Besides getting a new name, troubled Valeant is also in desperate need of some regulatory success to rebuild its image. But it’s not going to get it from a key plaque psoriasis combo drug Duobrii—at least not soon.
The FDA has just rejected Doubrii, one of the seven products that Valeant hoped would collectively generate $1 billion of annual sales over the next five years, Valeant’s Ortho Dermatologics division announced Monday.
In a statement, Chairman and CEO Joseph Papa said the complete response letter “did not specify any deficiencies related to the clinical efficacy or safety of Duobrii and no issues with CMC processes.” Instead it “only noted questions regarding pharmacokinetic data.” He added that the company has already requested a meeting with the agency to resolve the concern “expeditiously.”
While Papa works to play down the problem, Wells Fargo analyst David Maris, in a note to investors Monday, pictured the event as “a major setback” for Valeant.
For one thing, the Canadian drugmaker has high hopes for the drug, only recently identified as one of the “Significant Seven,” which the company hoped to get to $1 billion in peak sales before 2023. The other six are psoriasis treatments Siliq and Jemdel, ophthalmologic therapies Vyzulta and Lumify, SiHy Daily contact lenses and Relistor. But more importantly, the drug bears value beyond itself—a more symbolic one—as “it is a key part of an innovation pipeline execution Valeant has laid out,” wrote Maris.
For the past few years, Valeant was built around a precarious business model that included swaths of M&As that led to mounting debt, controversial price hikes, reputation-damaging insider trading allegations and suspicious relationships with specialty pharmacy, most notably Philidor. That was the old page new chief Papa hopes to turn.
“This is the focus of our turnaround: investing in innovation, getting products approved, and successfully commercializing them,” Papa said in the fourth-quarter earnings call about the seven key products. Also as part of the plan to rebuild its reputation, the drugmaker in May announced a plan to rebrand itself and pick up the name of its promising eye business as Bausch Health starting from July.
Doubrii is a topical lotion that combines two approved plaque psoriasis products, halobetasol propionate and tazarotene. Valeant touts the drug’s possible longer-term duration of use than both drugs used alone.
However, as Maris now sees it, Duobrii will not likely be on the market this year or even in 2019. What’s worse, because it is a combination of two generic drugs, Maris said he doesn’t believe managed care will offer reimbursement at a significant premium, and that the drug is never going to be a major product with over $100 million in peak sales.
The current Duobrii setback, coupled with the slow uptake of Siliq—which Papa warned said was because of labeling but for which he has expressed optimism for the long term—had Maris doubt whether Valeant should adjust its expectation for the seven key products.
The next major moment for Valeant is Oct. 5, when the FDA is scheduled to deliver a verdict on Jemdel, the third psoriasis asset on the “Significant Seven” list.