J&J’s acquisition of Cougar Biotechnology in June 2009 gave it abiraterone, a late stage drug for prostate cancer with promising clinical data – but also with a short patent life and an increasingly competitive market.
The compressed timeline to launch was compounded by a challenge: while buying a Phase III asset provided increased validation of its benefits, the timing also presented challenges because clinical strategy, the bedrock of pre-launch planning, had already been set.
J&J met the challenge by deftly integrating Cougar – establishing procedures for assuring the transfer of knowledge, conducting market preparation tasks in parallel rather than sequentially, and, most importantly, by decisively embracing the trial design and indication sequencing that came along with the molecule.

Approved by FDA on April 28, 2011, Johnson & Johnson’s prostate cancer drug Zytiga (abiraterone) is off to a brilliant launch. Payors are covering it with relatively few restrictions, medical oncologists are using it in patients with advanced disease, and it has streaked ahead of its direct competitor Sanofi’s Jevtana (cabazitaxel), a second-generation taxane, in part by grabbing new patient share from the same post-docetaxel population.

The early success of Zytiga in the market was enabled by a complex sequence of events in pre-launch planning and preparation, which was colored by the sponsor’s late entry into its development. Such a situation is common where Big Pharma takes over a Phase III asset, but if not carefully managed, it can suppress or even derail a promising launch.

The performance of any launch is a result of decisions that build on the drug’s safety and efficacy profile and product characteristics, setting the stage for the drug’s commercial performance. In the case of oncologic drugs, planning essentially begins in Phase II, when critical elements of the Phase III trial design are worked out: inclusion/exclusion criteria, endpoints, and, most importantly, indication sequencing. In situations in which a Phase III cancer asset changes hands via licensing or acquisition, the acquirer – in most cases, a big pharmaceutical company with the necessary capital and the regulatory and commercial capabilities to take it to market – is bringing a molecule into its portfolio whose clinical strategy has already been set. That is to say, early launch planning is largely divorced from launch execution.

Of course, Big Pharma always has the option of re-doing the trials, but that takes time and money and lost years in getting to market. In the case of Zytiga, J&J acquired the developer, Los-Angeles-based Cougar Biotechnology Inc., in July 2009. [See Deal] (See [A#090526p1]). At the time, abiraterone was in two Phase III trials: the first, in patients with metastatic castration-resistant prostate cancer (mCRPC) who had failed prior docetaxel chemotherapy (the ’301 trial), was in an advanced population; the second was in patients with mCRPC who were chemotherapy naïve (the ’302 trial). The ’301 trial in chemotherapy-resistant patients was fast-tracked and would be the launch indication. According to Cougar CEO and founder Alan Auerbach, ’301 was fully enrolled at the time of the acquisition.

The ’302 trial in asymptomatic or mildly symptomatic chemo-naïve patients, an earlier and much larger population, had begun enrolling in April 2009; J&J expects to release data in first half 2012.

J&J introduced Zytiga, a pill, to the market in May 2011 in combination with prednisone for mCRPC patients who had failed chemotherapy. Uptake among oncologists has been fast. Sanofi’s Jevtana, which launched a year before in 2010, is administered as an intravenous (IV) infusion in combination with prednisone and carries a black box warning for neutropenia. By contrast, its market share and patient share took a dive with Zytiga’s entry.

Robert Bazemore, president of Janssen Biotech Inc., the commercializing company for J&J’s immunological and oncology pipeline, pointed out that Zytiga was launched 18 months after the acquisition of Cougar. At the time of the acquisition, the ’301 trial was on track to file in 2011, but the pressure was mounting: abiraterone faced the loss of a composition-of-matter patent in 2016 and the narrow category of CRPC was rapidly filling with competing drugs. Bazemore’s team was to a great extent reliant on the indication sequencing determined by Cougar, and on whatever key opinion leader (KOL) and physician research Auerbach and his largely virtual team were able to do to inform the drug’s target product profile and Phase III design. Following the acquisition, J&J completed the ’301 trial, filed an NDA, built out the commercial organization, and executed the myriad details of the launch.

