Pubdate: Mon, 11 Mar 2002
Source: Journal News, The (NY)
Copyright: 2002 The Gannett Company, Inc.
Contact:  http://www.nyjournalnews.com/
Details: http://www.mapinc.org/media/1205
Author: Christopher Mele

PENWEST HOPES TO PROFIT FROM PAINKILLER

Patterson-Based Pharmaceuticals Hopes to Gain Approvals for a Painkiller 
That Would Be an Alternative to OxyContin

PATTERSON -- Penwest Pharmaceuticals Co. is fundamentally shifting its 
business strategy in the hopes of turning a profit and tapping into a $1 
billion painkiller market.

Penwest has been known for five decades as a manufacturer of excipients, 
the non-active filler used in drugs. In 2000, its $35 million excipient 
business saw sales to more than 250 customers in 40-plus countries. Penwest 
also has a drug-delivery business centered on a time-release technology it 
pioneered called TIMERx.

Although it enjoys royalties from licensing its technology to other 
drug-makers, it is working to expand beyond its two core businesses. By 
beefing up its research-and-development efforts and pumping up its 
pipeline, Penwest hopes to capture up to 50 percent of a product's 
potential return versus the 5 percent to 15 percent it now gets with royalties.

Penwest has nine drugs in development, some in concert with a partner and 
some on its own. The drug getting the most attention is Oxymorphone ER 
(extended release), an opioid analgesic that relies on Penwest's TIMERx 
technology. The company is touting it as an alternative to the popular but 
much-maligned pain-killer OxyContin.

Penwest expects to file a new drug application with federal regulators by 
the third quarter of this year for Oxymorphone, a morphine derivative 
that's stronger than OxyContin and 10 times more potent than morphine. The 
twice-daily dosing is being developed in partnership with Endo 
Pharmaceuticals for the treatment of moderate to severe pain. Under the 
agreement, the two companies share development and manufacturing costs as 
well as net sales.

OxyContin, made by Stamford, Conn.-based Purdue Pharma, has gained a public 
relations black eye for being easily abused and too readily prescribed. 
Doctors have been warned about prescribing the drug and media accounts are 
replete with accounts of misuse.

Abusers of OxyContin have been know to crush and snort, inject or chew the 
drug. In Penwest's TIMERx technology, Oxymorphone's active ingredients are 
combined with locust bean gum and dextrose. When the tablet meets with 
water in the gastrointestinal tract, the gum matrix expands into a tightly 
bound gel that releases the drug at a predetermined rate. That matrix is 
expected to minimize abuse of Oxymorphone by injection (since the gum would 
make any kind of solution too gooey to use in a syringe) and inhaling the 
drug would not produce the immediate high that abusers want. Since chewing 
still poses a potential form of abuse, it's unlikely that Oxymorphone will 
win a label from the FDA saying it's less abusable, according to a research 
report by Leerink Swann & Company.

"However, we believe an aggressive marketing campaign championed by Endo's 
sales force could influence the prescribing practices of physicians 
attempting to reduce the use of the most abusable opioid pain therapies," 
the report reads. Michael J. Hearle, a senior analyst at Leerink Swann, 
said the new drug, if approved, would erode OxyContin's $1 billion market.

"There is a huge opportunity for Penwest and their partner, Endo," he said. 
"The most poignant marketing message is doctors are afraid of losing their 
license if they write a prescription for OxyContin."

Penwest officials take a slightly different view of Oxymorphone's potential 
market. The introduction of Oxymorphone may erode some of the OxyContin 
share but it will likely cause the whole pain-management market to expand, 
said Penwest's chief financial officer, Jennifer L. Good.

She said the market is currently underserved, but that doctors are paying 
more attention to aggressively addressing pain management. Penwest, which 
allied with Endo in 1997, is ahead of competitors, who are only in the 
early stages of developing their own pain-management medicines, Good said. 
Currently Oxymorphone is available only by injection or suppository. It 
recorded $1 million in sales in 2000 due to less-than-ideal delivery methods.

Doctors are looking for alternatives to OxyContin because pain management 
drugs can lose their effectiveness over time and can produce unwanted side 
effects in higher dosages. The introduction of an alternative drug would 
allow doctors to use a painkiller at lower dosages and still be effective.

"The more that are available the better it is for the patients," said Dr. 
June Dahl, professor of pharmacology at the University of Wisconsin Medical 
School and a collaborator with the university's Pain and Policy Study 
Group. "Each patient is a pharmacological experiment."

Penwest, once a subsidiary of Penford Corp., was spun off and became a 
public company on Sept. 1, 1998. The company expects to reach profitability 
in 2004 and in the meantime to invest heavily in research-and-development. 
Spending for research climbed to $18 million and $20 million in 2001 and 
2002, respectively, compared with $12.8 million in 2000 and $7.4 million in 
1999.

To meet its higher costs, Penwest wants to raise money each year through 
2004. Last year it sold stock at a fixed price to a hand-picked group of 
investors to raise $30 million.

The company lost its president and chief operating officer, Michael J. Fox, 
after less than a year. Fox, who had been a Penwest consultant, found his 
commute from Boston too much of a grind and wanted to spend more time with 
his family. Good said Penwest is now looking to hire a senior vice 
president of drug development who can grow into the president's slot.
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MAP posted-by: Keith Brilhart