 (again, think GHB) is a dangerous drug if abused or diverted for non-medical use. The millions of people affected by fibromyalgia (and potential users of Xyrem) dwarfs the relatively small number of narcoleptics (think tens of thousands) who use Xyrem today.

What happens when Xyrem/JZP-6 is made more widely available? Do the risks of JZP-6 abuse and diversion in the general population outweigh the drug's benefits for fibromyalgia patients? I expect those to be the key questions debated at the Aug. 20 FDA panel and is the reason why the FDA invited drug safety experts to join the panel's discussion and voting.

What does Jazz do to make sure Xyrem is used properly under the current narcolepsy indication?

Under a strict risk management plan ironed out between Jazz and the FDA, Xyrem is distributed through a single specialty pharmacy that maintains a registry of all doctors and patients. When a doctor prescribes Xyrem, the central pharmacy verifies the prescription with the doctor and contacts the patient to obtain additional information. Only after these checks does the pharmacy ship Xyrem directly to the patient by courier. Doctors can only prescribe a one-month supply of Xyrem to new patients and no more than a six-month supply at any one time.

It's not entirely clear if Jazz has proposed to use the exact same risk management plan for JZP-6 in fibroymalgia, but it's safe to assume that something similar will have to be implemented as a condition for FDA approval.

Is there any evidence to suggest that all these safeguards and restrictions work to deter abuse and diversion of Xyrem? If so, perhaps FDA and its advisory panel will be persuaded to approve Xyrem for the broader fibromyalgia indication.

Yes. Drug safety experts (including a Jazz employee) conducted a study analyzing adverse event case reports encompassing 26,000 patients worldwide who were prescribed Xyrem from 2002 through 2008. The goal of the study was to determine whether the approval and marketing of Xyrem led to an increase in abuse or misuse of the drug.

No such upticks in abuse or misuse were found, according to the researchers. "Cumulative commercial experience indicates that the incidence of misuse and the risk of abuse, dependence, diversion and drug-facilitated sexual assault with sodium oxybate

Xyrem appear to be very low. Concern that sodium oxybate

Xyrem might present the same risk profile as illicit GHB is not supported by the available data," the researchers conclude.

The study, titled "Safety Overview of Postmarketing and Clinical Experience of Sodium Oxybate: Abuse, Misuse, Dependence and Diversion" was published in the

Journal of Clinical Sleep Medicine

in April 2009.

A copy of this

Xyrem safety study is available for free download

. The study was sponsored by Jazz and I'm not sure it captures all the Xyrem patient case reports. With that said, the Xyrem study is worth reading because it underscores nicely how drug risk-management plans, when designed correctly and implemented rightly, can help patients benefit from a drug while minimizing the risks.

Are you predicting a positive recommendation for JZP-6 from the FDA panel?

I'm definitely leaning that way. Jazz seems to have the safety data necessary to overcome concerns that wider distribution of Xyrem/JZP-6 will lead to more problems with abuse and misuse. If Jazz can do that, the FDA panel should vote to recommend approval.

Now, putting that optimism on a shelf for second, let's not forget that FDA advisory panels can, and often do, veer off into crazy town. If Jazz is faced with a group of hyper-safety conscious panel members -- the kind of people who'd be afraid to approve baby aspirin today -- then all bets are off.

Vivus

(VVUS) - Get VIVUS, Inc. Report

ran into this very problem last month with disastrous results. The

FDA seemed OK with the safety of Vivus' weight-loss drug Qnexa

, but the agency's outside experts were much more safety- obsessed and

voted against the drug's approval

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.

What is fibromyalgia? Is it a real disease?

I'm going to tread carefully here. Fibromyalgia is a disease in which patients, largely women, complain of chronic, all-over body pain that has no known cause. Fatigue, sleep problems, irritable bowel syndrome and depression are also a part of the fibromyalgia disease definition.

The FDA has approved three drugs for the treatment of fibromyalgia --

Pfizer's

(PFE) - Get Pfizer Inc. Report

Lyrica,

Eli Lilly's

(LLY) - Get Eli Lilly and Company (LLY) Report

Cymbalta and Savella from

Forest Labs

(FRX)

and

Cypress BioScience

(CYPB)

-- so in that respect, fibromyalgia is a very real disease. Some doctors, however, contend that

fibromyalgia is a made-up disorder

, which makes its diagnosis and treatment controversial.

You've said nothing about the phase III studies of JZP-6 in fibromyalgia? Does the drug work?

The JZP-6 data (or, what's been released/presented by Jazz) appear to be quite strong. Two phase III studies comparing JZP-6 to placebo both met their key primary and secondary efficacy endpoints by significantly decreasing pain and fatigue scores, improving daily function and boosting self-reported patient scores for overall quality of life.

The studies' primary endpoint defined "responders" as patients with a 30% reduction in pain scores. In the first phase III study, 46% and 39% of JZP-6-treated patients responded at two different dose levels compared to 27% of placebo patients. In the second study, 35% of JZP-6-treated patients responded, again at two dose levels, compared to 20% of placebo patients. All differences were statistically significant.

How does JZP-6 compare to the currently approved fibromyalgia drugs?

No true comparative studies have been conducted, but JZP-6 is more like Lyrica in terms of dealing with pain, fatigue and insomnia than it is like Savella and Cymbalta, which work against pain and depression.

JZP-6's biggest disadvantages are two-fold: 1) inconvenient dosing which requires patients to take the drug orally (it's a liquid) once at bedtime and then again in the middle of the night; and 2) the restrictive and cumbersome prescription process. JZP-6 is also likely to be much more expensive than the other fibromyalgia drugs. For these reasons alone, JZP-6 is not going to be the drug of first choice for fibromyalgia patients. More likely, JZP-6 will be prescribed for patients with the most severe symptoms.

Any revenue projections for JZP-6 in fibromyalgia?

Not of my own, but Jefferies analyst Corey Davis estimates JZP-6 peak sales in 2015 of about $200 million, which assumes the drug captures only 1% of the current 2 million fibromyalgia patients current under treatment.

Even if that estimate proves to be overly optimistic, Jazz is a profitable company today on existing sales of Xyrem in narcolepsy ($98 million in 2009, $29 million in the first quarter) and despite the commercially disappointing performance of Luvox as a drug for obsessive-compulsive disorder. The addition of any fibromyalgia revenue adds significant earnings leverage to Jazz's income statement.

What's the upside/downside risk to the Aug. 20 FDA panel?

Add a fibromyalgia approval to the mix and Jazz is worth about $14. If the FDA panel dings JZP-6 and the FDA follows suit by not granting the approval, Jazz is worth about $7, according to one buy-side analyst with a long position in the stock. His fund doesn't allow him to be quoted by name.

Given the volatile nature of stocks like Jazz, I won't be surprised to see the stock trade higher or lower than those targets based on the outcome of the FDA panel. One significant risk not to be addressed by the FDA panel is the possibility that a generic drugmaker enters the market with a competing version of Xyrem/JZP-6. So far, it seems as if the restrictive risk management plan and cumbersome prescription process necessary to sell Xyrem/JZP-6 has dissuaded generic entry. That could change if JZP-6 is a big hit in the fibromyalgia market, however.

One last time, what are the important dates to remember regarding Jazz and the FDA advisory panel?

The FDA panel is scheduled to convene on Aug. 20. Two days prior, on Aug. 18, look for the FDA to post the agency's review of JZP-6 on its Web site. That document will give investors a first look at how FDA views the efficacy, and more importantly, the safety of JZP-6 in fibromyalgia.

-- Reported by Adam Feuerstein in Boston.

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Adam Feuerstein writes regularly for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback;

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