Valeant Pharmaceuticals International won big with ribavirin, its hepatitis C treatment, in the past.
Now with generic versions of the drug eating into a big chunk of its ribavirin sales, the Costa Mesa-based drug company has big hopes for a next-generation hepatitis C treatment, viramidine.
Viramidine has the potential to be a “transforming product,” said Wesley Wheeler, Valeant’s president, North America and global commercial development.
The drug is in the third phase of testing. The results have been mixed.
Viramidine has produced a lower rate of anemia in patients than the popular hepatitis C treatment, which combines ribavirin with pegylated interferon, a protein designed to stay longer in the body.
But viramidine hasn’t proven to be any better at treating the liver disease than the ribavirin combination.
Valeant sells more than 450 drugs worldwide. Most are small sellers compared to Big Pharma’s blockbuster drugs, which treat everything from high cholesterol to allergies.
The company generates revenue from two sources: drug sales and licensing fees.
Its largest drug is Diastat, an epilepsy treatment, which accounted for about 9% of Valeant’s $683 million in sales last year. Valeant also earns licensing fees from ribavirin, which, despite the sales dropoff, still accounts for the biggest slice of the company’s overall revenue.
“We can go from a company with 400 products that are $60 million or less to a company with all those products plus one that could be $900 million,” Wheeler said.
Annual sales of ribavirin are about $1 billion globally, he said.
After third-phase studies for viramidine are completed, Valeant said it plans to ask for approval from the Food and Drug Administration to sell the drug in early 2007, Wheeler said.
“We’ve told most of our investor base that we’re projecting to launch (viramidine) in 2007,” he said. “It’s coming up faster than we all believed.”
A report from SG Cowen & Co. on hepatitis C treatments said viramidine has promise.
“If viramidine is able to clearly establish benefit over ribavirin without compromising on efficacy, it could take considerable market share from generic ribavirin and address a potential $1.5 billion to $2 billion market opportunity,” the investment bank said. SG Cowen doesn’t cover Valeant.
But Andrew McDonald, an analyst with ThinkEquity Partners LLC in San Francisco, doesn’t see viramidine as a blockbuster drug for Valeant.
In a research note, McDonald contended that viramidine, based on second-stage trial results, proved no better at treating the liver disease than the current hepatitis C cocktail of ribavirin with pegylated interferon. McDonald said he’s more keen on Valeant’s other drugs.
In a statement after the second-stage results were released, Valeant acknowledged that after 24 weeks the “sustained viral response,” or patient response to the drug, wasn’t statistically different between those taking viramidine and the ribavirin combination. It did note the anemia-related benefit, though.
McDonald said that the top hepatitis C therapies in development are early-stage drugs from Kenilworth, N.J.-based Schering-Plough Corp. and Cambridge, Mass.-based Vertex Pharmaceuticals Inc.
Schering-Plough pays ribavirin royalties to Valeant and packages it with pegylated interferon.
Valeant’s royalties from ribavirin sales fell 24% in the first quarter to $19 million amid stiffer competition from generic drug makers.
Valeant’s overall sales grew 15% to $181 million, aided in part by its $280 million acquisition of San Diego-based Xcel Pharmaceuticals Inc. earlier this year.
Chief Executive Tim Tyson, who is credited with modernizing Valeant, has said in past interviews that Valeant’s future is not ribavirin.
To help make up for the ribavirin decline, the company boosted research and development spending in the first quarter by 39% to $26 million, versus a year earlier.
The company is concentrating on neurology, infectious diseases and dermatology and has refocused its sales and marketing efforts on promising markets such as North America and Europe.
Valeant has continued to retool from its days as ICN Pharmaceuticals Inc. and has worked to distance itself from the legacy of founder and former chief executive Milan Panic, who was ousted in 2002 by disgruntled shareholders.
In March, Valeant moved quickly to bring its line of Kinerase anti-aging products out of the doctor’s office. The drug maker signed actress Courteney Cox Arquette of “Friends” fame to be the drug’s spokeswoman, and began selling it at Sephora stores.
“I’m a businessman. I’m here to maximize my brands and our company’s value,” Wheeler said earlier this year about Valeant’s decision to move Kinerase into traditional retail channels.
Meanwhile, Valeant has cut jobs and facilities, mainly in Eastern Europe.
Its shares have struggled this year, falling 32% to about $18 at recent check.
