Neck-and-Neck in Nephrology

Nabi with PhosLo and Genzyme with Renagel now split the market for dialysis patients requiring treatment for high phosphate levels. Soon a third firm will enter the fray--the UK's Shire. Thus far, the marketing battle has been fought with nitty-gritty clinical data. But now Genzyme is raising the notion of "accumulation" to stigmatize competitors, while Nabi emphasizes the issue of cost. The competitive stakes are rising because Medicare changes in 2006 will dramatically expand the market.

Genzyme and Nabi are duking it out in the renal-disease market, each claiming product superiority and seeking dominance as the commercial stakes rise.

By Deborah Erickson

• Nabi with PhosLo and Genzyme with Renagel now split the market for dialysis patients requiring treatment for high phosphate levels.

• Because nephrology is a true specialty market, companies can sell successfully with small sales forces—a fact not lost on the UK's Shire, which aims to launch Fosrenol, its own in-licensed hyperphosphatemia drug, in the US this year.

• Thus far, the marketing battle has been fought with nitty-gritty clinical data. Now Genzyme is attempting to break away from that level of detail by raising the notion of compound "accumulation" in an attempt to stigmatize both Nabi's and Shire's offerings.

• Tiny Nabi is throwing some tough punches itself, emphasizing that PhosLo, the product it in-licensed just a year ago, is much less expensive than Renagel. That argument resonates these days, but Genzyme hopes for data to defeat it.

• The competitive stakes are rising because in 2006, Medicare will extend reimbursement to oral drugs and dramatically expand this market.

For fifty years, people suffering kidney failure have received dialysis treatments to purify their blood. For nearly as long, doctors have recognized that these patients need to manage the amount of phosphorous in their blood on a daily basis. While most people automatically excrete this element and other unneeded dietary components they take in through their diet, those without working kidneys can't do that. It's a problem that needs tending because high phosphorous levels can lure calcium out of the bones, weakening them. They can also lead to the calcification of soft tissues and all the trouble that entails, such as hardening of the arteries.

Hyperphosphatemia is now a problem that companies are fighting to solve. One of the competitors is Nabi Biopharmaceuticals , which only last year took license to calcium acetate (PhosLo) from private firm Braintree Laboratories Inc. [See Deal] Launched by Braintree in 1990, PhosLo was the first prescription drug in the space, and for many years, the only one. Nabi is locked in battle for market share with Genzyme Corp. , which five years ago launched a competing polymer-based product called sevelamer (Renagel) that has been taking share ever since. Currently, the companies split the market just about evenly in terms of prescriptions written. In fact, they probably each take a third, with the rest of the market managing phosphorous levels with calcium carbonate, sold over the counter as Tums—but there are no figures to track the non-prescription product.

Genzyme gets more dollars from its half of the market because Renagel is at least twice and by some counts five to six times more expensive than PhosLo. Nabi is working to exploit this price discrepancy, via marketing that emphasizes its drug is more cost effective. Genzyme, for its part, insists that Renagel is superior because it is not calcium-based and thus cannot be linked with calcification. Genzyme's marketing and clinical trials clump PhosLo together with Tums, tarring both calcium-based treatments as potential—if not yet fully confirmed—contributors to calcification of soft tissue.

Soon a third company will enter the fray: Shire Pharmaceuticals Group PLC , of the United Kingdom, hopes to gain FDA's approval to market lanthanum carbonate (Fosrenol) in the US before this year is out. Shire licensed this phosphate binder from AnorMed Inc. of Vancouver, Canada, and is already touting that Fosrenol has a higher binding affinity for phosphate than calcium or aluminum [See Deal]. The company is also emphasizing that its drug is not calcium-based, in an apparent attempt to play to the concerns that Genzyme stirs up with nephrologists. Shire will probably also seek to compete on price, since Nabi is making that an issue.

