Kos: Right-Sizing Expectations

Kos Pharmaceuticals has grown its lead product Niaspan, a form of the B vitamin niacin, into a $300 million product, mostly by marketing to cardiologists. The drug raises "good" cholesterol, and so is often prescribed in addition to statins that lower "bad" cholesterol. A recent co-promotion deal with Takeda will give the drug and a follow-on, Advicor, much more exposure in the primary care market, where the biggest pharma companies compete brutally. A vital step, or too little too late?

As a small company in the huge cholesterol market, Kos has done well. But the dynamics of competing there are decidedly difficult. Can the party last?

By Deborah Erickson

• By the measures applied to most small companies, Kos Pharmaceuticals is a success. After a disappointing start, the firm has grown its lead product Niaspan, an extended release form of the B vitamin niacin, into a $300 million drug.

• The product raises "good" cholesterol, and so is often prescribed in addition to statins that lower "bad" cholesterol. Kos has established the drug mostly by marketing Niaspan to cardiologists—a specialty strategy sensible given the company's small size.

• But cholesterol is a market where the world's biggest pharma companies pour on DTC advertising and send thousands of reps to call on GPs, who write by far the bulk of prescriptions. Kos hasn't had the means to do that.

• Recently, Kos signed a co-promotion deal to help it reach GPs. Now Takeda has over 1,000 reps carrying Niaspan as well as a combination product, Advicor, that contains the vitamin and a generic statin. Is this alliance a vital step toward building Kos's franchise, or will it be too little, too late?

It's tempting for small companies looking at massive markets to think they can grab a small slice and grow rich. But those who pursue the dream find out just how tough it is to realize. Kos Pharmaceuticals Inc. stands as a case in point. The company has been competing in the market for cholesterol drugs (now valued at nearly $13 billion) since 1997 when it launched Niaspan, an extended release formulation of the B vitamin niacin. The company's strategic premise was one that many others are following today: reformulate an existing product so that it has enhanced safety and efficacy, then bring it to market quickly in a cost-effective way. (See "Jumpstart to Products," IN VIVO, February 2004 (Also see "Jumpstart to Products" - In Vivo, 1 Feb, 2004.).)

By the measures of most small companies, Kos is a success and so is Niaspan, given that this year the drug is expected to generate sales of about $295 million. But that level of sales, strong as it is, is not nearly as high as analysts initially anticipated it would be by now, seven years after launch. Kos has learned over time to right-size its expectations and build its sales force accordingly. Growing sales to this level hasn't been easy, and increasing them will likely be harder still.

Kos went public in March 1997, bringing in $57.3 million, at $15 per share. [See Deal] A big vision for Niaspan, which launched that August, and nine other candidates in development at the time, helped the company close a $44.1 million follow-on offering in October [See Deal]. By then, shares were up to $42.75.

Niaspan followed Pfizer Inc. 's atorvastatin (Lipitor) to market by six months. Lipitor lowers LDL or "bad" cholesterol, while Niaspan raises HDL or "good" cholesterol. The managers of Kos and the firm's early investors thought this differentiation was a positive and that Niaspan would quickly become an integral aspect of everyday cholesterol management for many people. They were wrong. "We did limited pre-marketing because our research had essentially said that docs would adopt a post-HDL drug quite aggressively—but they didn't. Their principal focus was on reducing LDL," explains Christopher Kiritsy, Kos's EVP and CFO. That orientation continues to be a key challenge for Kos.

By the time Kos launched Niaspan, the big companies already in the market—and particularly the take-no-prisoners marketing blitz for Lipitor—had set the agenda for docs: lowering LDL as much as possible. Lipitor's developer, Warner-Lambert Co. (now a part of Pfizer) had hired Pfizer to co-promote the drug—knowing they had a truly outstanding product and wanting maximum muscle behind it. The partners emphasized that Lipitor was a "more powerful" statin than any that had come before, and that reducing LDL as much as possible should be doctors' goal. The message—and the data to back it up—quickly helped Lipitor take share from Merck & Co. Inc. 's simvastatin (Zocor), the most powerful statin on the market at the time, and Bristol-Myers Squibb Co. 's pravastatin (Pravachol). Both were billion-dollar drugs when Lipitor launched.

