St. Louis Business Journal -KV Pharmaceutical Co. is awaiting an October deadline for federal approval of a drug anticipated to boost company revenue while combating a national health epidemic — preterm births.
The U.S. Food and Drug Administration (FDA) is expected to make a decision on the new drug application (NDA) for Gestiva by Oct. 24. If the drug is approved, KV expects it to make a “significant” contribution to revenue in its Ther-Rx division in the second half of fiscal 2009, according to Sarah Weltscheff, senior vice president of human resource management and corporate communications.
The impact on prenatal health nationwide could be more than significant, according to health-care executives.
“This is a product breakthrough,” said Deborah Kersting, Missouri executive director of the March of Dimes. “The implications across the United States would be huge, and it’s exciting that this universal treatment would come out of Missouri.”
More than 500,000 babies are born prematurely in the United States each year, costing the nation more than $26.4 billion annually, according to March of Dimes. Preterm-related causes accounted for 36.5 percent of infant deaths in 2005, according to the National Center for Health Statistics.
Gestiva is a progesterone injection given to women who previously have had at least one preterm birth. The injection would be given once a week, starting between weeks 16 and 20 of the pregnancy and continuing until week 37, when a baby is no longer considered preterm.
“OB/GYNs are very excited, because this is the first medication proven to prevent preterm birth in women with a history of preterm births,” said Jennifer Gudeman, director of medical communications at KV. “What we have is an important weapon in the arsenal of OB’s trying to help these patients.”
The FDA approved 29 new drug applications from January to April, the highest acceptance level since 2000, according to industry publication Pharmalot.
KV placed an $82 million bet on Gestiva earlier this year when it acquired worldwide rights for the drug from Massachusetts-based Hologic Inc. KV paid $7.5 million in cash upon the deal’s closing and will pay the remaining $74.5 million if Gestiva obtains FDA approval and production is launched.
“It’s a logical and natural product addition to the Ther-Rx line, which is focused on women’s health,” Weltscheff said.
Gestiva has been granted orphan drug designation by the FDA, meaning that KV will have market exclusivity for seven years if the drug obtains FDA approval. “Seven years of exclusivity is very exciting for the company, obviously,” Weltscheff said.
KV reported revenue of $601.9 million in fiscal 2008. The company’s profit more than doubled in the first quarter of fiscal 2009, topping $12.5 million, as compared to $6.2 million in the first quarter of fiscal 2008. First-quarter revenue was up 30 percent to $148.9 million from $114.4 million in the same quarter a year ago. However, sales fell short of analysts’ estimates of $162.5 million for the quarter.
Despite the lower-than-estimated sales, David Steinberg, analyst with Deutsche Bank, maintained his “buy” rating for KV and held his price target for KV stock at $25. The stock closed at $22.65 a share Aug. 27.
The biggest risks for KV’s stock price “primarily relate to FDA approvals of KV’s products as well as Rx trends for core promoted products,” Steinberg said in a recent research report. In addition to the NDA for Gestiva, KV also has six abbreviated new drug applications (ANDA) for generic drugs pending with the FDA. Weltscheff declined to disclose what therapies’ ANDAs were pending.
KV also is facing an independent inquiry by its audit committee into alleged management misconduct. The allegations under investigation were made by sources not identified to management. In addition, in July the company prepared to turn over to federal authorities inventories of drugs containing guaifenesin in light of new FDA compliance guidelines. The company said it wrote off the cost of the inventory in 2008, and there will be no further impact.
If approved, Gestiva would represent the fourth approved NDA in KV’s 66-year history. In July 2007, the company received NDA approval for Evamist, a spray-on treatment for hot flashes. KV obtained NDA approval for Gynazole-1, a one-dose treatment for yeast infections, in 2000 and Clindesse, a one-dose treatment for bacterial vaginosis, in 2004. KV developed Gynazole-1 and Clindesse internally. Like Gestiva, the Evamist therapy was acquired by KV prior to receiving FDA approval. KV paid $150 million to Mountain View, Calif.-based VIVUS Inc. for Evamist last year.
KV launched the Evamist product in March, spending $3.8 million on marketing and promotions. Evamist prescriptions have risen to more than 4,000 per month since the launch.
Evamist is part of KV’s Ther-Rx subsidiary, as Gestiva also would be if approved. Ther-Rx’s revenue increased just 1.7 percent in the first quarter of fiscal 2009 to reach $50.9 million. Fiscal 2008 revenue at Ther-Rx was $214.9 million, accounting for 35.7 percent of KV’s total sales.
KV expects Evamist to boost Ther-Rx’s revenue beginning in the second half of fiscal 2009. The company anticipates Evamist to reach $125 million in sales at its peak.
“Evamist is one of many,” Weltscheff said. “In the case of Gestiva, it is expected to be the first approved drug of its kind. Therein lies a great deal of difference.”