But lately Genzyme has been begun talking up a point meant to stigmatize both Nabi's and Shire's drugs—namely, the concept of "accumulation." New advertisements for Renagel feature a tidy bedroom with a closet that's packed to the rafters with junk, and the slogan, "Why clear away one complication and create another?" It's a line clearly meant to stir up some fear—of calcification in the case of PhosLo, and of worse—dementia—in the case of Fosrenol.

Most nephrologists and some dialysis patients already know, and are now being reminded, that aluminum-based phosphate binders used in the 1970s and 80s caused dementia as the metal accumulated in patients' bones and brains. Shire can proffer safety data gathered in the course of developing its own metal-based drug, but cannot yet produce long-term studies. Genzyme aims to put the newcomer on the defensive right along with Nabi.

For now the marketing battle is squarely between Genzyme and Nabi. Each company claims the other is being deliberately misleading through the data it presents or neglects to present, and how they frame it. Each criticizes the other's clinical trial designs, and each evokes emotional arguments to the tune of, "how could anyone in their right mind prescribe that for these poor patients who are suffering so?"

The pitch of the battle is rising, because the commercial stakes are going up. In the US, some 275,000 people now have end-stage renal disease that requires dialysis and treatment with a phosphate binder. That number is expected to nearly double to 520,000 by the end of the decade as the population ages and rates of diabetes and obesity continue climbing. But there's more than organic market growth to fight over: from 2006, when new changes to Medicare policy come into effect, the number of patients eligible for treatment with some sort of prescription phosphate binder will instantly expand by a third.

When Medicare drug benefits are extended for the first time to oral medications, the 100,000 or so patients in the US who now cannot afford anything but Tums to control their serum phosphorous levels, will be eligible to get something better—at the government's expense. No wonder these companies are fighting to position their products as the superior treatment. There's even incentive beyond the Medicare windfall on the way, given that the trend in chronic-care medicine, private and state-funded, is to treat patients earlier, in hopes of staving off big, expensive problems. If, eventually, it's shown that people with failing but still somewhat functional kidneys can benefit from earlier management of their phosphate levels—i.e., if they can avoid dialysis entirely or for some years longer than they otherwise would—then the patient population for phosphate binders could swell to include millions of people.

It's clear there's now a lot at stake in a market that until five years ago was a sleepy little corner of the pharmaceutical industry. What's less clear is whether Genzyme's stance on accumulation can overshadow pricing arguments put forward by Nabi…and whether either can hold up against the product Shire expects to launch soon: a relatively inexpensive, non-calcium-based product. Until and unless Genzyme has firm clinical proof to justify its premium pricing, cost remains a strong enough argument to balance out the potential long-term risk of calcification—and hold these competitors to equal share.

The Calcification Question

For Nabi, in-licensing PhosLo in August 2003 was a way to get a marketed product that would generate cash to support clinical trials of the firm's other development programs. Better yet, it would help the company—which had only just sold off its core legacy business in plasma collection—get to know clinicians and payers in the nephrology market, where it aims to soon sell StaphVAX, a vaccine against Staphylococcus aureus. The vaccine, now in Phase III trials, is being tested in dialysis patients—in part because they are at high risk of infection by the bacteria but also because they come into dialysis centers for thrice-weekly treatments and are easy to access.

PhosLo wasn't up for sale when Nabi's head of business development went looking for opportunities, explains president and CEO Tom McLain. But it had become "sort of an orphan" in originator Braintree's portfolio. Braintree had been able to show the FDA that PhosLo was an effective phosphate binder—and the company could make that case without spending a lot of money, since calcium acetate had been around long enough to be considered a GRAS (generally recognized as safe) ingredient. Producing the product is also relatively simple, so it yields good returns even at modest pricing.