By June 1998, Lipitor had captured 18% of the cholesterol market—its ascendancy helped not only by its powerful ability to safely reduce LDL, but also by Warner-Lambert's and Pfizer's decision to undercut the price of the market-leading Zocor. With these big players and others noisily proclaiming the need to reduce LDL with statin therapy, it would have been nearly impossible for GPs to hear tiny Kos's message about the importance of increasing LDL.

Kos began detailing its drug with only 90 sales reps, all calling on cardiologists. The company made the choice to focus on marketing to these specialists because it was intent on controlling costs and was counting on a trickle-down effect to general practitioners. It got a trickle, alright, and little more than that to start. Before November of '97 was half through, a Salomon Brothers analyst, Robert Uhl, issued a report that sliced Kos's projected revenue for 1998 in half, from $92 million to $46 million. Kos's stock dropped from nearly $31 to under $17 per share. Uhl wrote that it would have taken 5,000 new prescriptions during the key eighth week of the launch to meet his original forecast. In fact, only 708 prescriptions were filled that week. Niaspan sales in '98 totaled just $13 million.

The slow roll-out eventually roused law suits from some investors who claimed that Kos should have disclosed the low prescription figures at the time of its follow-on stock offering and thus was guilty of fraud, negligent misrepresentation and breach of fiduciary duty. The district court dismissed the case and the appeals judge decided that was appropriate, but he did find that the plaintiffs had a lone valid claim: Kos should have shared what data it had about prescription levels at the time of the follow-on offering. Aside from that, though, he found that Kos had sufficiently warned investors of the risks it faced, including "physicians' anti-niacin bias," the possibility that patients using Niaspan would suffer episodes of flushing they consider intolerable, and the fact that Kos had fewer marketing resources than competitors, a smaller sales force and limited marketing experience. Kos had also decided to distribute starter packs of the drug that contained a three-week supply and could be distributed without prescription—and the company pointed out that therefore prescription-writing might initially be slow. Unfortunately for Kos, many of the risk factors management had foreseen came into play, after all.

"We took Kos public with high expectations that were out-sized relative to their performance," says Ian Sanderson, a pharmaceutical analyst who covers the company for SG Cowen, the lead underwriter for the IPO. "For the first few years Kos was viewed as a failure," he says, "but the founders kept on funding the company and in late '02 things started clicking," he says: Kos reached critical mass, and prescription-writing for Niaspan picked up. This year the drug is expected to generate $300 million in sales at 94% gross margins, so by most small-company definitions, Kos is a success. "Niaspan is not the huge product Kos hoped it would be," Sanderson acknowledges, "but it's an extremely profitable little drug. The company has had to address the question, ‘What is success?' and redefine it for themselves."

Smart and Targeted

Kos's managers are proud of what they've achieved as a specialty pharma company, and emphasize that they've achieved the strong growth they have in a cost-effective way. "We couldn't afford a massive sales organization to educate primary care providers, so we went to cardiologists. It's a tried-and-true method: elicit support from opinion leaders and leverage that," declares Richard King, EVP, commercial operations.

"If you look at the way a Pfizer or an AstraZeneca go about this," King points out, "they take legions of reps and throw them on new brands. It does guarantee the ability to drive the business, but at significant cost. We think instead of throwing money at the market, it's smarter to identify up front who is going to respond to the message. I'd suggest our returns are better than the biggest companies."

"We've never even fantasized about competing with Pfizer or BMS on share of voice," adds Chris Kiritsy: "The only way we could win is by being smart and targeted—identifying high prescribers and calling on them with a differentiated message." Kos focused on convincing cardiologists of the importance of raising HDL. Its promotional materials presented Niaspan as "the HDL-evator," and use other up-down imagery to show the danger of letting HDL get too low, such as an open manhole cover that gets covered again by Niaspan.

"Niaspan does lower LDL, so we could have gone head-to-head with big players like Pfizer, but we would have been beaten to a pulp," says Kiritsy. Positioning the product for use in conjunction with statins gave Kos some breathing room, allowing it to "live alongside the giants." A similar strategy has helped Gilead Sciences Inc. establish its anti-HIV therapy tenofovir (Viread) in the highly competitive market for HIV drugs. (See "Gilead's Global Logic," IN VIVO, March 2002 (Also see "Gilead's Global Logic" - In Vivo, 1 Mar, 2002.).)

Lessons learned from what Kos president and CEO Adrian Adams describes as the "tricky early years" of selling Niaspan seem to have influenced the launch of Kos's second product, Advicor—a combination product that includes Niaspan and the generic lovastatin.

