Being Irish, I couldn’t let St. Patrick’s Day pass without commentary on Irish company, Elan Corporation, plc. Dublin-based Elan is a biotechnology company focused on discovering, developing, manufacturing and marketing therapies in neurology, autoimmune diseases, and severe pain.
Tumultuous times
2005 has been a tumultuous year so far for Elan. January started well enough with an announcement of a license agreement with Roche around Elan's proprietary NanoCrystal technology. NanoCrystal is an innovative technology designed to enhance the clinical performance of poorly water-soluble drugs by transforming them into nanometer-sized particles. The technology developed by scientists at Elan allows drugs to dissolve faster and more completely in the gastrointestinal tract, enabling better absorption by the body. Three pharmaceutical products have already been commercialized incorporating NanoCrystal technology, and several additional product launches are anticipated over the next few years.
Back to business
February brought more good news; the Commissioners of the Securities and Exchange Commission (SEC) gave final approval to the previously announced provisional agreement between Elan and the Staff of the SEC to settle the investigation by the SEC's Division of Enforcement that commenced in February 2002. The approved settlement concludes all aspects of the investigation with respect to Elan and its current and former Directors and Officers. For Elan, this represented an important step forward, removing uncertainty and enabling energy to be focused on the core business of bringing innovative science to patients of neurodegenerative and autoimmune diseases. The future was looking bright and all energy was directed towards executing successful launches of Prialtan and Tysabri. The hype and the hope was that these drugs would have the company back in profit by 2006.
PRIALT (ziconotide intrathecal infusion), is a non-opioid analgesics known as an N-type calcium channel blockers (NCCBs). It is the synthetic equivalent of a naturally occurring conopeptide found in a marine snail known as Conus magus. Research suggests that the novel mechanism of action of PRIALT works by targeting and blocking N-type calcium channels on nerves that ordinarily transmit pain signals. Elan received FDA approval for PRIALT in December 2004, followed by European Commission (EC) approval in February 2005.
TYSABRI (natalizumab) is a monoclonal antibody that binds to a protein called alpha-4-integrin. Integrins are found primarily on the surface of white blood cells, and play a role in immune system activity. Tysabri benefited from the FDA accelerated approval program available for serious or life threatening diseases when a product appears to provide a benefit over available therapy. Tysabri was approved in November 2004, on the basis of a clinical study showing that when the drug was added to a Biogen product Avonex, it reduced the risk of exacerbations by 54% compared to Avonex alone. In a separate clinical study Tysabri reduced the risk by 66% compared to placebo. These results represented an important and meaningful benefit for patients with MS.
Perfect storm
Unfortunately for Elan, just like so many times before just as one storm past another came crashing in. Elan was developing Tysabri in collaboration with US-based biotechnology company Biogen Idec Inc. On February 18, 2005 Biogen gave the FDA preliminary information concerning two serious adverse events that occurred in patients being treated with Tysabri in combination with the Biogen product Avonex (Interferon beta-1a). These events involve one fatal, confirmed case and one suspected case of progressive multifocal leukoencephalopathy (PML), a rare and frequently fatal demyelinating disease. Both of these patients were in the continuation phase of trials that were used to receive FDA accelerated approval. Ten days later Elan and Biogen announced a voluntary suspension in the marketing of Tysabri and a halting of all Tysabri clinical trials.
Speed it up at the FDA
The question naturally arises as to whether the potential danger with Tysabri could have been discovered before the drug received FDA approval if the more typical procedure of waiting for two-year data had been followed. If so, it’s unlikely that the drug would have received approval. The FDA has to walk a very thin line between patient safety and allowing effective drugs to be made available sooner to people with serious diseases. Accelerated approval first emerged in the late 1980s, as the FDA faced demands for quicker access to drugs to treat patients with HIV/AIDS. Then in 1992, the FDA formalized the process by allowing accelerated approval if clinical trial results could "reasonably suggest clinical benefit," even if it wasn't proven. The process will now certainly endure closer scrutiny but as we all know from the recent withdrawal of Vioxx, even the more typical approval process can not guarantee patient safety.
Furious investors
Shares in Elan collapsed after the initial withdrawal of Tysabri, falling by almost 70% in a matter of hours. Not surprisingly investors are furious. So much so, that some shareholders have grouped together and filed a class action lawsuit. The complaint alleges that Elan failed to disclose and misrepresented material adverse facts in connection with Tysabri including serious immune-system side effects and that the drug could make patients susceptible to PML. Biogen is also under the spotlight for stock sales that were made by senior level executives’ just days before the marketing of Tysabri was suspended. Trading in options for Biogen Idec stock spiked to record levels two days after a doctor reportedly said he informed company officials that a patient taking Tysabri had developed an unexpected complication. The SEC is investigating this surge in options trading however, Biogen has said that the directors had no knowledge of Tysabri safety concerns when they had made their stock sales.
We are in this together
Ever optimistic in the face of adversity, Elan are pinning their hopes on the possibility that PLM only occurs when Tysabri is taken in combination with Biogen’s, Avonex. Scientists are busy scanning the brains of people who took Tysabri either on its own or with Biogen’s Avonex to find any signs of PML. If Tysabri is shown to have caused PML on its own, Elan is the company most directly affected, but they will not be alone. A number of pharmaceutical companies including GlaxoSmithKline (GSK) have drugs in clinical trials that work in a similar way to Tysabri and already, the effects of the Tysabri withdrawal are being felt. The FDA has halted trials of GSK’s experimental drug known as "699" as a precautionary measure. Both the GSK drug and Tysabri act by blocking alpha-4 integrin, however, Glaxo's medicine is given as pill, whereas Tysabri is administered by intravenous infusion.
Even if Elan's drug is eventually given the all-clear, projected Tysabri profits may take a dive due to a shorter lifespan if rival treatments get to market in the next couple of years. Future patients may also harbor safety concerns over treatment with the drug.
Pot o’ gold
With more than $1bn of debt due in 2008, many now doubt whether Elan will be able to repay creditors if Tysabri does not go back on the market quickly. Last year Elan posted a loss of $376m and hope was pinned on the Tysabri revenues to return the company to profitability. Now, the future looks dim but never discount the luck o’ the Irish - they just might find the four leaf shamrock that leads to the pot o’ gold at the end of the rainbow. Fingers crossed that the Leprechaun guarding it is friendly!
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