Thursday, April 27, 2006

ED Market: Showing Flaccid Growth



Just back from a week’s vacation in sunny Florida, the following headline caught the 10Q Detective’s attention: “GM pays $17M for erectile dysfunction care.”

Charles E. Wilson, the former President of General Motors, said, “what was good for our country was good for General Motors and vice versa.” [Testimony, Senate Armed Services Committee, 15 Jan 1953]. Ergo, we thought it might be interesting to do a retrospective commercial analysis of currently marketed products for erectile dysfunction, and a prospective review of several pipeline products identified that are currently in clinical development.

According to the Massachusetts Male Aging Study (MMAS), erectile dysfunction is a condition that affects an estimated 52 percent of men between the ages of 40 and 70. Erectile dysfunction, or ED as it is commonly called, affects over 30 million men in the U.S. In fact, more than half of all men between the ages of 40 and 70 experience ED to some degree. The etiology of ED, frequently associated with psychogenic and/or vascular problems, is particularly common in men with diabetes and in those who have had a radical prostatectomy for prostate cancer. ED is defined as the consistent inability to get or maintain an erection that is hard enough for sexual intercourse.

Many therapeutic options are available to assist in the management of erectile dysfunction (ED). The types of medications can be divided into oral, injectable, topical, intraurethral insertion, and penile prostheses:

· Oral -- UPRIMA (apomorphine) is a dopamine receptor agonist that works in the brain to improve diminished erectile function by enhancing the natural signal to the penis following sexual stimulation, similar to the way men normally have erections. UPRIMA works through the central nervous system, producing a series of events that enhances the ability to achieve and maintain penile erection. The generic [branded drug, Ixense] is sold on the Internet and comes in the form of small flavored pills that dissolve on the tongue.

Phosphodiesterase (PDE-5) selective inhibitors are agents that act peripherally to induce smooth muscle relaxation of the corpora cavernosa. The most commonly used agents are sildenafil (Viagra), vardenafil (Levitra), and tadalafil (Cialis). Viagra was the first in this series of PDE inhibitors. These agents rely on the role of nitric oxide (NO) in inducing vasodilatation. NO relaxes smooth muscle by stimulating guanylyl cyclase activity, which raises the intracellular concentrations of the cyclic nucleotide cGMP, which, in turn, induces vasodilation.

· Injectables -- Agents that are injected directly into the penis and exert their relaxant effect directly on the corpora cavernosal smooth muscle. They can be used as single agents or in combination. The most commonly used agents utilize prostaglandin E1 (PGE-1), otherwise known as alprostadil (the generic name for the synthetic version of prostaglandin E1, a naturally occurring vasodilator present in the human body and at high levels in seminal fluid). These medications can be obtained commercially as Caverject, which is a vasodilator (PGE-1) that is injected into one of the corpora cavernosa. If the blood vessels are capable of dilating, a strong erection should develop within 5 minutes. Available since 1995, patients can be supplied with vials of a single agent or a combination of agents mixed in a single vial.

Intracavernosal injection of other drugs, such as papaverine and phentolamine (sometimes in combination), are also effective but invasive treatments.


· The Medicated Urethral System for Erections (MUSE), launched by VIVUS (VVUS-$3.20) in 1997 in the United States, is a small suppository placed into the urinary opening using a disposable plastic applicator. MUSE was the first minimally invasive therapy for erectile dysfunction available at a time when only more invasive therapies existed. With MUSE, an erection is typically produced within 15 minutes of administration and lasts approximately 30 to 60 minutes. MUSE is a relatively safe, local treatment that minimizes the chances of systemic interactions with other drugs or diseases. The commercial launch of Viagra in the United States in April 1998 significantly decreased demand for the injectables.

· TopicalAlprox-TD is an alprostadil-based cream treatment intended for patients with mild, moderate or severe erectile dysfunction. Based on proprietary transdermal penetration technology developed by NexMed Inc.’s (NEXM-$0.82), the medicine is currently approved for sale in China and in Hong Kong since October 2001 and April 2002, respectively, under the Befar trademark.

In December 2002, NexMed completed two pivotal Phase 3 studies for Alprox-TD, which tested over 1,700 patients at 85 sites throughout the U.S. Both studies demonstrated that Clinical studies have demonstrated that NexMed’s technology promoted the rapid absorption of alprostadil and improved clinical responses in men with varying degrees of ED. Prior to filing a New Drug Application for Alprox-TD, however, the Company, will be required to initiate a new 12-month open-label safety study. A past open-label study was halted in November 2002 due to FDA concerns about results found in transgenic mice study. The topical cream product is packaged in a pre-measured dose and is applied locally via an applicator to the tip of the penis with the onset of activity reported at 10-15 minutes.

· Penile Prostheses -- ACTIS, manufactured by VVUS, works by allowing blood to flow into the penis, but applied constriction latex band therapy restricts the outward blood flow. The result is an erection.

In the past, the placement of prosthetic devices within the corpora was the only effective therapy for men with organic ED. Now, given its limited appeal relative to other aforementioned therapies, it is a procedure of last resort.

Two types of devices are available, a semi rigid and a multicomponent inflatable system. With the semi rigid prosthesis, 2 matching cylinders are implanted into the corpora cavernosa. These devices provide enough rigidity for penetration and rarely break. The major drawbacks are the cosmetic appearance of the penis, the need for surgery, and the destruction of the natural erectile mechanism when the prosthesis is implanted.