Kos clearly concentrated on giving Advicor a more powerful launch than Niaspan enjoyed. In May of 2000, the firm entered a co-promotion agreement with DuPont Pharmaceuticals Co., which provided some help with pre-launch marketing. But when BMS bid to acquire DuPont in mid-2001, Kos exercised a clause it had put in the agreement, and got back all rights for itself, plus a $45 million payment. [See Deal] Adams says he was concerned about BMS because Pravachol is still an important product for it: "We didn't want ours to be a stepchild."

After Kos reclaimed its rights to Advicor, the company says it talked to more than a dozen Big Pharmas about a co-promotion, but no deals resulted. Adams says many of those large companies thought it would not be big enough to satisfy them, or they wanted a larger share of profits than Kos was willing to give. "We decided it may take longer to establish, but we'd rather have it all to ourselves," he says. But Kos did want to get more feet on the street, and so it hired extra reps through a two-year arrangement with Quintiles Transnational Corp. 's contract sales unit Innovex [See Deal]. The CSO brought 150 reps and Kos by that time was fielding 250.

The drug launched in January 2002, and Richard King says it was detailed not only to 10,000 cardiologists, but also 2,000 endocrinologists and 28,000 GPs, most with sub-specialties in cardiology. To identify docs likely to prescribe its products, King says Kos looked not only at those writing scrips for statins, but also for "some surrogates" including treatments for angina and ischemic heart disease. "We assessed various other more local usage patterns as well," he says, noting, for instance, that physicians who use beta blockers tend to have more interest in treating HDL.

"Advicor is the first dual therapy for HDL and LDL. It matches Lipitor for LDL lowering, and it has a beneficial impact on HDL," he declares. King says that claim of equivalence is often met with disbelief and challenged, but explains that a clinical study called ADVOCATE showed Advicor is "as effective as Lipitor and more effective than Zocor on LDL lowering, and far superior on other lipid measures." The study was presented at the American College of Cardiology meeting in March 2002, and Kos says it helped boost sales of Advicor from $26 million in 2002, its first year on the market, to $67 million in 2003.

A number of analysts expected Advicor's sales to cannibalize those of Niaspan, and apparently that did start happening. King says that Advicor, put in first detail position for its launch, started to "overshadow" Niaspan. So in July 2003, Kos and Innovex switched the detail positioning to put the older drug first. Niaspan sales grew 73% from 2001 to 2002, reaching $146 million, and 56% from 2002 to 2003, to reach $227 million. They're expected to hit about $295 million this year.

Now that Kos had two lipid-treatment products on the market, it considers itself responsible for a franchise, and its marketing messages is intended to get attention for both drugs. Adams says the firm's reps talk specifically about Niaspan and its effect on HDL, but they also talk about LDL and triglycerides.

Adams illustrates how Kos reps approach docs now, during telephone detail calls: "Doctor, I'm from Kos Pharmaceuticals and I'd like to talk to you about dyslipidemia. We have a drug that is the most effective for increasing HDL. It's ideal for patients who are already in good control of their LDL levels—it's called Niaspan and you should add it to their regimen without having to change the statin. But, doctor, we recognize that there are patients who are not to goal with LDL, and who want to work on HDL also, so we'd say, switch them to Advicor, which is also a good starting treatment, because it offers broad protection against dyslipidemia."

As of the first quarter of '04, Kos figures that 3.6% of new prescriptions written in the cholesterol market are going to its two drugs combined; about 2.9% for Niaspan alone. By contrast, Lipitor generated $2.5 billion for Pfizer in 2003, and dominated the cholesterol reduction market with 52.1% share.

Kos deliberately limited the length of its CSO contract, Adams says, so that it could be open to "a significant co-promotion relationship." In November 2003, Kos finalized the sort of arrangement its execs believe will power up the franchise. Takeda Pharmaceuticals North America Inc. (a division of Takeda Chemical Industries Ltd. ), which at the time had "over 1,000" sales reps calling on primary care physicians for its own diabetes drug pioglitazone (Actos), agreed to also carry both Niaspan and Advicor for three years. [See Deal] Takeda said it wanted to fully utilize its sales force capacity, and begin preparing for other products in its pipeline. It is responsible for all costs associated with its sales force, including promotional materials and samples. Kos is responsible for manufacturing and supplying both products, and will collect and record all sales.

