Valeant Pharmaceuticals is Soldiering On - Pharmaceutical Executive

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Valeant Pharmaceuticals is Soldiering On


Pharmaceutical Executive


Just how Valeant balances those two things—producing a less costly treatment regimen and capitalizing on the financial opportunity Tyson speaks of—is what many are calling the determining factor in the drug's success rate. And it's a factor that's difficult to predict because until now, Valeant has been making money off of a number of small, $50ish-million-per-year products. The investor community has been slow to react to Viramidine and the rest of Valeant's pipeline, in part because it has nothing to compare it to.

"One of the knocks we've always had against Valeant is that they're too diverse," says Arthur Wong, an analyst for Standard & Poor's. "We've wondered if they are going to spread themselves too thin. A company of this size that doesn't have any products over $50 million in sales is kind of weird."

Valeant is working on that. In the restructuring phase of its strategy, the company discontinued 200 (out of 600) products that were either unprofitable or inconsistent with its specialty pharma focus. From the remaining 400, it's focusing on about 20, a selection that still runs the gamut. To name a few, there's Diastat (diazepam rectal gel), indicated for breakthrough emergency epilepsy seizures mainly in children; Efudex (fluorouracil), the standard of care topical treatment for solar or actinic keratoses; Tasmar (tolcapone), for Parkinson's disease; and then there's Kinerase, an OTC fine-line and wrinkle cream for which Friends star Courteney Cox is the spokesperson.

"You don't see many specialty companies spread so thin, across so many different products," Wong says. "They are trying to find an identity."

Given the low risk involved in Viramidine, chances are good that Valeant will have the opportunity to make the drug a big part of its future identity. But an inappropriate price tag could put a ceiling on its potential.

"Valeant has said that if you give people Viramidine plus pegylated interferon, anemia is a lot less. But the key question is: How much can they charge for that luxury?" says John Savopoulos, infectious diseases lead analyst for Datamonitor. "At the moment, you have very cheap ribavirin. If Valeant makes Viramidine 50 percent more expensive, doctors are only going to use it for second-line use, only on patients with anemia. If they go to the market with something stupidly expensive, physicians won't go for it."

Watson, of William Blair & Co., disagrees. "Doctors always talk about pricing, but when push comes to shove, they are completely price insensitive," he says. "What's going to determine the success of this drug is its clinical data. If it demonstrates superior efficacy to ribavirin, I think it will be wildly successful, regardless of price—within reason, obviously. You can't price it at triple what ribavirin costs, but you can price it at a premium."

Under either scenario, Viramidine's approval will be a big boon for Valeant. Most analysts are predicting sales of at least $300 million. But as Wong points out, "Even if Viramidine only generates $100 million, it's still them proving to everyone that they can conduct a large-scale trial and get a product out. It shows that the machinery is working."

Not to mention, Viramidine is just one of four late-stage products in Valeant's pipeline:

Zelapar (selegiline), which Valeant acquired in February 2004 when it bought Amarin Corporation's US operations for $56 million, is a treatment for Parkinson's disease. Last month, Valeant received a second approvable letter from FDA regarding Zelapar that requested additional clarification on issues already addressed by the company in its response to the first approvable letter.

Retigabine, in Phase III, is an adjunctive treatment for partial-onset seizures in patients with epilepsy. Valeant acquired the drug when it purchased Xcel Pharmaceuticals in March 2005 for $280 million. The company is predicting sales of more than $500 million for epilepsy alone (epilepsy drugs are often used for other indications) and a late-2008 launch.


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