Over the years, Braintree's focus shifted to gastrointestinal products, "so PhosLo wasn't core for them, but it was good for us, so we approached them," McLain explains. Nabi was already marketing products to hospital-based specialists, he notes, and since nephrologists often have their offices at hospitals, and dialysis centers tend to be close to hospitals, the company could leverage its existing sales force by detailing PhosLo. McLain also reasoned that the sort of consultative selling required for PhosLo would be a competency worth strengthening, since StaphVax as a new sort of prophylactic treatment, will be sold largely on the basis of pharmacoeconomic arguments.

Best of all, from Nabi's perspective, was the clinical data Braintree had recently gathered in a trial pitting PhosLo against Renagel, the competing phosphate binder that launched in 1999. "When you call on nephrologists, they want data and they want to talk it through," McLain asserts, so Nabi could take what Braintree compiled and run with it. The so-called "CARE" trial (Calcium Acetate Renagel Evaluation) that Braintree conducted is the only double-blinded, placebo-controlled comparison of the two products, and Nabi says it clearly shows that PhosLo is a superior phosphate binder to Renagel. The study did not look at calcification, however.

"Other clinical studies that have been done in the area have not tested Renagel against PhosLo specifically, but against a combination of calcium-based binders. They have all been open label and consequently open to bias, and that is not the right thing to do scientifically," declares Henrik Rasmussen, MD, PhD, Nabi's SVP, clinical, medical and regulatory affairs. He says that in previous Renagel comparison studies—in particular, Genzyme's "Treat to Goal" study—many patients in the group taking Renagel also received a couple of Tums at night time, "because most of them are getting hypocalcemia. Too little calcium is not good either, but they did not control for that supplementation." In the study Braintree did, people received just its calcium-based binder, and no other.

According to Rasmussen, Genzyme's message is that "calcium is bad for you." The competitor "bases its story on one study where patients were randomized to get either Renagel or a calcium-containing binder, and then they looked at cardiovascular calcification," he says. Yet although acknowledging that the "Treat to Goal" study did show an increase in calcification in patients that took a calcium-based binder, Rasmussen disagrees with Genzyme's conclusion that this result was related to the calcium in the pills. Rasmussen and Nabi maintain that, "the quantities of calcium that people are getting through the binders has no correlation to calcification."

Rasmussen argues that the reason the patients taking Renagel exhibited less cardiovascular calcification is not because the polymer-based binder contains no calcium, but because it reduces LDL cholesterol. Other studies where cholesterol was reduced also showed delay of calcification, he notes. "Genzyme is quiet about the fact that Renagel was originally developed as cholesterol-lowering agent. They did not emphasize that the LDL of patients in the "Treat to Goal" study went from an average of 100 to 65 mg/dl," Rasmussen declares. The findings connecting cholesterol lowering to reduced cardiovascular calcification have inspired Nabi to launch a new Phase IV clinical trial it calls PRECISE, in which it is administering PhosLo with Pfizer Inc. 's atorvastatin (Lipitor). PRECISE stands for "Prevention of Cardiovascular Calcification in End-Stage Renal Disease." Nabi expects the pairing of drugs will prevent cardiovascular calcification—through Lipitor's expected reduction of LDL cholesterol—and thus remove the onus that Genzyme continues placing on calcium. "We are going to show the world that the calcium in the tissues has nothing to do with the calcium in our pill," Rasmussen says.

Beyond the clinical points that Nabi says show its product is superior, the company also makes an economic argument in favor of PhosLo. Rasmussen says that the annual average cost for one year of PhosLo is about $750, versus about $4,300 for Renagel—a difference on a daily basis, of about $2.14 for PhosLo versus $11.70 for Renagel. Given that discrepancy, he asks, "Why would anyone in their right mind prescribe Renagel for this impoverished patient population, when they can get better phosphate control with PhosLo?" When the concerns about calcification are raised as a possible reason, Rasmussen argues that, "Even if Lipitor is added to the therapy, so there is less calcification, the cost is still less than half that for Renagel."

PhosLo generated $12.9 million in sales from August 4, 2003, the date Nabi acquired it, through December 27th of that year.