Adams says Takeda is "almost a perfect match, because they've been successful promoting just one product, calling on GPs and endocrinologists. There are huge synergies, because most diabetics will succumb to heart disease. Our products fit well together and they're committed to our brand." Kos seems to have put some effort into strengthening the link, filing in July 2002 a supplemental NDA for Niaspan as a treatment for diabetic dyslipidemia.

Since the deal was struck, Takeda has added some reps. It now fields 1,250, King says, and so Kos figures its partner can reach about 77,000 physicians. Kos's own 450 reps call on approximately 22,000 of the same doctors, and another 22,000 independently. "Takeda will call on about 55,000 primary care docs we've never seen. Together, we think we'll be able to detail docs with good frequency, so they can hear about HDL amid the clutter of LDL," King says. Between them, he says, Takeda and Kos will call on physicians responsible for writing about 74% of all cholesterol prescriptions.

Takeda is placing Actos in the first sales position, Niaspan second and Advicor third. Market research firm ImpactRx Inc. has data showing that products positioned third in a detail call get little or any benefit. But Adams argues that, "It makes all the sense in the world to go to those doctors with Niaspan as the first product, because it's the basis for Advicor." He points out that GPs may have heard about the need to increase HDL, but not necessarily about Niaspan, so Kos thinks it's important to get them on board, for using it with a statin, first. "Once they're tuned into Niaspan, they're more likely to prescribe Advicor," Adams declares, noting that that the detail positioning may change over time, but that Kos wants to drive Niaspan as fast as it can. He says the firm will monitor how physicians react to the new marketing push over the next 3-6 months, before reassessing it.

Parsimony under Question

Management's moves—from building up and reassigning its own sales force, to doing a deal specifically intended to get attention from GPs—show that Kos realizes the importance of moving beyond marketing to specialists. Since cardiologists comprise a relatively small community—King tallies 13-14,000 in the US—and they've been hearing about Niaspan for seven years now, Kos is hoping that the exposure to an essentially untapped audience of GPs will boost sales for both of its lipid products.

Given the huge gulf between sales for blockbusters like Lipitor, Zocor and Pravachol, and Kos's niacin-based products, some industry observers can't help thinking that Kos should have made a move into the primary care market years ago. That kind of stretch simply wasn't part of Kos's business model, but perhaps it should have been. "The mistake they've made till now, and I'm not sure it's easily rectified, was not having more of a GP presence," Ian Sanderson declares. He acknowledges that Kos is small and such a big task would have been hard to pull off, but the big money the large firms are pulling down in the cholesterol market can set one to daydreaming.

DTC advertising might have created some pull-through for Niaspan, Sanderson muses, but patients have a different sort of relationship with a cardiologist than with a GP. They're much more likely to listen to the specialist's advice, versus plopping down an ad or mentioning something seen on TV. Doing DTC advertising now might help the Takeda effort, Sanderson muses—but then again, might only benefit generic drug manufacturers eager to usurp Kos's sales.

Kos execs say they would rather make measured investments than big, splashy ones. "We don't think you have to compete with the big boys from day one," King asserts. Even as the company reaches for GPs, its modus operandi calls for identifying those most likely to prescribe a niacin-based product, and, he says, "putting in place enough resources to reach them—but not so much that you bankrupt the company."

Kos's parsimonious approach to marketing at times comes under question, Adams says: "Our board often asks, ‘Why don't you spend on DTC advertising? Pfizer, AstraZeneca and BMS are all doing it.' We say, we want to know where the money is going and what effect it's having." So Kos concentrates its spending on medical education and direct selling.

"While our message isn't known by all physicians, if you ask 100 cardiologists, ‘What's the drug of choice for treating HDL', 80% will say Niaspan." Adams declares, adding, "We've been very effective in the markets we've targeted." No one's disputing that. The question is whether Kos, with Takeda's help, can persuade enough GPs to write prescriptions for its drugs that it can continue posting strong growth.

"We believe we're now at the sweet spot in our growth, because the market need is still significantly unmet and we're really the only game in town because we have the only product approved for increasing HDL," Richard King declares. Data will continue driving doctors' decision-making in favor of Kos's products, he says, citing a variety of studies showing the benefits of niacin, though not necessarily prescription Niaspan.

