Before the markets opened Friday, Eagle Pharmaceuticals announced third-quarter earnings results. Third-quarter financials were a relative non-event for the company although it made headway during the quarter on several product development with the FDA approval of Ryanodex, a dantrolene sodium injectable suspension for the treatment of malignant hypothermia, as well as a tentative approval and orphan designation of its ready-to-use (RTU) bendamustine product for the indication of chronic lymphocytic leukemia (CLL) and seven subtypes of non- Hodgkin’s lymphomas (NHL). During the quarter, Eagle also received an approval of its ANDA for diclofenac/misoprostol, a legacy ANDA, for which we hold measured expectations given the difficulty in marketing a stand-alone ANDA.

The Ryanodex 505(b)(2) NDA was approved on July 23 after being designated for priority review earlier in the year. On the call, management said that an FDA decision on seven-year orphan exclusivity was roughly one month away despite receiving an orphan drug designation before the review process. The pricing of Ryanodex was announced at $2,300 per vial with a 10% early stocking discount. This price point amounts to three times the cost of the legacy product, which suggests a potential $60 million market in the United States alone, without additional pricing power.

The average hospital stocks about three to four vials for a total cost range of roughly $7,000 to $9,000 or, using the two year shelf-life of Ryanodex, $3,000 to $5,000 per year. With shipping beginning in August, management is focusing on the stocking phase with 9,000 outlets, including 6,000 hospitals and 3,000 ambulatory care centers. This estimate excludes outsidethe- U.S. potential for the product, although we believe management is targeting a regulatory filing in Europe in early 2015. Regarding the durability of the product outside of the potential orphan exclusivity decision likely announced during September, the company also expects to have four Orange Book patents listed by the end of September for Ryanodex, which should cover the product from 2022 to 2025. Despite the premium to current pricing, the company is confident in the adoption of Ryanodex due to its significant benefits over the current dantrolene formulation.

To administer the current formulation of dantrolene, an average of 12 vials must be reconstituted for the patient in more than 700 milliliters of IV fluid, a process which may take 15-20 minutes. This product preparation must occur during a critical period for the physician and patient, with malignant hyperthermia episodes characterized by a rapid increase in body temperature and rapid presentation of symptoms, all of which occur during an operation since malignant hyperthermia is triggered through certain anesthesia. Eagle’s Ryanodex is a ready-to-use formulation of dantrolene that can be administered with 95% less volume (250 mg of Ryanodex in 5 mL of sterile water) and can be administered in less than a minute, an important distinction given the acute needs of malignant hyperthermia in the clinic.

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