The current market for drugs to treat sexual disorders is estimated at US$3.8 billion. Given the aging baby boomer population and direct-to-consumer advertising projecting the desire of seniors to maintain an active sexual lifestyle, as late as the 3Q:05, forecasters called for a 74% increase in sales to U.S.$6.6 billion by 2012, with most of this growth predicted to come from the PDE-5 inhibitor class. Actual prescription growth, however, has shown a decrease of 3%-5% in the overall ED market for the past five-months.

In the opinion of the 10Q Detective, the PDE-5 vitalized the market—and has strangled new RXs, too. In July 2005, FDA alerts about non-arteritic anterior ischemic optic neuropathy (NAION) were issued after the agency received 43 reports of varying degrees of vision loss, including blindness, among users of erectile dysfunction drugs.

NAION is a vascular event that occurs when blood flow to the small arteries that supply the optic nerve is decreased or blocked. The lack of blood supply to the optic nerve causes damage to the nerve, which may result in permanent vision loss in one or both eyes. NAION is usually permanent and often leads to legal blindness.

On July 5, 2005, the FDA approved updated labeling for Cialis, Levitra, and Viagra to reflect this potential risk of sudden vision loss. This news, coupled with the prior concern among health practitioners about the potential for cardiac risk of sexual activity in patients with preexisting cardiovascular disease [found in the Warning Label section of the Drug Package Inserts of PDE-5 agents] has adversely affected the way doctors and patients think about treating and using drugs, respectively, for ED or “recreational use.”

The 10Q Detective believes, however, that a thematic area currently being ignored by investors is the growth potential afforded by next generation ED drugs. The same factors that initially drove the explosive ED market growth in the past four years (the availability of effective oral therapy, growing worldwide awareness of ED and treatment options, and an aging population) will continue to influence the market over the next decade. Emerging novel agents that offer fewer side effects—and similar erectogenic efficacy to—Viagra (and other first-generation PDE-5 agents) will resuscitate the flaccid ED market.

Analysis of identified high-revenue yielding prospects for erectile dysfunction:

· VIVUS is developing avanafil, a fast-acting, highly selective phosphodiesterase type 5 (PDE-5) inhibitor, as an oral medication for the treatment of ED. The Company licensed avanafil from a leading Japanese pharmaceutical concern, Tanabe Seiyaku Co., Ltd, in 2001. VIVUS has exclusive worldwide development and commercialization rights for avanafil with the exception of certain Asian markets.

While PDE-5 inhibitors currently on the market are effective in treating ED, newer drugs that possess better specificity for the PDE-5 enzyme may be safer. In addition to PDE-5, there are at least ten other types of PDE enzymes in the human body. Drugs that inhibit more than one of these enzymes can potentially cause significant adverse effects, depending on the enzymes that are affected. In an in vitro study conducted by Tanabe comparing the activity of avanafil, sildenafil, tadalafil and vardenafil against all 11 of the known PDE enzymes, Tanabe found that avanafil demonstrated the best specificity for PDE-5, with little activity against the other enzymes.

Avanafil possesses a shorter plasma half-life than other PDE-5 inhibitors currently on the market. The plasma half-life of a drug is the amount of time required for 50% of the drug to be removed from the bloodstream. In general, the shorter the half-life, the less potential there is for the drug to interact with other drugs that may also be in the bloodstream. All approved PDE-5 inhibitors are required by the FDA to include warnings against taking nitrates after administration. For example, Cialis’ label warns patients not to take nitrates within 48 hours of administration. Approximately 5.5 million men take nitrates on a regular basis for angina pectoris and another half million annually will experience a heart attack and are potential candidates for emergency nitrate therapy. Sildenafil and vardenafil possess plasma half-lives of approximately four hours, and tadalafil has an extended half-life of 17 to 18 hours. The plasma half-life of avanafil, however, is approximately 90 minutes, which means that it is removed from the bloodstream faster than the other currently available PDE-5 inhibitors. VIVUS believes avanafil’s short half-life, high specificity and fast onset of action are ideal characteristics for an on-demand treatment for ED.

An End-of-Phase 2 meeting with the FDA for avanafil took place in November 2005. Corporate discussed the Phase 2 results and the proposed protocol for the Phase 3 trials. Based on this meeting, VIVUS will proceed with finalizing the Phase 3 protocol and it is corporate’s intention to request a Special Protocol Assessment from the FDA prior to the initiation of the pivotal Phase 3 trials.

A second generation of PDE agents, such as avanafil, and other newer drugs are coming to market that will provide men with increased options for successfully treating their problems with sexual function. Given the increased understanding of the physiologic mechanisms of ED, newer treatments are being developed that target the specific molecular dysfunctions and provide a mechanism of enhanced penile functioning. Possible new developments in the management of ED with a time frame of 5-8 years until their market approval are guanylate cyclase activators, Rho-kinase inhibitors, melanocortin receptor agonists, gene therapy, and tissue engineering.

In the next report of the 10Q Detective, we will examine a company developing a promising melanocortin receptor agonist, the revenue-yielding prospects of the agent, and place a valuation on the company developing this—and other—products.

Stay tuned....

p.s. It is nice to be back!

1 comment:

Tayler said...

A new research has shown that the consumption of watermelon can yield surprisingly positive results in men with ED. Watermelon has been found to make improvements in ED condition as good as an ED drug. If more and more people experience the benefits it won’t be surprising if the sales of drugs like tadalafil experience a slump.