"The landmark Framingham heart study shows that the higher you raise HDL, the less risk you have of developing heart disease," King points out. But he's also got more precise evidence, for instance via the so-called HATS study comparing Zocor versus Zocor plus niacin. In that trial, treatment with Zocor alone reduced patients' LDL levels by 35% and increased HDL by 8%, while bringing triglycerides down 10%. Overall, coronary events for patients taking Zocor alone were reduced 34%. People taking niacin in addition to Zocor fared better still. They saw their LDL lowered 42%, their HDL increased by 26% and their triglyceride levels reduced by 36%. Coronary events were reduced by 90%.

A study called ADVENT (Assessment of Diabetes Control and Evaluation of the Efficacy of Niaspan) showed the drug raised HDL by 24% versus placebo. It's a helpful result because controlled-release niacin has generally been little-used for diabetics, since high doses of the ordinary vitamin were shown to increase the HbA1c levels that patients strive to keep in control.

In addition to flaunting flattering statistics from a variety of clinical trials, Kos reps are surely also talking up revisions to guidelines for preventing cardiovascular disease in women. New guidance issued in February 2004 by the American Heart Association says that women should ideally not allow their HDL levels to drop below 50 mg/dl. Previously, the safe level was 40 mg/dl. Adams says the revision triples the number of women who require therapy to 28 million, but acknowledges that doctors "initially do start to identify only those patients with really, really low HDL—like 25." Still, the guideline can only work in Kos's favor, and likewise the recent advisory by the Center for Drug Evaluation and Research that cardiac patients should not take over-the-counter niacin but instead seek out the prescription form.

Kos is very optimistic about its prospects. Adams says the overall corporate goal by the end of 2007 is to capture a 7-8% share of all cholesterol prescriptions. That's a hugely ambitious goal, which Adams thinks can be achieved "with our focused effort driving share of voice, and share of mind."

Enthusiasm, Meet Realism

Industry observers are more measured in their optimism, for a number of reasons that include the very nature of Niaspan, the status of patents protecting it, the brutality of big pharmaceutical players whose statins dominate the cholesterol market, and the experiences of other small companies who've had a go at primary care markets in the US.

Bob Caprara, VP of ImpactRx, a market research firm that monitors prescription-writing by physicians, says, "Kos could have the best product in the world at this time, but it still all comes down to promotion." The statins are among the most heavily promoted of all drugs on the market today, and that's not going to change, he points out. AstraZeneca PLC has recently been pushing hard on the promotion of rosuvastatin (Crestor), "and everyone is playing defense against that," Caprara declares. He notes that Merck and Schering-Plough Corp. are planning a huge launch for their combination product, called ezetimibe/simvastatin (Zetia/Zocor), sometime in the second half of 2004. [See Deal]

"Cholesterol is a chronic market, but right now it's hypersensitive to promotion. The docs seem to really have their ears on. When you promote, it has an effect," Caprara observes. "That's good for the big boys, but not so good for Kos." As IN VIVO went to press in early March, ImpactRx data showed that in the PCP network it monitors, Advicor is getting about an 8% share of attention (share of detail activity), meaning that the doctors are hearing 11 details for other cholesterol products for each Advicor detail. Among cardiologists, the ratio is closer to 20 to 1.

Caprara notes that Merck and Schering-Plough are making effectively the same pitch for ezetimibe (Zetia) to doctors that Kos does for Niaspan—to prescribe their new pill in combination with a statin. And they'll be putting huge resources behind the message that Zetia lowers LDL by a unique mechanism. While statins work in the liver to decrease LDL, Zetia works in the digestive tract to decrease absorption of cholesterol from the diet. The reasoning for prescribing Zetia is different than for Niaspan—to get a bigger drop in LDL cholesterol, as opposed to boosting HDL—but the action requested of prescribers is the same. Caprara figures, "If docs are prone to play that game, and give something in addition to a statin, they're going to go with Zetia."

Asking physicians to mind patients' HDL as well as their LDL is asking them to change the way they think about treating cholesterol, Caprara argues, and he believes that's a Herculean task better suited to a big company with lots of money and lots of reps dedicated to delivering that message. "It's going to be hard to change the way doctors think when they're getting deluged with messages about efficacy and safety," he asserts, adding that big companies and reps pitching top-selling products get more respect in the marketplace: "The Lipitor rep coming in and saying something has a lot more juice than Takeda pushing Advicor. The doc is going to listen more."

