Lisa Jarvis. Chemical Market Reporter New York:Oct 17-Oct 23, 2005. Vol. 268, Iss. 13, p. 27-28 (2 pp.)

AS MORE cases of avian flu crop up across the globe, the very real threat of a flu pandemic is finally hitting home. Countries are scrambling to prepare for an outbreak, breathing new life into a class of antiviral drugs. Sales of Roches Tamiflu, which had been lackluster in recent years, are set to quadruple this year, and BioCryst Pharmaceuticals Inc.'s Peramivir is back in development after several years collecting dust. Yet analysts warn that despite a long list of nations looking to stockpile antivirals, the upswing may not be permanent.

"The threat is both real and formidable," secretary of Health and Human Services Michael Levitt told leaders from across the globe on the opening day of the International Partnership on Avian and Pandemic Influenza, held in Washington D.C. early this month. "We could be battling 5,000 different fronts at the same moment; we could have a period of over a year as we see the waves of the pandemic come and go."

With fears of a flu pandemic reaching fever pitch and the reality of insufficient vaccine supplies sinking in, the once ailing market for antivirals is suddenly flourishing. After Tamiflu sales dropped off sharply in 2004, Roche has seen a surge in demand. Tamiflu sales fell 22 percent in 2004 to CHF330 million ($257 million), but by the first half of 2005, they had already climbed to CHF580 million ($450 million). The company attributes the improvement to a "late but severe flu season" last year, government stockpiling and strong demand from Japan.

Roche could continue to see robust sales of its drug in the near future. The company is the primary beneficiary of the $4 billion fund provided by an amendment to the 2006 Defense spending bill to strengthen the nations preparedness for an outbreak of avian flu, with $3 billion earmarked for bolstering stockpiles of Tamiflu. Moreover, countries are lining up to establish a stockpile of antivirals, with Tamiflu at the top of the list.

Yet Roche is not the only company whose fortunes have been lifted by the prospect of a flu pandemic. BioCryst Pharmaceuticals Inc. is seeing renewed interest in its antiviral drug Peramivir. In 2002, the drug failed to meet its primary endpoint in a Phase III trial in influenza, causing BioCryst's development partner, Johnson & Johnson, to return all rights to the drug to BioCryst, which shelved the project.

However, a researcher at Utah State later conducted animal studies that showed Peramivir was highly potent in treating bird flu strains, says Claude Bennett, president and COO of BioCryst. The new study spurred the company to ask the Food and Drug Administration to approve the drug to treat avian flu based on its abundance of data from its earlier trials with J&J. However, the agency was unconvinced, requiring new data to show the drug's activity.

BioCryst has since teamed with the National Institutes of Health (NIH), which is funding much of the development of an intravenous version of the drug to treat influenza. The company plans to file an investigational new drug application with the FDA for Peramivir by the end of November. The NIH will then initiate a Phase I trial of the drug at its research facilities in the US to establish the dosing levels, to be followed, ideally, by a larger trial in humans in Southeast Asia, says Bennett.

The flu season in Southeast Asia runs from May to September and the size of the NIH trial-and the timeline for getting Peramivir to market-will depend on how many patients can be enrolled. "Flu is very hard to predict," notes Bennett. The parenteral administration will likely mean it will be given in a hospital setting-which could limit the number in the NIH trial, he adds.

Despite the need for new studies, analysts seem to think the drug's time to approval could be quick. "Peramivir could come to market sooner than one might think possible, given special regulatory consideration and extensive preclinical and clinical data that has already been generated," says Leerink Swann & Company analyst Joseph Schwartz.

The most likely scenario will be that Peramivir will qualify for approval under Bioshield II once the NIHs Phase 1 trial is complete, say analysts. In that instance, the drug would be available for stockpiling purposes, but not marketed as a general flu treatment to the general population.

Peramivir is part of the same class of drugs, called neuraminidase inhibitors, as Tamiflu and GlaxoSmithKline's Relenza, but it appears to offer several key advantages. Anecdotal evidence from animal trials indicates the drug is as effective as Tamiflu if not more so. And analysts say the production process is more economical and more easily scaled up than that of its peers, there being far fewer steps in the production process for Peramivir than for Tamiflu.

"We think this is a much more economical production route," which is critical when attempting to address a global outbreak, says Bennett.

Cilag AG, a subsidiary of Johnson & Johnson, is manufacturing the drug for BioCryst, and is capable of making one metric ton-or about 10 million doses-of the drug per month, says Bennett. One analyst indicates that Roche is only capable of making 2 million doses per month.

Despite its promise, analysts say it is difficult to pin down the revenue potential of Peramivir. BioCryst shares have risen over 50 percent in the past two weeks, pushing above $15 early last week after several media reports on the potential of the antiviral.

However, there is uncertainty around how many doses will be required for stockpiling and how big of a share that market Peramivir could capture. Further, the market could contract if stockpiling is complete or the threat of a pandemic eases.

"At some point, reality will set in," says Rodman & Renshaw analyst Ren Benjamin. "The problem right now is that investors are trying to get a handle on how much exactly could potentially come out of this if the Phase I trial is successful."

As many as 1,000 Exxon Mobil employees and 14 residents of a senior citizens home were injected with fake flu shots, authorities said Friday.

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Swiss pharmaceutical company Roche Holding AG said it had temporarily suspended shipments of the anti-viral drug Tamiflu in the United States to ensure that enough treatments will be available for the regular influenza season.

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