Phase III cancer assets theoretically come with less clinical risk because of their advanced stage of development, but that advantage, paradoxically, presents challenges. For all the due diligence that J&J did to assure that Cougar’s Phase III trial designs were solid, in fact it had little latitude to modify any aspect of the trials with which it might have disagreed. The clock was ticking; competition was heating up. In this compressed time frame compounded by the difficulties of navigating an acquisition and a product in transit, J&J pulled off an exemplary launch.

Cougar Strikes

Prior to founding Cougar in 2003, Auerbach was a sell-side analyst at Wells Fargo Securities specializing in cancer companies. With $5 million in seed capital and the desire to start a company, he began calling on oncologists whom he knew from his career as an analyst. In particular, he spoke with oncologist investigators at Celgene Corp., one of the companies he covered, which at the time was testing thalidomide in prostate cancer. Auerbach was looking for ideas – for targets, pathways, drugs.

One of the doctors told him about the antifungal ketoconazole, which given in high doses works against prostate cancer by taking out the adrenal gland’s ability to make testosterone, the male hormone that fuels the growth of both healthy and cancerous prostatic cells. Specifically, they told him about a subset of cytochrome P450 metabolic enzymes called CYP17 that plays a role in testosterone production in the adrenal gland. Ketoconazole inhibits CYP17. “Patients who had failed first-line hormone treatment, drugs like Lupron (leuprolide), they responded to ketoconazole. Unfortunately, it’s an extremely toxic drug, and it’s difficult to manage its side effects, liver toxicity and such,” Auerbach recalls.

Auerbach had his target – CYP17. Now he had to find a drug that inhibited it with greater specificity and that he could license into his fledgling company. Working from a rented office, he began a process he called “dialing for drugs.” He had only two criteria: it had to inhibit CYP17 with fewer off-target effects, and it had to have compelling clinical data. One of the doctors in his network told him about BTG International Ltd., a UK specialty pharma company, which had a drug in an early clinical trial that fit his demands. The drug had been assigned to BTG by a non-profit cancer research organization that had done early work on it; BTG, in return for a royalty, was to license the drug to a company that could develop it.

That drug turned out to be abiraterone acetate, a prodrug, which is converted in vivo to abiraterone, an androgen biosynthesis inhibitor that targets 17 α-hydroxylase/C17, 20-lyase (CYP17). The drug was originally discovered at the Institute for Cancer Research (ICR) in the UK. BTG sorted out the IP around the drug and funded modest early trials in unspecified cancers. Other companies seem to have overlooked abiraterone because of its scant clinical dossier, and because no one else appeared to be searching for early-stage inhibitors of CYP17. But Auerbach was. He licensed the drug from BTG, and his company was off and running.

“We viewed abiraterone as a kind of targeted version of ketoconazole. Ketokonazole is used in prostate cancer, so that’s where we wanted to use abiraterone,” says Auerbach.

Cougar tested the drug in Phase II, and received a special protocol agreement (SPA) from FDA for the two Phase III trials. The endpoint for CRPC was fairly straightforward – overall survival (OS). Aleksandr Rabodzey, PhD, a senior research associate on the global biotech team at Sanford Bernstein, notes, however, that Cougar had originally planned and powered the ‘302 trial to have a PFS-OS co-primary endpoint, with PFS as the filing endpoint. When FDA endorsed OS as the only approvable endpoint for Phase III (Rabodzey believes this may have occurred after FDA saw results from the Phase III Provenge [sipuleucel-T] trial, which hit OS in the same population), Cougar substituted OS as the primary filing endpoint.

