Pozen (NASDAQ: POZN) and AstraZeneca (NYSE: AZN) have amended their agreement on osteo-arthritis drug Vimovo, paving the way for what could be an unraveling of a drug partnership dating to 2006.
If pharma giant AstraZeneca divests to a third party its rights to sell and market Vimovo in the United States, AstraZeneca will be relieved of its obligations under the agreement, according to a Pozen regulatory filing. The revised agreement releases each company from obligations of the agreement effective the date of a divestiture of the drug.
No divestiture has taken place and for now, AstraZeneca remains responsible for marketing and selling Vimovo. But AstraZeneca has already signaled its own frustrations with the failure of the drug to take off in sales. In May, AstraZeneca said that it would stop promoting Vimovo in most countries, including the United States and Europe, by the end of the third quarter. Vimovo is approved in 71 countries and the drug will still be available to patients. But AstraZeneca will not be putting the full weight of its salesforce into promoting the drug.
“We understand that AstraZeneca will instead now focus on those countries where the product has shown growth and which AstraZeneca believes have the greatest potential for future growth,” Pozen said in its quarterly filing. “The decision to launch the product in additional countries will be made by AstraZeneca on a case by case basis.”
After disclosing AstraZeneca’s decision in May, Pozen CEO John Plachetka told analysts during a conference call that an osteo-arthritis drug is a poor fit with AstraZeneca’s current focus on cardiovascular products. He also said that perhaps another partner could find better success selling Vimovo.
Vimovo brings together the pain reliever naproxen with AstraZeneca’s omeprazole. The combination drug employs Pozen’s delayed release technology which delivers the pain reliever in a manner that’s safer on the stomach. At the time the deal was reached, the market was looking for alternatives to Vioxx, the former Merck blockbuster pain drug that was withdrawn amid growing concerns about the drug’s association with increased cardiovascular risks.
Pozen has done its part to try to boost Vimovo sales. In 2011, Pozen commissioned a third party to conduct an independent review of Vimovo. That study concluded that Vimovo addressed a medical need for patients but payers and providers were unconvinced of the drug’s value.
With the sales rights to Vimovo squarely in the hands of AstraZeneca, Pozen could only provide its British partner with the information it had gleaned from the study. But sales have remained disappointing to the partners and to analysts. Pozen’s Vimovo revenue comes in the form of royalties from AstraZeneca’s sales of the drug. In the first half of 2013, Pozen’s royalty revenue from Vimovo sales was $3.1 million, virtually unchanged from the same period in 2012.
Even with its meager sales, Vimovo remains a crucial contributor to Pozen’s top line financials. Pozen also commercialized migraine treatment Treximet with another drug partner, GlaxoSmithKline (NYSE:GSK). But Pozen sold its U.S. rights to Treximet in 2011 to support another drug program, its “safer aspirin” development developed for secondary prevention of cardiovascular disease. A Food and Drug Administration drug approval decision on these so-called PA drugs is expected in January. Pozen earlier this month reached a deal with yet another drug partner, Sanofi (NYSE:SNY), to commercialize that aspirin combination product in the United States. But for now, Vimovo royalties remain Pozen’s primary source of revenue.
