Son-Of-Xigris Goes to Biotech--Where it Belongs?

When Eli Lilly licensed the follow-on drug candidate to sepsis treatment Xigris to Cardiome, it was a tacit acknowledgment that this family of specialist products may be better suited to biotech. Perhaps they should have done the same with Xigris.

At first glance, Eli Lilly & Co. ’s licensing deal with Cardiome Pharma Corp. on April 30 may not have appeared particularly remarkable. Lilly has after all been one of the more active Big Pharma out-licensers, and LY458202, in Phase I trials for cardiogenic shock, looked rather too niche for the larger firm—but perfectly suited to a cardiovascular-focused biotech. [See Deal]

But this wasn’t any old out-licensing deal. LY458202, also known as GED-aPC, is an engineered analog of recombinant human activated Protein C, and was developed as the back-up to drotrecogin alfa (Xigris), which Lilly currently markets for severe sepsis. Xigris has been one of the industry’s most high profile disappointments since it was approved in the US in late 2001, tainted by side effects, in particular uncontrolled bleeding. In 2006 it sold less than $200 million, down 10% on the previous year and a far cry from the $3 billion in peak sales that some analysts had predicted. (In Europe, Xigris received approval in 2002 under "exceptional circumstances" which means it is reviewed annually.)

Lilly says it’s sticking firmly by Xigris, not too surprising given the many years millions of development dollars it has invested in the drug. Yet it was persuaded to part with Xigris’ offspring—theoretically a better molecule, designed to show better anti-thrombotic and anti-inflammatory activity without increased bleeding--for a mere $20 million up front and up to $40 million in milestones, the first of which isn’t payable until the start of Phase III, estimated in 2009. There’s no clawback, no opt-in or co-promotion rights, and no equity stake. Cardiome pays the fees just once, but gets an unrestricted license across all of a dozen or so potential indications—including sepsis—although it will owe sliding scale royalties from high single digit to low double digits, depending on sales.

Lilly’s justification: We can’t do everything; we have a strategy around Xigris; it would be some time before we could get GED-aPC to market anyway; and meantime there’s Phase III anti-platelet prasugrel to look after. Perhaps most significantly, "we don’t want to spend hundreds of millions of dollars on it," says Mike Johnson, director, corporate business development at Lilly. In other words: we’re not about to make the same mistake twice.

In fact this kind of deal is what Lilly, with the benefit of hindsight, wish it had done with Xigris—sell it to a specialist biotech that can afford to start small, in niche yet better-characterized conditions, rather than trying to create a blockbuster in what was then, and now still is, a graveyard indication like sepsis.

Particularly when that biotech’s CMO and EVP, Clinical and Regulatory Affairs is Chuck Fisher, MD, the man who drove the Xigris development and regulatory program while he was at Lilly. (See "Protein C: Saving Lives, Saving Lilly," IN VIVO, May 2001 (Also see "Protein C: Saving Lives, Saving Lilly" - In Vivo, 1 May, 2001.).) It’s a safe bet that this Cardiome deal wouldn’t have happened without Fisher, who, having researched sepsis for many years, arguably knows Xigris and GED-aPC better than anyone else, and also what to do with it. "I had my eye on it [GED-aPC] for a long time," Fisher told IN VIVO.

Nevertheless, this wasn’t an easy deal for Cardiome to pull off. Negotiations lasted almost two years. Competition wasn’t the problem—there were only two or three companies Lilly would have felt comfortable dealing with, says Johnson. The problem was Lilly’s internal team, "which made an extraordinary effort to keep the drug," notes Fisher. And it’s easy to see why: they had been working on the molecule for six years; apart from the emotional attachment to the franchise, trade secrets around the manufacturing of such a complex biologic were also an issue. "It was a long drawn out journey, both for the molecule and for the manufacturing," sums up Johnson. "We spent lots of time and money figuring out the best cell line and process to use, which media to feed the organism, etc.…it was important to [structure a deal that would] protect those trade secrets."

But Lilly management also wanted the drug to see the light of day, and extract what value it could from it at no additional cost. The company was considering a spin-off, according to Fisher—who certainly would have gone with this if the option had been on the table while he was still with Lilly--but he persuaded them that giving the compound (the first ever biologic that Lilly has out-licensed) to an established company like Cardiome would get the drug to patients faster.

Indeed, Fisher also reckons his new company can do a better job than Lilly at marketing GED-aPC, even though for now Cardiome has no sales force. Lilly’s mistake with Xigris, argues Fisher, was to launch a completely novel new drug with significant side-effects for an until-then untreated but broad and complex condition without fully understanding which patients would respond best to the drug. The combination of adverse events and relatively low efficacy in the general population has caused most hospitals to restrict Xigris’ use has to specific patients with severe sepsis.

All this tainted the Xigris brand, notes Fisher, who resigned from Lilly at the beginning of 2002. For GED-aPC, Cardiome is taking on what Fisher describes as more manageable (yet hardly plain sailing) indications initially, including cardiogenic shock and veno-occlusive disease. The idea "is to bootstrap our way up via niche indications," Fisher explains, and eventually, perhaps, explore sepsis too. (See Exhibit 1.) Just how Xigris should have been commercialized, in other words.

So doesn’t that parent drug, too, truly belong in a specialist biotech whose sales threshold is below $250 million? "We certainly expressed interest in Xigris," notes Fisher, who was keen on co-promotion rights to the drug. But despite Xigris’ performance to date and despite its awkward profile as a very expensive drug (nearly $7000 for a four-day course) with safety issues in a highly cost- and safety-sensitive environment, Lilly execs aren’t abandoning Xigris just yet. "We’re in invest mode on Xigris, not in sales mode," emphasizes Johnson.

The investment’s going into a biomarker strategy to prospectively identify patients that will respond to Xigris and get the drug back on track. A Phase II study is underway to try to identify optimal dosage and timing based on patients’ Protein C levels. Lilly in February 2007 announced the start of a new Phase III placebo-controlled Xigris trial which will also "further clarify the drug’s benefit/risk profile," all this in the context of the drug’s fourth annual EU license review.

For Cardiome’s Fisher this deal is the opportunity to take control of and make good on an almost life-long project: Fisher has worked on the trials of most of the sepsis drugs, all of which, except Xigris, have failed to make it to market. But the deal also sets up a nice industry case study comparing how efficiently and quickly a biotech and a Big Pharma can develop and commercialize an innovative, biotech drug in a specialist, critical care indication. Lilly hopes that Cardiome will approach it as a partner if the drug is a rip-roaring success. "We don’t have a contract claw-back, but it’s reasonable to think they might come back as we’re experts," says Johnson.

Lilly’s probably not holding its breath, though. For one thing, it knows how tough it is to develop and market drugs for sepsis. Indeed, Fisher initially had to persuade even a couple of Cardiome’s own board members to support the project, in part because it risked diverting focus from the biotech’s lead drug vernakalant, designed to treat atrial arrhythmia. Second, Cardiome, like many biotechs, has its own downstream ambition. "There may be an opportunity three or four years down the road to put a small sales force into the field in acute cardiovascular," noted Cardiome’s CEO and chairman Bob Rieder on the conference call announcing the deal. In the $300-500 million cardiogenic shock market, there wouldn’t necessarily be room for Big Pharma—even one that has tried this before.

Melanie Senior