Karo Bio's Prescription: Cheaper Drug Approval

Karo Bio, a tiny Swedish biotech company with no products on the market, has a big problem. Its experimental cholesterol-lowering pill is a potential blockbuster. But only if it can raise the $500 million needed to bankroll up to five years of large-scale testing normally required for widely used drugs that combat disease in unfamiliar ways.

Karo's prescription for its predicament is as novel as its compound: enlist one of the world's premier cardiologists to help convince the Food & Drug Administration that such expansive—and expensive—testing is not needed.

The company has retained Steven Nissen, the head of cardiology at the Cleveland Clinic and a frequent adviser to the FDA on drug safety. Nissen says there is a need for new types of cholesterol pills, among the world's most widely used drugs, and he's endorsing a clinical trial that could cut the usual approval time by half. Nissen and Karo must persuade the FDA to go along—and convince a big drugmaker to help pay for trials tiny Karo can't afford alone.

"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 a telephone interview. "That requires innovative thinking."

The potential payoff is huge. Alexander Lindstrom, an analyst at ABG Sundal Collier in Stockholm, forecasts that sales of Karo's drug, eprotirome, could reach $1.3 billion a year. Pfizer's (PFE) Lipitor, the largest cholesterol drug, had sales of $11.4 billion last year. It will lose patent protection in 2011.

Eprotirome is a 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's (MRK) 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.

"This is...the first new targeted compound within this area for many, many years," says Jens Kristensen, Karo's chief medical officer. 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 regulators. Kristensen declined to specify how much the research may cost, saying the company can fund smaller studies alone.

Since the Karo drug works with the liver in a different way than current medications and could be taken over many years, regulators normally require a more stringent review. Explains Robert J. Temple, director of the FDA's office of drug evaluation: "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."

Trying to market any heart drug is risky. Pfizer spent almost $1 billion and 13 years of research on torcetrapib, an intended Lipitor successor, before scrapping it in 2006. Nissen and Karo are proposing a shortened research path for eprotirome, 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. But after GlaxoSmithKline's (GSK) Avandia diabetes drug in 2007 was linked by Nissen to an increase in heart attacks in patients, the FDA required companies to also show that their diabetes products don't raise significant heart risks. That has pushed some health advocates to press the FDA for wider testing of possible side effects of other new medicines intended for long-term use.

Nissen says his plan for eprotirome's study would include more patients than the several thousand 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 goal is to show the Karo compound cuts both cholesterol and heart attacks without serious side effects, while pushing eprotirome through the approval process in less than three years.

If regulators clear Karo's limited scope for research, it will still cost $300 million or more, figures Erik Hultgard, an analyst at Handelsbanken Capital Markets in Stockholm. That's why Karo, with assets of only $35 million at the end of 2009, needs help from a deep-pocketed drug company.

More than 81 million Americans, or one in three adults nationwide, have some form of cardiovascular disease, and 831,300 die from it every year, according to the American Heart Assn. Such numbers underscore the potential for eprotirome, said Lindstrom.

But Handelsbanken's Hultgard says generic versions of Lipitor may flood the market before Nissen's drug trials are completed. That could discourage investment from large pharma 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.

Also, Karo must deal with the uneasiness many health advocates have with attempts to fast-track drug approvals. Rory Collins, co-director of the University of Oxford's Clinical Trial Service Unit, which studies causes and treatment of chronic diseases, says studies of the kind Nissen proposes can't rule out all significant risk. "We know hormones have other effects," says Collins. "I think one would be a little bit more wary and would want to have large-scale trials."

The bottom line: Karo Bio has recruited a renowned drug-safety expert to help develop a fast-track plan for approving its new drug.

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