Kaleo, which is based in Richmond, Va., announced Oct. 26 that it will bring the product it invented, Auvi-Q, back to market in the first half of 2017. Auvi-Q was previously an option for those with life threatening allergic reactions, but was pulled in late 2015 due to problems with the injection mechanism. At the time, Sanofi (SFY) - Get Report was marketing the drug.
Sanofi terminated its deal with Kaleo when it became clear that the drug was no longer working and had to be recalled.
The announcement comes as a surprise to the markets, which expected a competitor to enter the space in late 2017, when Teva Pharmaceuticals (TEVA) - Get Report was expected to release a generic version of the EpiPen.
"We believe that patients should have options when it comes to epinephrine auto-injectors for life-threatening allergic reactions," said Spencer Williamson, CEO of Kaleo, in a statement. "When a health care practitioner prescribes Auvi-Q, determining that it is best for a patient, we believe that the patient should be able to obtain the product without insurance barriers or being subjected to a high out-of-pocket cost."
Mylan shares fell on the news, trading at $38.14 pre-market, down 1% from its Tuesday close price. The pharmaceutical company will report earnings on Nov. 9, one day after the U.S. presidential election.
It is unclear how much the announcement will impact Mylan's EpiPen sales, though it's worth noting that when Auvi-Q hit the market back in 2012, it took about a 10% market share. Patients appreciated the Auvi-Q's smaller, more compact design.
It is likely now that Auvi-Q will take at least a portion of Mylan's share of EpiPen sales, especially given the market's environment. Mylan came under fire in the summer when it was first reported that it had hiked the price of the EpiPen approximately 25% each year since 2007, when Mylan bought the drug from Merck. The drug industry's standard price increase is 10% year over year.
The Epipen price increases, coupled with an insurance environment that passes more of the cost of drugs onto patients, sent their cost as high as $600 per two pack. Since these issues came to light, Mylan has agreed to offer a rebate program worth $300, and has broadened its patient assistance program offerings.
Still, the company has faced broad scrutiny from federal and state officials. On Oct. 10 Mylan settled with Center of Medicare and Medicaid, agreeing to pay $465 million after the EpiPen had for years been misclassified as a generic drug, which allowed the company to pay a lower rebate to patients.
Mylan is still under investigation by the attorneys general of Minnesota and New York. Neither has provided an update into the investigations.
Kaleo executives are touting Auvi-Q as a more affordable version of the EpiPen, although the company has yet to provide insight into how much the drug will cost.