Winning Takeda's agreement to send Kos's products out with more than 1,250 sales reps is a big move for a specialty pharma company like Kos, but it's a move that occurs in the context of other, far larger companies sending 5,000 and 6,000 salespeople into the cholesterol marketplace. The big companies have a lot riding on their products, and they're not going to cede share lightly to anyone. "There are huge numbers of troops fighting hard out there in the cholesterol marketplace," Caprara explains: "Nobody's sneaking through the jungle in Vietnam. This is World War I trench warfare. Kos is like one platoon fighting in a major battle for GPs' attention." He's betting the fighting is only going to get nastier once Merck and Schering-Plough launch Zetia/Zocor.

"It's going to take a Pfizer to get primary care docs to buy into the message of increasing HDL," Caprara asserts: "That may sell with cardiologists but to influence PCPs, you're going to have to hammer on the message over and over and over. Pfizer can do that, if they decide they want to." And it looks like they do.

Pfizer is working on a new drug for elevating HDL cholesterol. It acquired the compound, called torcetrapib, through the purchase of Esperion Therapeutics Inc. in 2003 [See Deal], and is developing it only in fixed-dose combination with Lipitor, not as a stand-alone treatment. The compound is meant to inhibit cholesteryl ester transfer protein (CETP). Secreted by the liver, the protein transfers cholesteryl esters from HDL to LDL cholesterol. Phase II data showed that 60 mg of torcetrapib, in combination with 40 mg of Lipitor, lowered LDL by 60% and boosted HDL by 55%. There's some question as to whether the HDL produced in response to the drug is active, and higher doses elevated some patients' blood pressure.

Ian Sanderson says that already, "there's a lot of enthusiasm around Pfizer's CETP inhibitor." Japan Tobacco Inc. also has a drug candidate of that class in Phase II trials. Even if all goes well in development, these inhibitors are still at least three or four years from market. Too far off to be an immediate threat to Kos, they're nevertheless casting shadows. "As soon as something new comes along, Niaspan will be relegated to second-line therapy," Sanderson declares.

Unlike Capara, he believes that many doctors already are aware of the merits of elevating HDL, but they're just not that keen on Niaspan. "The lipid specialists we talk to are dying for a good HDL-increasing medicine. They all know about niacin; it's been out there for 30, 40 years," he says. Because Kos's lead product is niacin, in an extended-release formulation, it can still cause flushing. The events reportedly occur about 70% less often, and decrease over time. The drug is dosed at night, and some doctors say taking it with aspirin helps. Still, flushing is a drawback that Sanderson thinks is going to make the drug "a hard sell in the GP market," if only because docs have to take the time to explain the issue.

Like other analysts that follow Kos, Sanderson is also concerned about Niaspan's patent status. Barr Pharmaceuticals' Barr Laboratories Inc. division first challenged Kos's patent in January 2000, filing an application to produce a generic version of extended-release niacin. The trial is set to begin early next year, though a summary judgment could be issued by the end of this summer. Sanderson says, "There is a chance, and a pretty good one, that Barr defeats them." An appeal could stretch the case into early 2006, but Kos could feel the hurt sooner than that.

"If there is a decision in Barr's favor, they'll probably do an at-risk launch" of a generic extended-release niacin, Sanderson suggests. The dynamics have him wondering, "whether Kos is now trying to run that business like a cash cow," and what else it could be doing to help itself.

"If I were Kos, I would have tried to get Takeda to emphasize Advicor, because of the Niaspan patent situation," Sanderson declares, adding that, "The key selling point of Advicor is simply that it's cheap. For a patient with mildly elevated LDL, it's the cheapest way of treating that and getting HDL benefit." Kos raised the price of Advicor late in 2003, and again at the start of 2004, but at $2.05 a day, it's still about half the price of Niaspan and lovastatin purchased separately. About 85% of managed care organizations include it on their formularies—a plus if Kos can convince health plans to try it first.

Forging On, Filling Out

Kos's managers say that of course they know the cholesterol market is fiercely competitive, but they're banking on the fact that for now, they've got the only drugs approved for increasing HDL. So they see medicines like Pfizer's new combination product Caduet, which unites Lipitor with the hypertension drug amlodipine (Norvasc) as a convenience product for patients with those two separate disorders. Likewise, the upcoming Zocor/Zetia drug may have enhanced LDL lowering properties, but "has no impact on HDL. We've still got the only drug in this niche," Adams insists.