Genzyme's Rebuke

Just about every point that Nabi makes in favor of PhosLo and against Renagel is refuted by Genzyme, which acquired Renagel and its developer, a company called GelTex Pharmaceuticals Inc. (now Genzyme Drug Discovery & Development ), for $1 billion in cash and stock in 2000 [See Deal]. The companies had forged a joint venture in 1997 to promote the drug [See Deal].

Renagel is now Genzyme's second most important product, generating $282 million in sales last year, with $100 million of that from sales in the EU. Originally, GelTex had no expectation that the drug's sales would be anywhere near that high. So says Mark Skaletsky, GelTex's founding CEO, and now president and CEO of Trine Pharmaceuticals Inc. "It was clear there was a need for product like this," he explains. "because the clinicians we spoke to were concerned about hypercalcemia." Still, GelTex knew the calcium-based binders were cheap, and that its own new polymer would have to cost much more, to justify the expense of discovery, trials, building a factory, etc. The company recognized the challenge of taking share in a market where many patients are covered by Medicaid, a parsimonious payer.

GelTex debated at board level whether or not to proceed with development of Renagel, according to Skaletsky. "We decided to do it, if only to demonstrate that we could, through the use of polymers, remove substances from the GI tract." GelTex had as its main corporate goal a bigger objective: to develop a polymer that would absorb cholesterol from the intestine and thus compete in the huge primary care market.

Renagel does lower cholesterol, in addition to binding phosphate, but it and other candidates GelTex produced could never match the cholesterol-lowering power of statins like Lipitor.

But just as GelTex underestimated Renagel's potential in the late 90s, so it appears that Genzyme overestimated it at the beginning of 2000 when it acquired the company. Then, Genzyme announced that it expected Renagel to be a $500 million product within five years. That hasn't happened yet, and analysts say it's probably not likely now. Philip Nadeau, PhD, an analyst who covers Genzyme for SG Cowen, explains, "With the increase in competition coming from Shire, we don't show much growth for Renagel. We think in 2008, it may be a $450 million product."

Renagel took off slowly primarily because it was more expensive than PhosLo and both were equally effective at removing phosphorous from circulation. Initially, explains John Butler, SVP and general manager of Genzyme's renal business, "doctors tended to prescribe Renagel only when patients' calcium levels shot up. That continued through our launch," he says, "but we continued talking about the importance of managing calcium levels, and emphasizing that Renagel could remove phosphorous without raising patients' calcium level."

At first, Genzyme didn't have much data to support its argument that there are consequences to giving patients calcium. But then in 2000, a study published in the New England Journal of Medicine, which had nothing to do with Renagel, gave the drug's marketers something to crow about. Butler says the study, by lead author William Goodman, MD, of the University of California at Los Angeles, showed that "more calcium—in whatever form—leads to more calcification of soft tissues." The publication marked the first significant inflection point for Renagel, Butler claims: "It changed the way physicians were looking at calcium. Obviously, we promoted the paper heavily." The company increased its sales force to take advantage of the news, he says, and now fields about 80 reps.

Over the years, Butler contends, a growing number of studies have found a connection between the amount of calcium that dialysis patients are taking in, and the amount of calcification in their tissues. Butler points out that the results of Genzyme's own "Treat To Goal" trial, first reported in June 2001, showed the same thing. The 12-month trial continued on to 24 months, and he asserts that it "found significant differences [in patients' calcification levels] at six months, 12 months and 24 months." The study did not differentiate between PhosLo and calcium carbonate; patients taking either were considered to be on calcium-based binders.

"This is the study Nabi takes the most umbrage at. They like to compare it to their CARE trial," Butler says, adding that he finds the comparison hardly warranted. He notes that Nabi's CARE trial was an 8-week study that used "clearly suboptimal" dosing of the capsule form of Renagel, which Genzyme has discontinued. But Butler's biggest criticism is that Nabi (actually, Braintree) didn't measure calcification at all, in their study, "yet they say their drug is more effective. We think it's weak, and it's old news," he concludes.

