Avanir Pharmaceuticals Inc. has ridden its “pipeline in a pill” to rapid growth over the past two years.
The company ranks No. 1 on the Business Journal’s annual list of fastest-growing small public companies based in Orange County (see small-companies list, page 50). The Aliso Viejo-based drug maker had revenue growth of 1,088% in the two years through June 30.
Avanir’s revenue ballooned from $5.6 million for the 12 months through June 2011 to $67.2 million for the 12 months this past June.
Nuedexta, a mix of dextromethorphan and quinidine that’s sold to treat pseudobulbar affect, is Avanir’s primary drug. Pseudobulbar affect is a neurological disorder marked by uncontrollable outbursts of laughing or crying. It affects some 1.8 million Americans and is often found in connection with other diseases, such as amyotrophic lateral sclerosis.
Avanir has “went from a near zero-revenue company to a company that made available a drug for patients who needed it, and the massive growth that you’ve seen is entirely tied to this product getting recognition by both physicians around the United States and patients who take it,” said Greg Flesher, senior vice president of corporate development and chief business officer.
“It’s an exciting story to tell,” he said. “It’s a pure, natural evolution of patient needs drug; drug gets approved by the FDA; company goes out and talks to physicians about drug; physicians prescribed drug.”
The company spent more than 10 years developing Nuedexta prior to the Food and Drug Administration approving it in late 2010. Avanir introduced the drug in early 2011.
Nuedexta now is available to 75% of Americans who have insurance coverage, according to Flesher.
“That’s a very good thing. That is primarily due to the fact that our drug works really well; the efficacy of the drug is extraordinary, the safety profile is quite good.”
Avanir trades on the Nasdaq exchange and has gained analyst coverage in recent years.
Its stock is up 77% since the start of the year, with a recent market value of $721.5 million.
The company is scheduled to report its third-quarter earnings on Dec. 2.
Avanir, like many drug makers that are transitioning to commercialization from development, is still striving toward profitability.
Wall Street expects it to post a loss of $14.5 million on revenue of $21.9 million in the quarter ended Sept. 30.
Avanir is “set up for a little more success” for several reasons, Flesher said, including the fact that it has three issued patents for Nuedexta, including one that won’t expire until 2026.
“We spent more than a decade developing the drug. As of today, we get 13 to 14 years to recoup that investment,” he said.
Avanir, however, is awaiting a decision in a U.S. District Court case involving a patent lawsuit over Nuedexta that it filed against several generic drug makers, including New Jersey-based Par Pharmaceuticals Inc. and Watson Pharmaceuticals Inc., which is also based in New Jersey.
“Settlement remains possible and would remove a significant overhang for [Avanir’s] shares in our view,” analysts Charles Duncan and Roy Buchanan of Minneapolis-based Piper Jaffray wrote in an Oct. 21 research note.
The analysts said they continued to view Avanir’s patent strength “as supporting a positive decision” in the case.
Flesher said Avanir also has more development programs for Nuedexta, including for Parkinson’s disease and cutting down agitation in dementia and neuropathic pain among diabetics—the origin of the company’s “pipeline in a pill” reference.
It also expects growth from a pair of deals that happened this year.
In July, Avanir signed a deal with Yardley, Pa.-based OptiNose for the North American development rights to OptiNose’s system to deliver the sumatriptan migraine drug through a patient’s nose.
That deal could eventually be worth $110 million, including milestone payments.
Avanir signed a deal with Whitehouse Station, N.J.-based Merck & Co. to co-promote three type 2 diabetes drugs in long-term care facilities. That deal started Oct. 1 and runs for three years.
Avanir was incorporated in 1988 and moved from San Diego to Orange County in 2006. That came soon after the appointment of Eric Brandt, a former chief financial officer of Allergan Inc., as chief executive. Brandt left Avanir in early 2007 to become chief financial officer for Irvine-based chipmaker Broadcom Corp.
The company said Chief Executive Keith Katkin was unavailable for comment. He was elevated to the post after Brandt’s departure and has been with Avanir since 2005, starting as a senior vice president of sales and marketing.
Flesher, who joined Avanir in 2006 and assumed his current role in 2011, noted that Avanir has grown its workforce from 17 people in 2007 to nearly 300 today.
It’s primarily a U.S. company, although, “to our happiness,” Nuedexta was approved this summer in Europe to treat pseudobulbar affect, Flesher said.
He noted that introducing Nuedexta will take some time overseas because the drug maker has to negotiate with European countries’ respective health ministries for reimbursement and that Avanir is talking with potential partners for its international endeavors.