The company is developing a reduced-flushing form of Niaspan, as well as another combination product that will pair the original with generic simvastatin. Kos aims to have the combo ready by mid-2006, when the patents on Zocor are scheduled to expire. "Being able to offer a more powerful statin might help them in the cholesterol market, if they can hold on through the patent challenge," Sanderson suggests.

While Kos's fortunes in the near term clearly depend on its ability—now boosted by Takeda—to build its niacin-based franchise in the US, the company has been taking other steps to boost growth as well. For instance, it put responsibility for European marketing in the hands of Merck KGAA . [See Deal] The mid-sized German company launched Niaspan in the UK in November 2003, and anticipates introducing the drug in other EU markets throughout 2004 and 2005. Kos will now start to collect milestone payments and a portion of profits from its European marketing partner—and it saved itself the expense of establishing infrastructure there, a decision that a growing number of biotech firms are taking. (See "Why Not Europe?" IN VIVO, November 2003 (Also see "Why Not Europe?" - In Vivo, 1 Nov, 2003.).)

Kos has also turned to business development for a boost.

Kos acquired triamcinolone (Azmacort), an inhaled nasal steroid product, from Aventis SA in March 2004 for $200 million [See Deal], and is preparing what will effectively amount to a re-launch of the product. Peak sales once reached $250 million, Richard King says, but fell off when Aventis stopped all promotion to focus on bigger brands. The drug generated $88 million in 2003 for Aventis.

Kos plans to pitch Azmacort as a "tried and true steroid." It will hire 50 new reps that have a respiratory background to carry the product, primarily to specialists such as allergists and pulmonologists. But Kos also intends to leverage its current sales force to promote the drug to PCPs, who write the vast majority of prescriptions for patients with asthma.

"We're preparing the way for our own pipeline," Adams declares, explaining that Kos's interest lies in what he calls "the respiratory market." That term usually does cover products like the nasal steroid, but Kos's plans call for leveraging an inhalation delivery platform to deliver proteins like insulin. Nothing presently in the pipeline is slated for marketing before 2010; inhaled insulin is just in Phase I trials now.

Adams brushes off questions about selling into a brand-new market as no big deal: "Our reps will be using the skills they've already got—grasping science and presenting data to target groups—just in a new therapeutic area," he asserts. Adams says Kos aims to do in "the respiratory market" what it has already done in the cholesterol market—namely, develop improved formulations of existing drugs and market them cost effectively.

"We could continue to just generate sales for Niaspan and Advicor and nothing else, but we think we can again make use of a fast-to-market, low-cost strategy," Adams declares. Adams says the company is on the lookout for other business development and in-licensing opportunities, and believes Kos's model is robust enough to help it grow into "a billion-dollar company that competes with big and medium-sized pharmaceutical organizations."

There's no telling at this time how far Kos can take its model, and how well it will fare in maintaining growth that now depends so heavily on what is essentially a vitamin pill. Perhaps the new push into the GP market will be just what the doctor ordered for Kos, but other small companies who've tried to make a go of it in primary-care markets have found the going rough. When Elan Corp. PLC , for instance, launched its migraine drug frovatriptan (Frova) in late 2002, it managed to win 7% market share among neurologists. But these doctors write only 1% of total prescriptions for triptans, a market dominated by GlaxoSmithKline PLC 's sumatriptan (Imitrex). Elan's partner UCB Pharma Inc. meanwhile exerted barely any influence on GPs in the US with its 400-person sales force, getting just 1% of prescriptions. [See Deal] Frova has now come back to its owner—then known as Vanguard Medica; now a part of Vernalis PLC —another small firm whose marketing options are limited for financial reasons. [See Deal] (See "A Rare Second Chance at Partnering Success for Vernalis' Underperforming Frova," IN VIVO Europe Rx, May 2004 (Also see "A Rare Second Chance at Partnering Success for Vernalis' Underperforming Frova" - In Vivo, 1 May, 2004.).)

Kos's executives are familiar with dour forecasts; they've endured them before and so aren't overly put out now. Richard King recalls, "In the early years, so many people said that Niaspan would be a $25 million drug at best. Look at what we achieved." Kos is game to pursue the next phase of its growth, and feels it now has the co-promotion partner it needs—as well as the data—to win share in a ferociously competitive market where GPs write the vast majority of prescriptions and the biggest drug companies in the world duke it out with each other, sparing no expense. Kos will compete going forward as it has before: with a focused strategy that management believes can expand to fit its needs.