As for Nabi's contention that Renagel's better outcome on cardiovascular calcification stems from its LDL-cholesterol lowering effect, Butler acknowledges that Renagel does lower cholesterol, but says other independent studies have correlated calcification to the ingestion of calcium. Indeed, he suggests that Nabi is trying to have it both ways—saying PhosLo is not related to calcification, but then also saying they can control calcification by adding a statin.

Steven Burke, MD, Genzyme's VP, medical affairs, explains that with the "Treat to Goal" study "we were delighted to prove the point: it does matter how you treat the phosphate. It's not just about the level in the blood." He says he doesn't know if PhosLo and Tums are really different, but asserts, "they're probably not as different as Nabi would have you believe. We did see progressive calcification in users of both products."

Burke cites an independent study by Gerard London, MD, of the Hospital Fleury-Merogis in France, that investigated the ramifications of arterial stiffening and vascular calcification in end-stage renal disease. The physician concluded that the severity of a patient's calcification score is a strong independent predictor of overall and cardiovascular mortality.

"Given all these papers showing that calcium-based binders are related to calcification, which is predictive of cardiovascular disease," Burke says, "I just don't understand why doctors are still writing PhosLo prescriptions for people that have drug coverage." Cost may be an issue, he concedes, "but Nabi tries to confuse the issue" he asserts."

Looking Closer at Cost

Nabi exaggerates the cost of Renagel when arguing on behalf of its own drug, Butler declares: "They say a year's worth of Renagel costs $4,300, but if a patient is fully compliant, it's more like $3,000 a year—and we know that people don't take nearly all of what they're prescribed, so the actual average cost of therapy with Renagel is closer to $1,400 a year."

And even that may matter less in 2006, when Medicare coverage is extended to oral drugs. After that, nephrologists may write more prescriptions for Renagel, Butler figures, because they won't have to worry about their dialysis patients directly bearing the burden of the higher-priced drug. Patients with private insurance already get that relief, he says, explaining that Genzyme "contracts with insurers to be on the same playing field as PhosLo. The insurers pay the difference," he notes, "but they're willing to do that, because we've shown our product is worth it."

Yet the cost-effectiveness argument that Nabi makes for PhosLo—and which Shire will make for Fosrenol—resonates loudly these days, when governments and individuals alike are scrutinizing spending on health care. Every company selling in competitive markets is feeling the pressure to produce data that can justify premium pricing against less-expensive alternatives.

Consequently, Genzyme has a lot riding on a 2,100-patient study called DCOR (Dialysis Clinical Outcomes Revisitation) which began in 2001 and which should wrap up by the end of this year—with data ready for public presentation by mid-2005. As before in the company's "Treat to Goal" study, this trial does not differentiate between calcium carbonate and acetate, rather regards them as calcium-based treatments in one arm, vs. Renagel. DCOR is geared to look at hospitalization and death rates for people on these treatments—measuring how many times a patient is put in a hospital and for what cause, and whether they die from a cardiovascular event.

Butler says, "We think that if we show that Renagel, versus whichever form of calcium, keeps more patients alive, then we'll be able to get more than 50% of the market." Burke adds, "If it's true that our product reduces morbidity, that's where the real cost is. The average dialysis patient is hospitalized once a year, for four to five days. If we do reduce that, then Renagel may turn out to be cheap compared to calcium." He says Genzyme is working on additional studies that could reveal other beneficial attributes of Renagel, such as, potentially, the ability to preserve bone density, and so give weight to the argument that it's a superior drug.

Positive data will help Genzyme in its fight with Nabi, but won't defend against Fosrenol. Shire will certainly tout that its new drug is not a calcium-based binder, Butler notes, "since not a lot of physicians think that depositing calcium in patients' hearts is a good thing." But Genzyme is prepared to counter the argument.