Normally, a trial designed with a PFS endpoint requires fewer patients and would be underpowered for OS. But Cougar was conservative and powered the trial (1,000 patients) to be sufficient for OS. Still, Rabodzey suggests that the trial could have recruited more patients. He notes that Medivation Inc., which started a pivotal trial of MDV3100 in 2010 in the chemo-naïve mCRPC setting using OS as its primary endpoint, recruited 1,700 patients – 700 more than Cougar/J&J.

As to the indication sequencing that Cougar chose – chemo-resistant first, followed by chemo-naïve – Auerbach says his decision was guided by the need to get the drug to patients as quickly as possible. “The fastest path to approval in our view was going to be in patients who had failed chemotherapy, the patients who were the sickest. It would be a short trial, because patients who had failed chemo didn’t have long to live. Mark Schoenebaum, MD, pharmaceutical and biotechnology analyst at ISI Group, adds that the trials are not only shorter in time, but smaller and cheaper, too. Cougar started the ‘301 trial in mid-2008, approximately one year before being acquired by J&J. Cost was likely an additional determinant in the sequence choice.

Once it owned Cougar, J&J bought into the clinical plan, and allowed the biotech to complete the Phase III trials as designed. J&J executives would not reveal whether they would have gone for the chemo-naïve indication first if it were feasible, or whether they considered powering up the ’302 trial.

J&J’s decision to launch in advanced patients first could have gone another way, however. Prior to its acquisition by Pfizer Inc. in 2009, Wyeth started a Phase II trial in Her-2 positive breast cancer with a tyrosine kinase inhibitor called neratinib. [See Deal] The trial, in early-stage patients, tested neratinib in combination with paclitaxel versus the gold standard for Her-2 breast cancer, Roche’s Herceptin (trastuzumab). Puma Biotechnology Inc., the latest Auerbach start-up, on licensing in the drug from Pfizer in October 2011 decided to wind down that trial (and also a Phase III trial), and start it up again as a second-line treatment in refractory patients. ([A#14111006005]) [See Deal]. Auerbach used the same reasoning as with the sequencing of the Cougar/J&J trials.

Acquisition, Transition, Buy-In

William Hait, MD, PhD, began at J&J as therapeutic area head, oncology in 2007. ( See Also see "The Future Of Oncology At J&J: An Interview With William Hait" - Pink Sheet, 17 October, 2011.). (See Exhibit 1.) The company had a modest stable of cancer and cancer support products, including the aging cash cows Doxil (doxorubicin) and Procrit (epoetin alfa). It also had a mixed track record in business development in oncology with the multiple myeloma drug Velcade (bortezomib), partnered with Takeda Oncology, a division of Takeda Pharmaceutical Co. Ltd., its biggest success to date. [See Deal] Other partnered products had lower revenue potential, including Dacogen (decitabine), for myelodysplastic syndromes, licensed from MGI Pharma Inc., a division of Eisai Co. Ltd., and Yondelis (trabectedin), a drug for ovarian cancer, owned by PharmaMar SA, a division of the Spanish drug company Zeltia SA. [See Deal][See Deal]

Exhibit 1

J&J's Oncology Pipeline, Clinical Projects

J&JPRD

The research pipeline included a histone deacetylase (HDAC) inhibitor and several antibody products, particularly siltuximab (CNTO 328), but all in early stage R&D. Compared with most of its large-cap peers, cancer was a sleepy outpost at J&J until Hait’s arrival kicked the program into high gear, and resulted in the acquisition of Cougar Biotech. The diversified health care giant clearly wanted to step up its game.

Hait focused cancer R&D on three tumor types: prostate, lung, and B-cell hematologic malignancies. He also established tumor strategy groups to delve into the tumor micro-environment, specifically the interplay between the genomic changes that occur within the cancer cells themselves and their surrounding tissue. The prostate tumor strategy group at J&J had settled on mCRPC as the indication with greatest unmet need. “These are patients,” says Hait, “whose disease has recurred, has spread beyond the prostate off into the bone, who have received androgen deprivation therapy [ADT], but then despite treatment, they relapse. And that is inevitably a fatal event.”

