Generic fondaparinux - a unique drug opportunity

Generic fondaparinux is Alchemia's generic version of Arixtra(marketed by GlaxoSmithKline).

• potential to be the only generic copy of Arixtradue to a high barrier to entry for potential competitors
• Arixtrahas demonstrated superior safety and efficacy over the market leading drug, Lovenox
• it will compete in the multi-billion dollar heparin-drug market, sales in excess of US$4.5 billion for CY 2006 world-wide
• sales of Arixtracontinue to grow strongly, up 143% in CY 2006
• partnered with Dr Reddys, for manufacturing and US sales
• Alchemia is eligible for a minimum of 50%, and up to 60%, of profits from product sales in the North America (for press release click here).

History - Alchemia's fondaparinux has come a long way since a provisional patent was filed on a novel synthetic process in 2001.  A PCT application followed shortly after in 2002. Alchemia completed a large scale synthesis in-house in 2005 and in 2006 the cGMP scale-up was completed at the Dow Chemical Company.  In 2007 the manufacturing process was transferred to Dr Reddy's Laboratories in Hyderabad, India.

Market - Alchemia will sustain a competitive advantage in the heparin-drug market by way of patent protection over its efficient fondaparinux synthesis until 2021.  The use of Arixtrais recommended by the American College of Chest Physicians and recently received the European Society of Cardiology's highest recommendation for use in acute coronary syndromes (ACS).  It is very encouraging to see that sales of Arixtracontinue to grow strongly, up 143% in 2006.  We believe that the additional approvals and adoption of Arixtraas best practice in leading clinical practice guidelines for a growing number of those indications, are reflected in the increasing sales of the product.

Partner - Alchemia has signed Dr Reddy's Laboratories Limited as the US marketing partner for generic fondaparinux.  Under the new agreement Alchemia is eligible for up to 60% of profits from product sales. 

Dr Reddy's has extensive scale-up and manufacturing capacity and broad regulatory experience with ANDA filings.  In addition, Dr Reddy's has a generics focus with increasing sales in the US.  In the past two years Dr Reddy's has driven the growth of its generic business with the acquisition of the Betapharm Group in Germany and Roche's state-of-the-art active pharmaceutical ingredient (API) manufacturing plant in Mexico.  As a bulk manufacturer Dr Reddy's is able to produce fondaparinux at an extremely competitive price, addressing the need to maintain pressure on cost of goods in a generic environment. 

Manufacturing rights were transferred to Dr Reddy's through a licence of the Dow Chemical Company's manufacturing rights and related intellectual property to Alchemia.  Dow is entitled to a royalty on sales of the bulk fondaparinux manufactured by Dr Reddy's.

Indications - Arixtra, the branded fondaparinux, is approved for the treatment of deep vein thrombosis (DVT) and pulmonary embolism (PE) and the prophylaxis of DVT in orthopaedic and abdominal surgery.  Approval for acute coronary syndrome (ACS) indications is pending in the US (granted in the EU). In ACS, Arixtradisplayed equivalent efficacy on par to Lovenox, but with significantly less bleeding in this indication.  It is hoped that Arixtrawill become the treatment of choice for ACS. The US approval for the ACS indication should accelerate the sales growth of Arixtra.

Approval - Dr Reddy's is also responsible for manufacture of the (API), 'fill and finish' and all regulatory filings, including the ANDA.  Whereas other heparin-family products are complex mixtures derived from animal sources, fondaparinux is a fully synthetic molecule.  This means it will be reviewed by regulatory authorities in the same way as any typical generic drug. Firstly, no clinical trials are required.  Secondly, under the FDA's "First Generics Policy" (announced October 2006), as a first generic version of Arixtra, Alchemia's fondaparinux will be eligible for an expedited review process.  This may reduce the review time from over 16 months to closer to the FDA target of 6 months.

Risks - We have attempted to identify and mitigate the risks associated with the fondaparinux program.

Risks	Risk Management
Regulatory	Fully synthetic molecule / standard ANDA approval process  Potential to take advantage of FDA's 'first generics' policy
Competitor	The complexity of the proprietary synthesis provides a unique barrier to potential competitors to 2021 Alchemia is not aware of any other company attempting a generic synthesis
Market	If the only generic, Alchemia's fondaparinux is not expected to face extensive price competition compared to other generic markets Arixtrasales continue to grow strongly ACS indications for Arixtraare pending in US Updates of clinical practice guidelines in relation to thrombolytic therapy pending in the US
Synthesis	cGMP scale-up complete Technology transfer from Dow to Dr Reddy's complete Commercial scale synthesis well advanced

The patents covering Arixtraexpired in 2003 in the US and 2008 in Europe.  Arixtrahad market exclusivity until December 2006 in the US meaning that Alchemia is free to enter the market.  Exclusivity in Europe means that generic fondaparinux cannot enter the major EU markets until 2012.

Dr Reddy's has first right of refusal to market Alchemia's generic fondaparinux in Europe from 2012.  Alchemia welcomes enquiries to market its generic fondaparinux in the rest of the world.