Strong Q4 at Sanofi-Aventis Overshadowed by U.S. Delays to Acomplia, Ketek Label-Changes

French pharmaceutical heavyweight Sanofi-Aventis has survived the onslaught of generic competition to several of its key drugs with sharp sales increases in other drugs, bringing total net sales for the full-year 2006 to 28.4 billion euro (US$36.9 billion), a rise of 3.9% year-on-year (y/y). Turnover fared better in the final quarter (Q4), up by 5% y/y to 7.4 billion euro. While research and development (R&D) expenditure continued to grow, strategic cuts to Sanofi's sales force towards the end of 2006 resulted in a 5.7% y/y reduction in selling and general expenses over the fourth quarter and a 2.8% y/y contraction over 2006 as a whole, allowing full-year operating income (calculated by Global Insight as net sales minus cost of sales, R&D and selling and general expenses) to expand by 6.7% y/y to 8.4 billion euro. Fourth-quarter operating profit soared by 21.6% y/y to just over 2 billion euro. Despite the second half of 2006 being dominated by worries of lost U.S. sales due to the unleashing of generic Plavix (clopidogrel bisulfate), U.S. turnover nonetheless expanded at a noticeably faster rate than sales in cost-conscious European markets, particularly in the fourth quarter.

Generic Erosion Sets In

Sanofi-Aventis unquestionably felt the sting of generic competition in 2006, with blood-thinner Plavix seeing a drop in y/y sales growth from 20.2% in 2005 to just 9.6% in 2006. Thrombosis drug Lovenox (enoxaparin sodium) remains Sanofi-Aventis' top seller, with a 12.9% y/y rise to 2.4 billion euro in sales, but again, the expansion in turnover was down slightly from the 13.8% y/y witnessed in 2005. The one major change to Sanofi's top five is insomnia treatment Stilnox/Ambien (zolpidem), which overtook Taxotere and Eloxatin to sit at number three with an impressive 33.3% y/y jump to 2 billion euro in full-year sales, and an even bigger 42.5% y/y leap in the fourth quarter, reaching turnover of 580 million euro. Elsewhere, generic erosion to antihistamine Allegra (fexofenadine) and hypoglycaemic sulfonylurea drug Amaryl (glimepiride) continued to damage sales, with double-digit losses recorded for both drugs. While Sanofi-Aventis is pursuing legal action against several makers of generic Allegra, the company has twice lost an appeal to halt U.S. sales of the rival products while the trial is ongoing (see France: 9 November 2006: No Rest for Sanofi-Aventis, as U.S. Court Allows Generic Allegra Sales to Proceed During Patent Trial).

In terms of research and development of new drug candidates, Sanofi suffered a few setbacks in 2006, after discontinuing the development of two oncology compounds: tirapazamine was n developed for head-and-neck cancer and SR31747 was a potential treatment for prostate cancer. Several projects were advanced to Phase III development, however, including three oncology compounds (VEGF Trap, S-1 and XRP6258) and five vaccines (Flu Micro-injection, Flu infants, Flu new formulation, Menactra toddler 1-2 years, and Unifive combination vaccine). Sanofi-Aventis' pandemic influenza inoculation, developed by vaccines unit Sanofi Pasteur, is currently in Phase IIb trials.

More Delays for Acomplia's U.S. Approval

With weight-loss drug Acomplia (rimonabant) now approved in Europe and some markets already agreeing to reimburse the product, Sanofi-Aventis has been eagerly awaiting a green-light from the U.S. FDA (Food and Drug Administration). In February 2006, the FDA issued an approvable letter to Sanofi-Aventis over Acomplia, delaying approval until April 2007. In a press release issued yesterday (12 February), however, the French firm revealed that the FDA has extended its review period for Acomplia by another three months, ending on 27 July. With U.S. sales of other drugs faltering due to generic competition, Sanofi had been counting on an imminent U.S. market launch for Acomplia to help reverse the trend. The company previously predicted peak annual sales of 3 billion euro for the drug, but this goal will now take even longer than expected to achieve. However, the press release states that Sanofi has only just submitted data from the SERENADE clinical study to the FDA, as part of its new drug application (NDA) for Acomplia, indicating that the delay has not stemmed from a problem with previously-reviewed data, but rather from the submission of new findings for FDA review.