About five years after Alan Auerbach sat in a Los Angeles office dialing for drugs, J&J’s prostate tumor strategy group developed a key insight into the biology of prostate cancer. The conventional wisdom said that patients with CRPC have cancers that are no longer dependent on androgen. “But we knew from our own studies of the literature that there was still dependence on androgen,” says Hait. “And in fact, those androgens were being made by the tumor micro-environment. So we wanted to find a drug, build it ourselves, or buy one, which would block androgen at all sites, including the tumor and the tumor micro-environment.” J&J had a leg up in its search because it was the originator of ketoconazole, which hits the CYP17 enzyme.

Traditionally, business development begins with a commercial checklist: an unmet market need, a large population, a neglected tumor, and so forth. Interestingly, however, a biological insight into prostate cancer led to J&J’s acquisition of Cougar – an approach that may be increasingly common in an era of targeted therapies.

As a result of its findings, J&J knew that it wanted abiraterone. Given where the compound was in development and the imperative of assuring a seamless and speedy handoff, particularly in view of the rapidly evolving competitive landscape in CRPC, J&J elected to acquire Cougar and its key staff instead of in-licensing the drug. As with any other Big Pharma in a similar situation, the company may have had a quibble with the endpoints or the size of the trials, or their sequence. But the exigencies of getting to market required that J&J bite the bullet. The drug was sound, the trials were well designed, it decided to go ahead and buy.

Hait, who had formerly treated cancer patients, agreed with Auerbach’s desire to speed the drug to the sickest patients by the fastest route and to lead with the ’301 trial. The CRPC market was quite fluid at this time, with Dendreon Corp., which was developing Provenge, an active immunotherapy targeting an earlier patient segment, and Sanofi both aiming for mid-year 2010 launches of their drugs.

That it might make sense in this unsettled scenario to lead with a less risky indication – and a faster, less costly route to market – may have entered J&J’s calculation. The chemo-resistant launch would prime the market, allowing oncologists and some urologists to grow familiar with the drug, preparing the ground for the chemo-naïve launch a year or so later. Whether Zytiga could poach off-label share from Provenge in the chemo-naïve segment couldn’t have been anticipated, but was probably considered a remote and modest upside. Doctors would know that the ’302 trial was in progress, and medical oncologists in particular, being more adventurous than urologists, might use the drug off-label. Meanwhile, the European approval (which came in September 2011), would expand the chemo-resistant market and further propel the brand.

Janssen Biotech Takes The Zytiga Launch In Hand

Janssen Biotech, the former Centocor, was re-named in the corporate re-branding that J&J went through in June 2011. J&J felt that its institutional customers were confused when interfacing with the diversified pharma’s decentralized operating companies; the name change would present an integrated face to large hospitals and managed care organizations. Janssen Biotech’s role is to commercialize products in immunology and oncology coming out of Johnson & Johnson Pharmaceutical R&D LLC (J&JPRD). The old Centocor was associated with biologicals, like Remicade (infliximab) for autoimmune conditions such as rheumatoid arthritis and psoriasis. In contrast, Janssen Biotech’s pipeline is roughly 60% biologicals, 40% small molecule. Zytiga, an oral small molecule, was Janssen Biotech’s first launch of a significant, unpartnered cancer product.

Integrating Cougar and abiraterone into the J&J organization quickly – onboarding Cougar employees, completing the knowledge transfer, creating high-functioning Cougar/J&J teams – was a top priority, said Bazemore, a Centocor veteran. Next-level priorities included preparing the organization for the launch. To make the time frame work, many activities typically done sequentially had to be done in parallel. Normally, an internal compound at J&J is transferred from strategic marketing (corporate level) to the operating company’s marketing teams about two years before approval. By the time it comes to the operating company, a lot of the commercial work has been done. Janssen Biotech didn’t have that lead time. Bazemore likens the 18-month interval between the acquisition and launch to a tire change on a NASCAR speedway.

