The FDA handed down a major shock to AstraZeneca ($AZN) yesterday when it rejected its key hyperkalemia drug ZS-9, leaving potential rival Relypsa’s ($RLYP) shares to jump in after-hours trading.
Relypsa already markets its hyperkalemia treatment Veltassa, but AstraZeneca was meant to swoop in and take the lion’s share of a market potentially worth $6 billion.
Make no mistake, this is a major blow to AstraZeneca, which just last year paid out $2.7 billion for ZS Pharma ($ZSPH) to gain access to the drug, with Relypsa’s shares typically ticking downward in the past 6 months in expectation of its Big Pharma-backed rival gaining the green light.
Many analysts believed an AstraZeneca approval was a no-brainer, and its candidate has been seen as more favorable by analysts given concerns over Veltassa’s black-box warning issued by the FDA alongside its approval in late 2015.
Last year, after Veltassa’s approval, Credit Suisse analyst Vamil Divan said that his firm “continue[s] to believe that ZS-9 has an overall stronger clinical profile than Veltassa, highlighted by ZS-9’s rapid and consistent efficacy along with more favorable tolerability”--highlighting a fairly typical sentiment among analysts.
In fact, Veltassa came with the strictest black-box warning--which recommends against the administration of the drug with another oral medication at least 6 hours before and after.
But ZS-9 has also come with some safety issues during testing, and some believed it too may face a black-box warning of its own, or even a rejection.
Today, AstraZeneca confirmed that the FDA has issued a Complete Response Letter (CRL) for its ZS-9 NDA--but not over safety fears. “The CRL refers to observations arising from a pre-approval manufacturing inspection,” the Anglo-Swedish drugmaker said in a statement.
“The FDA also acknowledged receipt of recently-submitted data which it has yet to review. The CRL does not require the generation of new clinical data. AstraZeneca and ZS Pharma are evaluating the content of the CRL and will work closely with the FDA to determine the appropriate next steps for the NDA."
AstraZeneca told FierceBiotech that the “recently submitted data” were not clinical trial data but rather manufacturing data--specifically: “Additional supportive manufacturing data for the application [which] was very much proactively done in order to support our application.”
The spokesman added: “I think it’s important to note that we have not been asked to undertake new trials. The underlying efficacy and benefits are there. But let’s not pretend this is not ideal and it’s disappointing that the manufacturing issues are there.”
He said that the manufacturing problems--which weren’t specified--came from its ZS Pharma unit but did not place blame on the biotech, as it is now a part of the drugmaker. “We’re working through these issues and we remain absolutely confident in the asset itself and ZS Pharma. We will be putting the full resources of AstraZeneca's global manufacturing power behind ZS Pharma to resolve the issues.”
He said that this will be done in “as timely a manner as possible” and that there is a “clear plan in place.”
I asked if this was a snag or a much more serious delay. “Essentially, as these issues are resolved [there is no timeline given for this] and re-submitted to the FDA, then that review period would then be around 6 months. It is, I would say, a bump in the road--but it doesn’t derail ZS-9. This doesn’t undermine our confidence in bringing this to market, but at a delay now.”
There is a crack of good news as the company will not need to undertake new--and time-consuming--clinical trials. However, given the uncertainty over timelines, expect a big jump for Relypsa’s shares today as it looks highly unlikely that a ZS-9 approval could be made before 2017.
And in an extra boost to the Redwood City, CA-based biotech, it is also on the path to have its safety warning downgraded, as just this week, it submitted a supplemental NDA to the FDA requesting label changes for Veltassa based on its new Phase I drug-drug interaction (DDI) studies--which may also prove to be an issue with ZS-9.
The biotech will hope to gain this downgrade given that its sales so far have not been overly impressive and comes despite having the force of U.S. marketing partner Sanofi ($SNY) behind its sales push. A label change may shift that middling trajectory--and things will be made easier by not having to face off with ZS-9 in the immediate future.
Seamus Fernandez, an analyst at Leerink Research, said in a note that: “While the announcement of a complete response letter for ZS-9 is clearly a disappointment, particularly considering AstraZeneca’s $2.7 billion acquisition of ZS Pharma in November 2015, the issues identified by the FDA appear to be related solely to the manufacturing process and we believe should be addressable in the timely manner.”
He went on: “Per our conversation with AstraZeneca, these issues were communicated to the company in the first quarter and are not related to the product itself, but rather “operational manufacturing practice and quality.”
“Importantly, AstraZeneca believes it will be able to resubmit in 3 - 6 months, followed by a 6-month FDA review period (given the Class 2 response received). Based on this, we have pushed out our U.S. ZS-9 launch by around one year, but leave our probability of success at 80%.
“Additional data submitted to the FDA during the review process are from a drug-drug interaction (DDI) study and were not a reason for the CRL, according to the company. Beyond DDIs, we continue to expect ZS-9 to have a more attractive clinical profile than Veltassa.
“Based on discussions with key opinion leaders, ZS-9 appears to have better dosing frequency (once-daily vs. twice-daily with Veltassa), a faster onset of action, and better stability on the shelf. There have been some concerns over cases of peripheral edema with ZS-9 observed in clinical trials, particularly at higher doses, but according to AstraZeneca, this issue was not noted in the CRL nor had it been brought up in any discussions with the FDA.”
Shore Capital was less upbeat however on safety, saying: “Although ZS-9 is unlikely to receive a black box warning relating to binding of other oral medications, in our view, there are concerns it may receive a warning related to increasing sodium levels. We forecast sales of $1.16 billion in 2023.”
Relypsa has been seen as a major M&A target after AstraZeneca’s acquisition of ZS Pharma last year, with a number of Big Pharma names (including Actelion, which failed at the eleventh hour to buy ZS Pharma) bandied about as potential suitors in recent months. Last month, Reuters reported that Relypsa was on the verge of being bought out, according to people "familiar with the matter.”
After the CRL, buyout speculation--which seemed to have cooled slightly in the past weeks--will likely reach fever pitch.
Hyperkalemia is a disease in which dangerously high potassium levels threaten kidney and heart function. AstraZeneca said global peak sales for ZS-9 could exceed $1 billion a year, with the hyperkalemia treatment market estimated to worth more than $6 billion by some analysts. Veltassa has an odd mix of estimates, ranging from $200 million to $1 billion.
Last month, Relypsa and its EU marketing partner Vifor Fresenius Medical Care Renal Pharma submitted patiromer (aka Veltassa) to the EMA for the treatment of hyperkalemia.
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