Sleep Drugs Rouse Big Pharma
With 25 million Americans suffering from chronic insomnia, new treatments in the pipeline could find a huge market
by Beth Piskora From Standard & Poor's Equity Research
New York may be the "City That Never Sleeps," but the rest of the U.S. seems to be getting less shut-eye as well. Pharma and biotech companies are targeting sleeping disorders, with more than a dozen insomnia compounds in phase II and phase III clinical trials.
Approximately 70 million people in the U.S. suffer regular or occasional insomnia, according to Steven Silver, a biotechnology equity analyst for Standard & Poor's. But only 10% to 15% seek treatment, in part because of the side effects associated with the current crop of insomnia drugs. An astonishing 25 million people suffer from chronic insomnia. But the medical profession increasingly believes treating insomnia is important, since lack of sleep can lead to serious disorders including heart disease.
The Food & Drug Administration has approved several prescription drugs for insomnia, and many sufferers use PM formulations of popular over-the-counter painkillers. Overall, the U.S. insomnia drug market is estimated by Wolters Kluwer Health (WLSNc.AS) at about $4.6 billion in annual sales in 2006, up from $1.3 billion in 2001, a compounded annual growth rate of 29%. Over that same period, total prescriptions rose to 56 million from 30 million, a 13% annual increase.
Key products are Ambien, now generic since the U.S. patent covering the original formulation from Sanofi Aventis (SNY; $42; S&P investment rank 4-STARS, buy) expired in April; Sanofi's new Ambien CR (controlled release); Lunesta, from Sepracor (SEPR; $28; 3-STARS, hold); temazepam (generic); and zolpidem (generic). Generics are believed to account for more than two-thirds of the market.
"From a competitive standpoint, Lunesta has an advantage over the older insomnia treatments in that it may be prescribed for long-term use. Safety issues restrict the others to only short-term use," says Herman Saftlas, pharmaceutical equity analyst for Standard & Poor's. "However, Lunesta, like its rivals, is still a controlled substance."
Since many insomnia drugs are sold directly to consumers, sales are greatly influenced by consumer print and broadcast advertising. "Being similar to mood-altering drugs, anti-insomnia drugs are linked to addiction, thus the controlled-substance labeling," explains Saftlas.
Littered with Failures
He believes Sanofi has salvaged some of its Ambien franchise with patent-protected Ambien CR, which was launched in 2005. The company also has an aggressive R&D program across many different therapeutic classes, with some two dozen drugs now in late-stage development. Sepracor is also expanding its Lunesta franchise overseas, signing recent deals with Eisai (4523) to market Lunesta in Japan and with GlaxoSmithKline (GSK; $54; 4-STARS) to sell the product in Europe.
"Newer insomnia drugs now under development are being designed to reduce dependency and eliminate morning after grogginess and related side effects," says Saftlas. The insomnia area has been littered with several high-profile failures such as Goboxadol, from Merck (MRK; $52; 4-STARS), which was developed through alliances with smaller biotech companies.
Despite those failures, there are more than a dozen insomnia compounds in phase II and phase III clinical trials, many with mechanisms of action different from the ones Ambien and Lunesta use.
Three Responses Possible from FDA
S&P is specifically keeping an eye on Somaxon Pharmaceuticals (SOMX; $11; 4-STARS) and Neurocrine Biosciences (NBIX; $10; 3-STARS). According to S&P's Silver, Neurocrine's Indiplon IR (immediate release) formula could be approved as early as December. Another formulation, Indiplon MR (modified release) received a "non-approvable letter" and the company, according to Silver, has not determined a final plan for that formulation.
"When a company files for approval with the FDA, they typically get one of three responses: A) approved; B) approvable, which means that they are open to reconsidering once the company refiles with specifically requested data or follow-on trials; or C) not approvable," explains Silver. "In some cases of C, companies will request meetings with the FDA to seek clarification and then conduct further clinical trials in the hopes of refiling at a later time. In the case of Indiplon, they received an "approvable" letter, which requested further study be done. They have completed resubmission, and the drug, in its IR form, could be approved as early as December."
Meanwhile, Somaxon is expected to file with the FDA for approval of its Silenor drug in early 2008. The company had planned on an earlier submission date, but the FDA requested further data, which pushed the filing into next year. Most current insomnia drugs use mechanisms of action utilizing the GABA modulator in the brain. According to Somaxon, Silenor will block the release of histamine at the H1 receptor in the brain instead. This is Somaxon's claimed "differentiator," explains Silver, to avoid the hangover issues with other insomnia drugs.
The active ingredient in Silenor is doxepin, a psychotropic agent with antidepressant properties. In other formulations for other conditions, doxepin has been prescribed for more than 30 years. On its Web site, Somaxon claims the long use of the ingredient should overcome any concerns about its safety. "In phase III trials, Silenor showed statistically significant results in both onset [of sleep] and maintenance," says Silver.