Bazemore emphasizes flexibility more than novelty when describing Janssen Biotech’s commercial model. mCRPC, with an annual presenting population in the US of 40,000 to 45,000 (Sanford Bernstein estimates), has a relatively small prescriber base, requiring a small, highly specialized sales organization. Centocor/Janssen Biotech had built up its oncology sales force to sell Velcade at a time when J&J’s partnership with Millennium gave it rights to promote it in the US. But as that aspect of the partnership wound down, Janssen Biotech’s cancer sales force likewise declined. The company took the number up again in preparation for the Zytiga launch, but the composition and strategy had changed. That’s in part because advanced prostate cancer is a unique market, with both urologists and medical oncologists as prescribers, and because of the characteristics of Zytiga.

In line with what some other companies have done, J&J also changed the composition of the commercial team. The new commercial model consists of a mix of disciplines: promotional specialists, business specialists, and clinical science liaisons. While the promotional reps continue their traditional detailing responsibilities, the business specialists support physician offices with help on the forms, procedures, and requirements for getting reimbursement, and for assuring patient access. The clinical science liaisons, who come in at the request of physicians, provide a deeper level of engagement, bringing a more detailed scientific exchange to opinion leaders. “The way the regulatory guidelines in the US work is that sales reps have to stay within the bounds of the label, and they have a limited amount of time with physicians and that keeps them from getting into a detailed scientific conversation,” Bazemore says, stressing the importance of scientific rapport when the drug in question has a novel mechanism of action.

Bazemore put the number of Zytiga reps for the chemo-resistant indication at “a couple of hundred people, including management.” However, he notes that the clinical science liaisons and area business specialists are shared among products “so it’s hard to allocate a headcount number specifically to Zytiga.”

Although the composition of the field team was different from other launches, and the messaging and value propositions were targeted to different physician groups, the approach held to a fundamental multi-step commercial model that involves: developing a key insight that helps position the product in the customer’s mind; figuring out the kinds of support services that help customers in their job and make it easier for them to prescribe the product; and determining precisely who the customer is, and who refers and treats the patient.

Some of Janssen Biotech’s brands attract as much as 50% of the promotional spend on support services that surround the product. For instance, a service called ZytigaOne is a hotline for physicians and patients using Zytiga. It walks them through the reimbursement process, or it can do a scan of different payors and their co-pays, comparing them, and so generally supports the physician’s office in facilitating the process of getting reimbursement for the patient.

Zytiga also has co-payment support programs, educational programs, and compliance and adherence programs. It is distributed exclusively through a small network of specialty pharmacies with the ability to do compliance and adherence monitoring and intervention, and to assure that the patient is taking the medication correctly. That’s critical with a drug whose standard dose is a 1,000-mg oral pill taken once a day, along with 5 mg of prednisone twice daily.

Bazemore and his team began working with payors once Phase III efficacy data were in hand (approximately one year after the acquisition of Cougar), including addressing early access for appropriate patients. They also made certain that payors loaded the Zytiga national drug codes (NDC) into their databases within two weeks after the drug was approved, to ensure that they could begin ordering and billing for the drug, and that physicians would be able to use the product. “Our account management delivered finalized coverage decisions allowing access for 85% of Medicare Part D beneficiaries within 90 days,” says Bazemore.

J&J’s decision on pricing the drug, obviously a key to market access, also reflected its priorities. At a time when some companies are charging more than $100,000 for a course of treatment of certain cancers, Zytiga costs $5,000 a month, or approximately $40,000 for a median eight-month treatment duration. The cost is a little lower than Jevtana ($8,000/cycle, median six cycles) and well under Dendreon’s Provenge ($93,000 for a course of treatment).

