Windtree Therapeutics Inc. says that its newly approved synthetic breathing disorder treatment for preemies – Surfaxin (lucinactant) – deserves premium pricing, but it also must strike a balance with the need to compete with animal-derived products for the top spot on hospital formularies.

Furthermore, while labeling notes superior efficacy in preventing respiratory distress syndrome compared to one animal-derived product that is no longer marketed, it also highlights higher rates of administration-related side effects compared to other surfactants.

Respiratory distress syndrome occurs when infants are born without enough pulmonary surfactant, a substance produced naturally in lungs that is essential for breathing. Some 90,000 babies in the U.S. every year are treated with animal-derived surfactant replacement therapy.

Surfaxin was approved March 6 for prevention of respiratory distress syndrome in premature infants at high risk, after an epic struggle to get through FDA. Following submission of the first NDA in 2004, the treatment received three “approvable” letters between February 2005 and May 2008 and a “complete response” letter in April 2009 Also see "Will March 2012 Mark The End Of Regulatory Limbo For Discovery's Surfaxin?" - Pink Sheet, 28 September, 2011.. The final hurdle had to do with the validity of a quality control release and stability test ([A#06140040024_b]). The company submitted its response to the last “complete response” in September 2011 and was cleared on its fifth user fee date.

Surfaxin is the fifth product approved in the U.S. for respiratory distress syndrome. The others are Ross Laboratories’ Survanta (beractant), Chiesi Farmaceutici SPA’s Curosurf (poractant alpha), Ony Inc.’s Infasurf (calfactant) and GlaxoSmithKline Inc.’s Exosurf (colfosceril palmitate), which is no longer marketed. Both Survanta and Infasurf have indications for treatment and prevention, while Curosurf is approved only for treatment of the condition.

Pricing Needs To Be Aimed At Formularies Choosing Only One

During a March 7 investor call, the company declined to share its exact plans for pricing, but acknowledged that it would be tricky. As the only synthetic option, Surfaxin is fundamentally differentiated and has a competitive advantage relative to the current standard of care, argued Thomas Miller, senior vice president and chief operating officer. But execs said the company’s main priority is to get on the formularies of hospitals, most of whom typically buy only one of these products, to minimize potential for medical errors.

“Does this product deserve a premium? Absolutely, but we have to be mindful of that and balance that premium with our objective to get that one-of-one position on formulary rapidly,” Miller said.

Currently, the U.S. market for surfactants is worth only $75 million and the total in the major global markets is about $200 million. Pricing is low and does not reflect the well-understood benefits of medications today. “Compared to other medical categories, like oncology, there is limited differentiation for product perspective,” he said, “which has limited pricing power within the category to date.”

Miller pointed out that in other areas of medicine – for example, thyroid, growth hormone and insulin products – there has been a “wide, sweeping transition to synthetic alternatives,” so the company is betting that neonatologists and parents will prefer the synthetic product to the previously available animal-derived products.

“We see the transition as inevitable and our goal is to advance that transition in a prudent and timely manner,” Miller said.

The difficulties of setting a premium price when there are similar products available at a low cost were highlighted by Lumara Health Inc.’s experience with itspre-term delivery drug Makena (hydroxyprogesterone caproate), an FDA-approved alternative to low-cost compounded products Also see "FDA Steps Into Makena Pricing Dispute In The Name Of "Access"" - Pink Sheet, 4 April, 2011.. Makena was initially priced at $1,500 per injection. However, amid public outcry about the steep pricing relative to the compounded products, the company wound up cutting the cost by 54%.

With respect to the Surfaxin launch, hospital formulary committees will need to be persuaded of the advantages of the product by the literature, and then price will be negotiated. Thought-leader influence plays a huge role in which product gets picked, with neonatologists, hospital pharmacists, nurses and respiratory therapists all having input into the decision, Miller said.

“We know these audiences very well. We have had many previous and recent collaborations with the best and brightest academic influencers within the category,” he noted.

A survey published by University of Michigan’s Subrata Sakar and Steven M. Donn in the Journal of Neonatal-Perinatal Medicine in April 2011 found that 92% of neonatologists were concerned about giving animal-based products to patients, and 54% of parents of neonatal patients would prefer a synthetic over an animal-based agent.

Labeling Notes More Side Effects

Labeling does include comparative data. The approval was supported by a single randomized, active-controlled study in 1,294 premature infants called SELECT. Surfaxin demonstrated a significant improvement at 24 hours after birth compared to Exosurf, the primary comparator, but not Survanta, the second comparator in the study. The drug demonstrated a significant improvement in RDS-related mortality through 14 days of life compared to both Survanta and Exosurf.

FDA labeling highlights the superior performance compared to Exosurf on the primary endpoint, but not the 14-day mortality advantage compared to Survanta.

The label also includes the results of a second study of 252 premature infants comparing Surfaxin to Curosurf. This was a non-inferiority study but the “basis for the non-inferiority margin could not be justified,” so the study was terminated early, so results can only be used to evaluate safety, according to the product labeling.

Labeling notes that administration-related adverse reactions (endotracheal tube reflux, pallor, endotracheal tube obstruction and need for dose interruption) were higher with Surfaxin compared to other surfactants and resulted in more infants with oxygen desaturation and bradycardia. In the SELECT study, oxygen desaturation was reported in 17%, 9% and 13% and bradycardia for 5%, 2% and 3%, for Surfaxin, Exosurf and Survanta respectively. In the second study, oxygen desaturation was reported in 8% and 2% and bradycardia in 3% and 2% of infants treated with Surfaxin vs. Curosurf.

However, labeling points out, “these adverse events did not appear to be associated with an increased incidence of serious complications or mortality relative to the comparator surfactants.”

Going Solo In U.S.

The approval of Surfaxin follows the February approval of Discovery’s device Afectair, a series of proprietary disposable “patient interface connectors” that simplify delivery of aerosolized medications to critical care patients requiring ventilator support. Discovery is planning to launch both products at the end of 2012 and estimates it will need $12 million to $13 million per year to finance the commercialization.

Discovery Labs believes that it can target the U.S. market without a partner. About half of the product is delivered to only 225 hospitals.

“This is a very efficient market … the preponderance of business flows through a relatively small number of hospitals,” Miller said. “You only need to call on a couple hundred accounts.”

Affectair, meanwhile, will be sold by third-party medical device distributors.

The company has not disclosed how many sales reps and medical liaisons it plans to hire, but said during the call that this would become evident soon via job postings on its website.

Discovery does plan to seek a partner for ex-U.S. markets. Surfaxin and a follow-on product called Aerosurf, an inhaled version of Surfaxin, should prove valuable to potential partners, said John Cooper, president and chief financial officer. “We are in discussions with a number of partners now. Our target internally is to have something accomplished by the end of the year,” he said.

Discovery Labs Admits Pricing For Long-Awaited Surfaxin Will Be Tricky

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