A potential inflection point that Bausch Health hoped could diversify its portfolio has vanished with a pair of phase 3 failures for a new formulation of the company’s bread-and-butter Xifaxan—a setback that leaves a $2 billion hole in its growth plan.
Friday, Bausch Health announced its phase 3 Red-C trials for an amorphous solid soluble dispersion (SSD) formulation of Xifaxan (rifaximin) failed to meet their main objectives. The two studies were evaluating the drug in adults with liver cirrhosis for the primary prevention of hepatic encephalopathy.
The indication could make the new Xifaxan version a $2 billion-plus revenue product at peak, Jefferies analysts said in an October note.
Bausch Health’s stock price dropped about 9% as of publication time Friday morning on the news.
“We are disappointed in the results, as there is currently no approved treatment for these patients,” Bausch Health CEO Thomas Appio said in a Jan. 23 statement. “We are currently reviewing the full dataset to determine potential new development opportunities.”
It was only a few days ago that Appio touted the Red-C program among three potential inflection points for the company at the J.P. Morgan Healthcare Conference in San Francisco.
Amorphous rifaximin SSD was designed to overcome the drug’s dissolution characteristics that limit local bioavailability and therefore enable delivery through the entire gastrointestinal tract. Thanks to an FDA approval in 2010, Xifaxan is approved to reduce the risk of recurrence of overt hepatic encephalopathy (OHE); the Red-C program is meant for primary prevention.
The patient population targeted by the SSD formulation is at least three times larger than Xifaxan’s recurrent disease indication, Appio said at JPM. About 1.9 million U.S. liver disease patients have not experienced first OHE, according to Appio’s presentation. Besides, while recurrent OHE is only a U.S. indication for Xifaxan, Bausch was targeting the new formulation for primary prevention globally, the CEO added.
Xifaxan has been Bausch’s biggest product for years. The drug brought in $616 million in sales in the third quarter, making up 44% of Bausch’s business outside of Bausch + Lomb. But the aging drug, first approved by the FDA in 2004 for travelers’ diarrhea, is expected to lose market exclusivity in 2029.
That’s why Bausch is counting on the three inflection points before the Xifaxan patent cliff.
Missing out on such a big growth opportunity might trigger some organizational changes at Bausch. A Bausch spokesperson declined to comment further beyond Friday’s press release.
Among the company’s two remaining potential inflection points, one is related to Bausch’s skin tightening radiofrequency treatment Thermage. The other is an expected 2028 phase 3 readout of larsucosterol, which Bausch obtained last year through its acquisition of Durect for $63 million upfront. Bausch expects to advance larsucosterol into phase 3 testing for alcoholic hepatitis soon.
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