Bazemore says Zytiga’s pricing was based on benchmarking of other oral oncology drugs that offered a “breakthrough therapeutic benefit.” He maintains that Provenge, with its high price, or Jevtana, with its blackbox, were not used in the benchmarking exercise, “but we certainly looked very closely at how the market had responded to those drugs . . . and I think we used that to make a final determination about exactly where we wanted to come in. Knowing that we also had another indication coming, we wanted to make sure the pricing strategy wasn’t just set for chemo-refractory patients but for chemo-naïve patients once we get that indication.” Indeed, with Jevtana, Zytiga’s direct competitor, fading as a competitive factor because of safety concerns, Zytiga is making sharp inroads into the chemo-resistant mCRPC setting.

There was also a corporate rationale for how Janssen Biotech priced Zytiga. In response to an analyst’s question on J&J’s overall pricing strategy at the Morgan Stanley Global Healthcare Conference in September 2011, Chief Financial Officer Dominick Caruso stated that “Generally speaking, over long periods of time, our pricing is very responsible and we approximate the change in the consumer price index. So we really don’t depend very much on pricing in our business.”

Bazemore couldn’t have known then that Provenge would stumble in August 2011 when Dendreon pulled back its earlier forecasts and conceded product acceptance issues with community urologists. ( (See Also see "With Dendreon Humbled, Lessons Learned For Cancer Vaccine Makers" - Pink Sheet, 22 August, 2011.). That event amplified the price differential between the two products in that chemo-naïve setting and helped to vindicate the indication sequencing that J&J inherited from Cougar.

In fact, if Zytiga wins first-line approval in chemo-naïve mCRPC patients, it will go up against a Provenge hobbled not only by price and by burdensome administration and reimbursement dynamics, but perhaps most damningly, also by an efficacy paradox. That is, despite proven survival benefits, patients treated with Provenge appear nonetheless to progress because they show no sign of a change in standard cancer endpoints, including a drop in prostate specific antigen (PSA) levels or tumor shrinkage – a disconcerting situation for patients and physicians. “It doesn’t make sense scientifically,” adds Schoenebaum, “which is why academics are using [Provenge] far more than community physicians.”

Launch Dynamics And Performance, By The Numbers

CRPC patients are treated by urologists and by medical oncologists. There’s some disagreement about the breakdown, with some analysts putting it at 50/50 others giving urologists the edge at 60/40. Urologists tend to treat earlier in the disease when patients are non metastatic and on ADT therapy (e.g., Lupron) or, increasingly – especially since the launch of Provenge – asymptomatic/mildly symptomatic and metastatic. Chris Raymond, senior biotech analyst at Robert W. Baird & Co., notes that urologists are trying to hold onto prostate cancer patients and “are looking for tools to be able to treat patients longer.” For instance, he says large urology practices are hiring in oncologists who bring expertise for managing patients longer.

Mark Schoenebaum points out that urologists don’t have infusional capabilities, and so typically don’t use IV drugs. Therefore, as patients progress, urologists tend to refer them to oncologists. But Provenge may have changed urologists’ treatment behavior. When Provenge came along, says Schoenebaum, they saw an opportunity to make some extra money via buy-and-bill administering a safe, easy infusion. Provenge raised urologists’ interest in treating patients who no longer respond to, or who can no longer tolerate, hormonal therapy. In so doing, it paved the way for Zytiga, which offered a relatively safe, effective, and convenient way to bypass the use of ketoconazole or chemotherapy.

Many analysts believe that Zytiga’s natural home will be with urologists in the chemo-naïve setting. It’s basically an extension of ADT standbys like Lupron and Casodex (bicalutamide), products they’re familiar with that down-regulate testosterone. Bazemore says that Janssen Biotech launched Zytiga to both physician groups, even though oncologists were the primary prescriber in the chemo-resistant launch indication. “A high percentage of patients continue to see their urologist even after being referred to an oncologist. A male’s relationship with his urologist is one that is generally longer and well established. We wanted to be sure they were educated on Zytiga,” he explains.