Indications Cut, Warnings Ramped Up on Ketek

As expected, following the December 2006 meeting of an FDA Joint Advisory Committee (see France: 20 December 2006: Sanofi's Ketek Could Have Key Indications Slashed on Advice of U.S. Advisory Committee), the FDA has approved several revisions to the U.S. prescribing information for Sanofi-Aventis' antibiotic drug, Ketek (telithromycin), namely:

• A boxed warning indicating that Ketek is contraindicated in patients with myaesthenia gravis (a rare auto-immune disease);
  
  
• Updated warnings of possible visual disturbances and loss of consciousness; and
  
  
• The removal of two indications: acute exacerbation of chronic bronchitis (AECB) and acute bacterial sinusitis (ABS).
  
  

The antibiotic has been the cause of much controversy for Sanofi-Aventis in the United States over 2006, after the company suspended paediatric trials of the drug following the discovery of its link to liver failure in several adult patients (see France: 9 June 2006: Sanofi-Aventis Halts Paediatric Ketek Trials, as OptiClik Investigation Looms). In the United States as in neighbouring Canada, Sanofi-Aventis had to revise its label for Ketek last year, warning that the drug should not be taken by hepatitis patients (see France: 4 October 2006: New Canadian Safety Information Sees Sanofi-Aventis Discourage Hepatitis Patients' Use of Ketek). Ketek, which is approved and on sale in more than 50 countries worldwide, is currently prescribed for the indication of mild to moderate community-acquired pneumonia (CAP) caused by susceptible pathogens, including multidrug-resistant Streptococcus pneumoniae.

Outlook and Implications

Sanofi-Aventis has remained relatively vague in terms of 2007 guidance, saying only that "barring major adverse events, the Group expects a growth in 2007 adjusted EPS (earnings per share) excluding selected items in the same order of magnitude as 2006 growth, despite the end of protection for Ambien IR in the United States in April 2007 and generic competition for Eloxatin in Europe". The adverse events referred to include generic competition to Lovenox and Plavix in the United States, although while Plavix has already unquestionably taken a hit, Sanofi's recent court loss against generics producers Teva (Israel) and Amphastar (U.S.) does not mean that the two firms will be able to launch a copy version of Lovenox right away. While Lovenox was approved as a chemical drug, it is closer to a biotech product in its characteristics, and generics producers find it difficult to prove bioequivalence. The major threat for Lovenox will come from U.S. firm Momenta Pharmaceuticals, which is developing a biosimilar version of the product. Due to the underdevelopment of U.S. legislation on biosimilars, however, this too is some time off. As far as generic Plavix is concerned, both Sanofi-Aventis and U.S. marketing partner Bristol-Myers Squibb have a temporary reprieve, as Canadian drug-maker Apotex has been ordered by a U.S. court to halt sales of its copy version while litigation between the three firms is ongoing (see United States: 19 January 2007: Sanofi-Aventis, BMS Prepare for Round Two of Generic Plavix Battle as Court Case Set to Resume). Recent legal developments appear to be hinting at a possible victory for the two Big Pharma firms, which would theoretically delay any future sales of the Apotex drug until 2011.

In the meantime, Acomplia remains Sanofi-Aventis' biggest hope for future growth, with reimbursement in France and Scotland already in the works and more markets likely to follow. The delay to U.S. approval of the product will mean that an eventual U.S. market launch is likely to occur in the third quarter of 2007 at the absolute earliest, resulting in a significant lag between Europe and the United States in terms of developing market sales. The company will continue to see solid growth in 2007, albeit at a slower pace than it enjoyed during its first post-merger year. The reported decision by Sanofi to call off talks to acquire BMS (see France: 12 February 2007: Sanofi-Aventis Reportedly Ends BMS Takeover Talks as QLT Helps Settle Eligard Lawsuit) has been validated by today's results, and by the Acomplia delays and Ketek indication-revisions, as Sanofi-Aventis will need to spend 2007 focusing on maximising growth and preparing its strategy to deal with increasing levels of generic competition.