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Cholesterol Pill's $1.3 Billion Potential Spurs Study Shortcut

A Swedish pharmaceutical company with no products on the market is hatching a drug-testing shortcut to catapult its experimental cholesterol pill into a potential $1.3 billion-a-year seller.

Karo Bio AB’s drug, eprotirome, is generating attention from researchers because, when it is added to Pfizer Inc.’s Lipitor, the combination lowers cholesterol levels more than Lipitor alone. Because eprotirome works in a novel fashion, regulators such as the U.S. Food and Drug Administration require patient testing that can take at least five years and cost more than $500 million -- time and money Karo doesn’t have.

The company and the drug may be sprung by Steven Nissen, the head of cardiology at the Cleveland Clinic in Ohio. Nissen, who says there is a need for new types of cholesterol pills, is endorsing a clinical trial that can cut the usual time by half. He and the company need to persuade the FDA to go along, and Karo needs to get a large drugmaker to help pay for the trials, Bloomberg Businessweek reports in its May 31 issue.

“What we are trying to do is look for a strategy that allows the company to move forward in a deliberative fashion to develop the data they need without costing half-a-billion dollars,” Nissen said in an interview. “That requires innovative thinking.”

Photographer: Scott Saltzman/Bloomberg

The head of cardiology at the Cleveland Clinic in Ohio Steven Nissen says there is a need for new types of cholesterol pills and is endorsing a clinical trial that can cut the usual time by half. Close

The head of cardiology at the Cleveland Clinic in Ohio Steven Nissen says there is a... Read More

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Photographer: Scott Saltzman/Bloomberg

The head of cardiology at the Cleveland Clinic in Ohio Steven Nissen says there is a need for new types of cholesterol pills and is endorsing a clinical trial that can cut the usual time by half.

Karo is grappling with a conundrum faced by all companies working on novel heart drugs. Regulators want proof medicines are safe and prolong life before they are widely used. Definitive studies take resources that biotechnology companies often don’t have.

Evidence Needed

“Before you put millions of people on a drug for years and years, you need evidence that it’s beneficial,” said Robert Temple, director of the FDA’s office of drug evaluation, in an interview. “When you are using a drug chronically in fundamentally healthy people to prevent disease, how much assurance do you need? We certainly think about that.”

Setbacks, such as Pfizer’s torcetrapib and AtheroGenics Inc.’s AGI-1067, led half a dozen companies, including Pfizer, to pull back on work for new heart disease drugs. New York-based Pfizer spent almost $1 billion on torcetrapib, an intended Lipitor successor, only to meet with failure in 2006 after 13 years of development.

Nissen and Karo are proposing a shortened research path, one based on requirements the FDA imposed a year ago on diabetes drugs. Those medicines were originally approved on the basis of their ability to control blood sugar. Now companies must also show that the products don’t raise significant heart risks, as were found with Avandia, a medicine from London-based GlaxoSmithKline Plc.

‘A Few Thousand’

The goal for eprotirome is to show it cuts both cholesterol and heart attacks without serious side effects. Karo would study more patients -- “a few thousand,” Nissen said -- than were involved in the initial research for Lipitor and products like it, while taking less time and money than Pfizer’s torcetrapib, which had a trial involving about 15,000 people. The research would rule out serious safety hazards before the medicine is approved and give evidence of benefits.

“Without further ado, we want to take this forward,” Jens Kristensen, chief medical officer of 23-year-old Karo, said in a telephone interview. “This is a new target and it’s the first new targeted compound within this area for many, many years.”

If regulators clear Karo’s limited scope for research, it will still cost $300 million or more, said Erik Hultgard, an analyst at Handelsbanken Capital Markets in Stockholm. Hultgard and two more of the five analysts that follow Karo have a sell opinion on the company’s shares because of concerns that eprotirome won’t be developed successfully. One analyst has a buy rating and one has a hold, according to data compiled by Bloomberg.

Price Target

Hultgard’s price target is 5.50 kronor. The shares rose 5 percent in Stockholm trading, the biggest gain in two weeks, to 7.35 kronor, valuing the entire company at 1.14 billion kronor ($145 million). The shares have declined 13 percent in 12 months.

Eprotirome is a novel version of a thyroid hormone that is engineered to work only in the liver, where it helps clear cholesterol from the body. By contrast, Lipitor blocks a liver enzyme needed to produce cholesterol.

Patients given eprotirome in addition to Lipitor or Merck & Co.’s Zocor had 32 percent lower levels of so-called bad LDL cholesterol than patients given the marketed medicines alone in a trial. Two other studies testing the drug alone and with alternative cholesterol treatments also posted positive results. Now, a final round of studies is needed to confirm the drug’s benefits.

Research Partner

Karo needs a partner to fund the research program outlined by Nissen, Kristensen said. The company originally planned to begin the final studies of eprotirome last year, and is delaying the start as it irons out study details with European regulators. Kristensen declined to specify how much the research may cost, saying the company can fund smaller studies alone. Karo had total assets of about $35 million at the end of 2009.

More than 81 million Americans have some form of cardiovascular disease, or one in three adults nationwide, and every year 831,300 die from it, according to the American Heart Association, based in Dallas. Those numbers underscore the potential for eprotirome, said Alexander Lindstrom, an analyst at ABG Sundal Collier in Stockholm, who has a buy rating on Karo.

“The unmet need is still large,” Lindstrom said in a telephone interview. “We estimate $1.3 billion in peak sales, though there are many drugs that sell a lot more. Getting higher sales isn’t a stretch, but even at these lower levels it would still be a commercial success.”

Generic Lipitor

The outlook for Lipitor, and for generic versions, figures into analysts’ views of how valuable eprotirome might be. Lipitor, which generated $11.4 billion in sales last year, will have lost patent protection by the time the eprotirome study is done, Handelsbanken’s Hultgard said.

While Nissen’s studies may open the market for eprotirome, Hultgard said generic drugs might rush into the vacuum first. That may discourage investment from large pharmaceutical companies in new brand-name drugs in the niche, he said.

“With the market being highly generic, I think the willingness to pay for these types of drugs will come down,” Hultgard said in a telephone interview.

Bristol-Myers Squibb Co., based in New York, had rights to eprotirome until giving them back in 2004, after working with Karo for seven years. Bristol-Myers discontinued all its internal work on medicines that target thyroid hormone receptors. Jennifer Mauer, a Bristol-Myers spokeswoman, declined to discuss the reasoning behind the decision.

Risky Strategy

Karo’s Kristensen said Bristol-Myers was interested in eprotirome for treating obesity, which would have required significantly higher doses and might have led to unacceptable side effects.

Studies of the kind Nissen proposes can’t rule out all significant risk, said Rory Collins, co-director of the University of Oxford’s Clinical Trial Service Unit.

“A strategy of working out how to do these large trials to get reliable information on safety and efficacy is the only way,” Collins said in a telephone interview. “We know hormones have other effects. I think one would be a little bit more wary and would want to have large-scale trials.”

The FDA, which hasn’t yet seen the research plan developed by Karo and Nissen, needs to rule on it before the company can begin the final studies and bring a partner formally on board. Karo is in discussions with several companies, Kristensen said, declining to name them.

The hard work will start once regulators determine what studies are needed to get eprotirome approved.

The architect of Karo’s strategy is the 61-year-old Nissen, a drug-safety advocate and a frequent adviser to the FDA.

“I’ve had more drug failures than I can count,” Nissen said. “I’m not guaranteeing success.”

To contact the reporter on this story: Michelle Fay Cortez in London at mcortez@bloomberg.net

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