Although Dendreon offered an innovative treatment to urologists at a time when they were looking for “tools” to manage more advanced patients, the company fell short in execution. J&J’s market preparation and planning stands in stark contrast to Dendreon, which seemed blindsided by urologists’ issues with Provenge’s high cost and short treatment time frame, creating reimbursement uncertainty.

And J&J’s education campaign payed off. Baird Equity Research released the results of an oncologist survey fielded in July 2011 showing extremely high awareness of Zytiga early in its launch cycle, and more tellingly, significant off-label use of Zytiga in the chemo-naïve setting. (See sidebar, “Quantifying Zytiga’s Launch Trajectory.”) In a sample of 44 oncologists who had started at least one CRPC patient on Zytiga in the prior 90 days, 71% of patients had failed chemotherapy (Zytiga’s approved indication), and 22% of patients were pre-chemotherapy. “Over half of the pre-chemo patients getting Zytiga had not received Provenge nor was Provenge in their future,” commented the Baird analyst. Again, similar data for urologists would likely show Zytiga making minor inroads in the pre-chemo setting in advance of data from the Phase III ’301 trial.

On the payor side, although management of the prostate cancer category is tightening as it fills with new products, payors still struggle with constructing a policy that limits off-label use while allowing appropriate use of all agents. Bazemore said in mid-October that “formulary decisions have supported reimbursement.”

As these products clock more time in the field, however, utilization controls such as prior authorization and testing requirements may become more common. Trend data from The Zitter Group shows that as of the third quarter 2011, 80% of payors have no limitation requirements on cancer type for either Jevtana or Zytiga, “while over half limit Provenge to [its label indication].”

Unlike Provenge and Jevtana, both office-administered products that come under the medical benefit, Zytiga is a Part D drug, and as such its use can be curtailed by formulary tiering and co-pays. Zitter Group shows 69% of payors placing Zytiga on the highest formulary tier, whereas 31% don’t use formulary placement to control its use. Nicole Dautel, a senior director in Zitter’s market research group, says that many plans institute a launch policy that puts new cancer drugs on the highest tier until full P&T committee review, which can take up to 18 months to complete. The 69% figure will likely come down in the coming months as plans gain more experience with the drug.

Zytiga’s sales through its first four months post-launch climbed gradually, beginning at $5.8 million in May, the first full month of launch, and reaching $19.5 million for August. Thereafter, the ramp accelerated. Zytiga had “contributed about 1.5 points of growth to our pharmaceutical business compared to the same quarter last year,” which calculates to about $80 million in the third quarter (including European stocking in line with the September EMA approval) and $45 million in the second quarter (including US launch stocking),” noted Caruso on the third-quarter earnings call. The European launch in a larger chemo-resistant population will kick up sales, and eventual FDA and EMA approval in the chemo-naïve setting will propel the drug to what analysts who cover the company estimate will be $1.5 to $2 billion a year in sales.

SIDEBAR Quantifying Zytiga’s Launch Trajectory

The Baird Equity Research data on oncologists’ awareness of Zytiga is reinforced by ImpactRx Inc.’s BrandImpact Oncology survey of oncologists showing Zytiga, right from its launch in April 2011, accumulated new patient share and rose to nearly 30% of new patient starts in June, then declined 5% through September 2011. (See Exhibit 2.) Significantly, Zytiga is taking new starts from Jevtana, whose brand share of new patients fell from about 17% in October 2010 to 7% in September 2011, with a sharp decline of nearly 10% beginning at Zytiga’s launch and extending to July. ImpactRx data also show that Zytiga is changing the way the disease is treated, reducing the number of oncologists’ untreated prostate cancer patients by about one-fifth (from 21% of all patients untreated in April, 2011 to 17% of all patients untreated in September, 2011).

