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Drugmaker’s New CEO Sets No. 1 Drug Category Goal

Aliso Viejo-based Avanir Pharmaceuticals Inc.’s newly appointed chief executive has what he calls a “very simplistic” vision for the drugmaker.

“We want to be the leader in the [central nervous system] therapeutic area,” said Rohan Palekar, whose appointment was announced last month. He succeeded Keith Katkin, who moved to a company director role after eight years in Avanir’s top position.

The company’s primary drug is Nuedexta, which is approved for pseudobulbar affect. Pseudobulbar affect is marked by uncontrollable stretches of laughing or crying and often found in connection with other neurological disorders, such as Alzheimer’s disease and amyotrophic lateral sclerosis, otherwise known as Lou Gehrig’s disease.

Its second drug, Onzetra Xsail, received Food and Drug Administration approval at the end of January. It’s a powdered drug and disposable breath-powered intranasal medical device combination to treat acute migraine headaches for adults.

Avanir is now owned by New Jersey-based Otsuka America Inc., a unit of Japan’s Otsuka Pharmaceutical Co., which acquired Avanir a year ago for $3.5 billion.

The company is pursuing leadership in a major drug category in terms of sales. Central nervous system drugs are one of what Palekar calls the three major categories in pharmaceuticals, the other two being oncology and cardiology. He noted that progress has been made in oncology and cardiology drugs.

“I hate to say it, [but in] CNS, we’ve not made much progress,” he said, using the drug category’s acronym. He noted as an example that the FDA hasn’t approved a drug for dementia since 2004.

Avanir is seeking to help patients who haven’t been able to get relief, Palekar says.

“CNS drug development is tricky, and a lot of the large pharmaceutical companies have backed out” of the industry due to the scientific community still working out how the brain functions.

“We looked at it and said there’s high unmet needs, patients are suffering, [and] we have a unique drug and a platform that might allow us to build out a [central nervous system] portfolio.”

Portfolio

Avanir’s portfolio includes new indications for Nuedexta, such as treating agitation in Alzheimer’s patients and what Palekar called a “new-generation” version of Nuedexta that he said has a better clinical and safety profile than the drug’s current incarnation and that’s being tested to treat symptoms of schizophrenia.

The chief executive also noted that its new parent is a historically dominant player on the psychiatric drug side. Otsuka’s Abilify has annual sales of more than $7 billion.

“We are neurology and long-term care, they are psychiatry—you put those two together … I think you have something special,” Palekar said during an interview at Avanir’s headquarters in the Summit office complex off the Laguna (CA-73) toll road.

Palekar joined Avanir in 2012 as senior vice president and chief commercial officer. He has spent close to 30 years in the drug industry, including a long stint at New Brunswick, N.J.-based industry behemoth Johnson & Johnson in a variety of business lines.

“My background set me up, and I’ve had diverse roles,” he said.

“At that time, it was a pretty small company still. We had just launched our product, and I was brought in to head up the commercial organization.”

Palekar mentioned that Avanir is “creating a whole new category” with the introduction of Nuedexta.

“No one knew about this disease state called PBA,” he said with a chuckle. “I joke that the first time that I researched PBA, what comes up is Pro Bowlers’ Association or the Philippines Basketball Association.”

Education

Avanir spent the following two years educating doctors, patients and caregivers about pseudobulbar affect.

“That, I think, set the foundation for me to really get entrenched in the business,” he said.

Avanir also started to develop its pipeline, which Palekar said gave him exposure to the drugmaker’s research and development arm. He later picked up more responsibilities in his role and learned other aspects of the business.

That company growth—Avanir went from $41.3 million to $115 million in revenue in fiscal years Sept. 30, 2012 to Sept. 30, 2014—eventually attracted Otsuka, which Palekar characterized as a holding company that has allowed Avanir to run mostly as a stand-alone.

Palekar said that having the backing and resources of a $20 billion parent will help Avanir in its mission.

Avanir also is planning to grow its workforce. Palekar anticipates it will be about 600 by the end of this year.

He said the company will hire about 80 field salespeople to call on doctors after Onzetra’s approval. Its salesforce is divided into representatives who sell to doctors and those who sell to nursing homes. The company also plans to add 30 to 35 jobs in Aliso Viejo.

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