Burke points out that, "Since it's a metal, it's absorbed. It accumulates in the body." Given the history of trouble with metals—or at least, with aluminum—accumulating in dialysis patients, and producing toxic side effects, Genzyme plans to question the long-term consequence of treating people with Fosrenol. Shire knows it cannot avoid the issue, and is reportedly trying to show that lanthanum carbonate doesn't behave like a metal.

Other companies in the nephrology market are not taking sides on the attributes of binders. Amgen Inc. , for instance, recently launched cinacalcet (Sensipar) to control parathyroid hormone, which causes patients to secrete more phosphate. It's a complementary product to phosphate binders, Butler explains, because it addresses serum phosphorous that is drawn out of the bones, whereas Renagel, PhosLo and Fosrenol deal with dietary phosphorous. Nevertheless, Sensipar, which competes with the vitamin D analog paricalcitol (Zemplar) from Abbott Laboratories Inc. , and a similar product from Bone Care International Inc. , is adding to the noise in the nephrology marketplace.

The increased noise is influencing Genzyme's strategy. Its sales reps used to get into nitty-gritty details about two kinds of calcification—intimal, which is associated with cholesterol, and medial, which occurs on the outer layer of the arteries. But the company is now moving away from that highly detailed approach, Butler says: "The difference between intimal and medial calcification is important for key opinion leaders, but for the average practicing nephrologist, you don't want to go down that path at all."

"In a more complicated market, we need to tell a simpler story," Butler declares. So Genzyme's marketing message now turns around the fact that Renagel is not absorbed and therefore is more effective. Competing binders, whether metals like aluminum or lanthanum, or calcium, are absorbed, he explains, and data shows that there are—or historically have been—consequences to that. The simpler message Genzyme emphasizes now is, ‘It's all about accumulation.'

Expanding the Market

For all the maneuvering and messaging, Genzyme and Nabi are still neck-and-neck in the nephrology marketplace, but Butler says he's not concerned that the fight is as close as it is. "We're on target. It takes time to get a message heard, and it takes more than one visit with a rep to change the way a physician prescribes," he declares.

The complex tit-for-tatting is only going to get worse once Shire hits the market, predicts SG Cowen's Nadeau. He says that when Cowen talks to physicians in the nephrology space, they cite two factors as key determinants for any company's success in the marketplace: "The relative pricing of these products will be important, since Nabi is using an economic argument, and it sounds like Shire will too," Nadeau explains. Secondly, he says that nephrologists are awaiting the results of Genzyme's DCOR study of cardiovascular morbidity and mortality.

"If DCOR does show that Renagel has a positive effect on morbidity and mortality, then…game over," says Mark Skaletsky, "because what dialysis patient would not want to take Renagel if it extends life? If this study turns out positive for Genzyme, then the economic issue will go away."

DCOR could provide hard data that could help Renagel, Nadeau agrees, but until the results of that study are revealed in mid-2005, Genzyme and Nabi will have to keep duking it out in the marketplace with the messages they've already formulated and the data they've already gathered. "It seems the arguments of both groups have found their supporters in the physician community," he points out, adding, "As far as knowing which one is really right, it's hard for us to say. At the moment, we don't see any new data that would change physicians' minds."

Beyond battling for share in the current market of dialysis patients, it's clear that the makers of phosphate binders are all dreaming about seeing their products used earlier, in pre-dialysis patients, who number in the millions. Ditto for the marketers of treatments related to parathyroid hormone. But industry observers like Mark Skaletsky note, "That's not an easy set of trials to do for phosphate binders—they'll need large numbers of patients to get to the right statistics, and it's not obvious what the endpoint is."

The huge potential for growth in the nephrology market is obviously rousing to companies with products capable of competing there. But there's a larger lesson in this cantankerous tale of specialty marketing. The fight between Nabi and Genzyme spotlights the growing importance of cost-benefit arguments in and amongst purely scientific ones.