AstraZeneca's ZS-9 pain could mean big marketing gains for Relypsa and Sanofi's rival Veltassa

(Image courtesy of Relypsa)

A few weeks ago, AstraZeneca’s fortunes got a boost from another drugmaker’s failure: Clovis Oncology first lost a panel review for its rival drug to AZ’s Tagrisso, and then sidelined the candidate altogether.

Now, the tables are turned. AstraZeneca’s ZS-9 was rejected by the FDA on Friday, leaving Relypsa and its new med Veltassa in sole control of a hyperkalemia market potentially worth $6 billion.

AstraZeneca’s setback isn’t necessarily permanent or even long-lasting; the FDA wants the company to fix manufacturing problems, rather than new data. But the delay still gives Relypsa and its marketing partner, Sanofi, more time to lock up market share before ZS-9 makes its debut.

The longer runway will be welcome. Because Veltassa is the first new treatment for hyperkalemia in decades, Relypsa and Sanofi have to persuade doctors to change “the habits of a lifetime,” CEO John Orwin said during Relypsa’s first-quarter earnings call.

By the time Relypsa reported its Q1 results, some 1,700 doctors had prescribed Veltassa, accounting for more than 5,000 prescriptions, commercial chief Scott Garland said on the call. Physicians are trying out the drug, he said, prescribing it to one or two patients and watching the results. “[T]hey just want to see what kind of experience they can expect with the drug before they start using it broadly,” Garland said. And that means script numbers will wax and wane at first. “[W]e continue to expect the uptick of Veltassa will take time with monthly variations in prescriptions written and filled,” Garland warned.

About two-thirds of doctors say they intend to prescribe Veltassa, though, and name ID is strong, Garland said. The vast majority of nephrologists and cardiologists are aware of the new product--as many as 97% and 73%, respectively, Garland said.

But payers also have to be convinced, and though top PBMs Express Scripts and CVS Health have signed on, Garland said, it’s been slow going so far. Half of the big players have made coverage decisions on Veltassa, with about three-fourths of those giving the drug tier-three status or better. The drug is also facing prior authorization hurdles. “[C]learly we have progress to go to get the other half on board,” he said. “It is taking longer than we thought to make progress with our payers.”

Relypsa has an experienced salesforce on its side, thanks to its deal with Sanofi. The French drugmaker signed on to market Veltassa ahead of its launch in December, augmenting Relypsa’s own 120-rep team. Sanofi has established connections in the nephrology world, partly in thanks to its drugs for high phosphorus levels in kidney patients, Renagel and Renvela. Renagel and Renvela started facing generic rivals last year, but their sales have held up, with $457 million for the first half of 2015. The company also sells Hectorol, a treatment for thyroid problems in CKD patients on dialysis, and Lasix, a diuretic often used in patients with kidney problems.

But even experienced reps can’t change prescribing behavior overnight. “[A]ny time you try to change the mindset of physicians, that just takes time,” Garland said. “[T]he drug is a great drug. And the access things are things that I think we can address. … But I just think when you're dealing with a market where you need to build it, it’s just a market that’s going to take time.”

Along the way, Relypsa might find itself snapped up by a bigger company. Analysts expect Veltassa to hit $1.4 billion in sales eventually, and the prospect of a blockbuster reportedly has potential buyers circling, just as they did with ZS Pharma before AstraZeneca bought it--and ZS-9--last year.

- see the call transcript at Seeking Alpha

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