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Schering-Plough allergy drug deal has significant potential

The agreement between ALK-Abello and Schering-Plough on immunotherapy compounds welcomes the first tablet-based vaccine against grass pollen allergy on the global market. While immunotherapy is increasingly popular in Europe, the US remains a novice, offering great potential for ALK-Abello's Grazax.

The total number of people in the seven major markets diagnosed with allergic rhinitis (AR) is estimated to be 64 million. More than half of these patients, 53%, suffer from grass pollen allergy (34 million). The impact of this disease on a patient's life is often under-estimated. It imposes severe restrictions on the physical, psychological and social aspects of patients' lives and may therefore have an important impact on their careers as well.

In addition, if the symptoms of AR are not well controlled, they may contribute to learning problems and sleep disturbances. The direct and indirect costs of AR in terms of money are also high; around $12 million in the US and $4 million in Europe.

ALK-Abello's Grazax is a once-daily immunotherapy tablet that reduces and potentially halts the allergic reaction to grass pollen. Seasonal AR can be triggered by several allergens, of which grass, house dust mite and ragweed are the most common. A typical allergic reaction is characterized by sneezing, watery nasal discharge, nasal obstruction and itching, associated with inflammation as a response to an allergen. Allergic inflammation does not limit itself to the nasal airway, and therefore multiple co-morbidities have been associated with rhinitis.

The ARIA study investigated long-suspected links between asthma and rhinitis and highlighted the fact that rhinitis is a strong risk factor for asthma, suggesting the concept of "one airway, one disease".

The most likely cause of AR is a faulty training of the immune system during childhood, because the most significant risk factors include a personal and family history of other allergies, such as eczema, hives and asthma.

Disease modifying therapy

Traditionally, the goal of allergic rhinitis management was to achieve optimal symptom control through allergen avoidance and pharmacotherapy, which includes antihistamines, corticosteroids, cromones, decongestants and anticholinergics. However, these symptomatic therapies do not have a long-lasting effect after discontinuation, requiring frequent maintenance treatment. Insufficient symptom relief is often seen as the principal factor contributing to patient dissatisfaction with prescription allergy medication, according to the survey conducted on behalf of the Asthma and Allergy Foundation of America (AAFA). This study concluded that 31% of AR patients were not satisfied with their current treatment. Among allergy patients who were not fully satisfied with their current prescription allergy medication, more than half (55%) say they were not satisfied because their allergy medication did not relieve their symptoms for a long enough period of time, and nearly half (44%) were not satisfied because their allergy medication did not provide symptom relief quickly enough.

The only therapy that actually modifies the underlying disease in allergic rhinitis is immunotherapy.

Allergen immunotherapy involves the administration of gradually increasing quantities of specific allergens, such as pollen extracts, until a dose is reached that is effective in reducing disease severity from natural exposure.

The two most important types of immunotherapy on the market are subcutaneous immunotherapy (SIT) and sublingual immunotherapy (SLIT). SLIT is usually favored over SIT because of its improved side-effect profile and convenient method of administration (a patient typically receives between 60 and 90 injections over the course of a SIT immunotherapy treatment). However, immunotherapy is still a niche market in the treatment of AR, estimated to be around $400 million worldwide, with only few small companies dominating product marketing and development. Furthermore, the majority of these companies are based in Europe, leaving the US virtually untouched.

Grazax was approved in Europe in September 2006, after which it was launched in early January 2007 in the UK, Denmark and Norway. Other SLIT products on the market, including ALK-Abello's SLIT One and Stallergenes' Staloral and Alpha sublingual, are administered as drops under the tongue. Since Grazax is given as a tablet, it has several advantages over available SLIT products, although ALK-Abello may not keep this monopoly for long.

Companies like Stallergenes, Allergy Therapeutics and Curalogic are also developing vaccine tablets for grass allergy and have products in phase II and III. On the other hand, ALK-Abello will certainly profit from its first-to-market position and its recent partnership with Schering-Plough will increase the drug's uptake in the US.

The agreement between the two companies gives Schering-Plough exclusive rights to develop, market and distribute ALK-Abello's tablet-based immunotherapies against grass pollen allergy (Grazax), house dust mite allergy and ragweed allergy in the US, Canada and Mexico. Under the agreement between the two companies, ALK-Abello will receive an upfront payment and milestone payments relating to clinical development and regulatory events for these compounds. In addition, there are various milestone payments of up to $250 million in total. Furthermore, ALK-Abello will be entitled to royalty payments on net sales of the products by Schering-Plough while the latter will be responsible for all costs of clinical development, registration, marketing and sales of the products in the markets covered by the agreement.

Immunotherapy: an expanding market?

Traditionally, subcutaneous immunotherapy was reserved for the treatment of incapacitating allergies, which account for only a small percentage of allergy illnesses. This was because of the debatable side effect profile and the number of injections that needed to be administered over an extended period of time. This market has grown with the availability of sublingual immunotherapy, as administration has become less complex and the incidence of serious side effects has decreased.

Furthermore, there is increasing evidence that the administration of immunotherapy may have preventive effects in carefully selected patients, both in the development of asthma in patients with AR and in the development of new IgE-mediated sensitizations. The implication that immunotherapy may alter the natural course of AR, induce prolonged clinical remission, avert the "allergic march" to asthma, and prevent the development of further sensitizations, has raised the question whether it should be considered earlier in the management of allergic disease.

The market for sublingual vaccines for grass allergy prescribed in the moderate/severe phase of the disease could be worth over $4 billion in the seven major markets. Datamonitor estimates that a complete immunotherapy treatment costs about $1,400 over four years. It is furthermore assumed that 10% of the current moderate/severe intermittent and persistent grass allergy patients would be eligible for immunotherapy (2.8 million).

However, the European Academy of Allergology and Clinical Immunology (EAACI) has also indicated that - although at present immunotherapy is reserved for "difficult" care - immunotherapy should be introduced earlier in the course of allergic disease. This could result in an expansion of the market for immunotherapy, thus creating a very significant commercial opportunity.

Large pharmaceutical companies have so far not been involved in marketing or developing allergic rhinitis immunotherapy because it used to be thought that the commercial opportunity is relatively small. Though, as illustrated by the exercise above, sales generated in the grass pollen allergy market alone can be substantial. Since Grazax combines several important characteristics like ease of administration, efficacy and safety, and now has global market coverage, its fate will determine the future of the oral allergy immunotherapy market.

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