ImpactRx also shows that, among oncologists, Jevtana sales reps dominated share of details pretty much through April 2011 when Zytiga began to launch. Jevtana had nearly a year to monopolize the conversation with physicians and with patients. When Zytiga launched, the share of details for the two drugs were each at around 40%. As of August, Jevtana captured about 10% more share of detail than Zytiga. Provenge’s share of details lags well behind the other two competitors, although its showing among urologists might be stronger.

Exhibit 2

Share of New Patient Starts Prostate Cancer Market Oncology Network

ImpactRx BrandImpact Oncology

Lifecycle Planning And (Drum Roll . . .) Execution

Which raises the question of Zytiga’s longer-range lifecycle plan. In the absence of a patent extension, the drug will lose US exclusivity in five years, and competition in pre- and post-chemo mCRPC is heating up, so J&J is under some pressure to roll out new indications, especially with a new formulation of Zytiga to get around the patent. It is in Phase II in estrogen receptor positive (ER+) metastatic breast cancer, but it’s uncertain whether a Phase III trial could be completed before the drug comes off patent. Bill Hait has spoken of using Janssen Diagnostics LLC’s circulating tumor cell platform to investigate mechanisms of resistance to Zytiga. Hait also mentioned that the company “is hoping to study [Zytiga] in earlier disease in prostate cancer,” perhaps in non-metastatic patients on hormone therapy, a population that Rabodzey estimates to be three to four times as large as the metastatic population.

Combination/sequencing with other mCRPC agents presents a lifecycle opportunity, although at this time the mCRPC market is so fluid that, until a standard-of-care treatment is established in each setting, combinations and sequences of drugs are speculation. Once Zytiga gets its pre-chemo indication, some analysts think it will fade from the post-chemo setting and find a home in sequence with the other hormonal agents. Also, payors might be reluctant to cover any combination or sequence that hasn’t been studied in clinical trials.

Nonetheless, some companies with late-stage agents have signaled interest in being given in combination with Zytiga. Chris Parker, MD, for instance, a professor at the Royal Marsden Cancer Centre, UK, and principal investigator in the Phase III ALSYMPCA trial for Algeta ASA’s Alpharadin (radium-223 chloride), has spoken of combining Alpharadin with Zytiga. Alpharadin is a bone-targeting agent for post-chemotherapy patients, as well as those with bone metastases who are unable to take chemotherapy. Some analysts have said that Zytiga’s concomitant use with prednisone would complicate opportunities for sequencing or combination. In fact, another lifecycle opportunity would be to figure out a way to eliminate the need for an accompanying steroid.

Some analysts, such as RBC Capital Markets’ Michael Yee, have proposed the use of Provenge in sequence with Zytiga. Schoenebaum speculates that the sequence would only make sense if Zytiga preceded Provenge. “Provenge is probably slow-acting, acts over the long term. How does it act? It revs up your immune system. So if you were to follow up a course of Provenge quickly with a course of abiraterone that’s given with a steroid, it may not make sense to down-regulate the immune system with a steroid right after,” he says.

Medivation’s MDV3100, another androgen blocker, which on November 3 reported stunning interim overall survival results in its Phase III AFFIRM trial, is given without prednisone. Some analysts believe it will find use in two settings – chemo-naïve and chemo-resistant. In one scenario, proposed in an article in the August 2011 issue of European Urology, Zytiga would be used frontline in the pre-chemo mCRPC setting followed by MDV3100; and MDV3100 would supplant Zytiga altogether in the post-chemo mCRPC setting.

J&J management is mindful of the need to sort out these potential lifecycle opportunities soon. J&J has shown it can speed quality products to market under intense pressure. But, in view of a rapidly changing competitive landscape, advancing science, fluid regulatory guidelines, and tightening market access, can it do so when the market is a moving target?

J&J’s Zytiga –The Anatomy Of A Cancer Launch

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