With FDA Nod, Nonprofit Drug Firm Launches New IUD—And New Model

Xconomy San Francisco — 

An unusual women’s health biopharma with a very unusual strategy has passed its first big test.

The FDA said today that Medicines360 can bring a contraceptive to market. That’s not the unusual part, and neither is the product. It’s an intrauterine device, and IUDs have been around for a century in one form or another.

What’s unusual is that San Francisco-based Medicines360 is a nonprofit.

There have been other nonprofit biotech companies. But Medicines360 wants to sustain itself through product sales, not donations, and the FDA decision opens the door to that effort.

Now comes the second part of the test. Medicines360 will lean on its marketing partner, the pharma giant Actavis (NYSE: ACT), of Dublin, Ireland, to make the sales.

Actavis will sell the IUD in the U.S. at market prices under the name Liletta. Medicines360 will use its cut of those sales to subsidize access to the product at clinics that serve lower-income women.

If Actavis doesn’t deliver the goods, Medicines360’s strategy will be for naught. Chief operating officer Pamela Weir (pictured) says she isn’t worried. “Actavis has an incredible women’s health sales force in the private sector,” she says.

Actavis spokesman David Belian wouldn’t give a headcount of salespeople, but he said the company already has seven women’s health products that it sells to 25,000 healthcare professionals in the U.S. Belian also declined to give sales projections. The U.S. contraceptive market is $1 billion and growing, he said.

I asked Weir about potential tumult, thanks to Actavis’s seemingly constant involvement in mergers and acquisitions. Big pharma reorganizations can be deadly to smaller partners, who see their internal allies shuffled to new positions or dismissed altogether. Weir isn’t worried about that, either: In mergers, she says, “brand teams” are generally left to “do their thing.” (One shakeup that can’t be avoided: Actavis just merged with Allergan and will adopt the Allergan name except in a few select markets.)

Weir speaks from experience. She’s a 25-year pharma veteran, most recently serving as vice president of marketing at sprawling specialty pharma companies King Pharmaceuticals and Nycomed—now part of Pfizer (NYSE: PFE) and Takeda Pharmaceutical, respectively—that have similar businesses to Actavis.

There is at least one incidence of a nonprofit biotech company: OneWorld Health, also in San Francisco, which was founded in 2000 and merged with Seattle’s nonprofit PATH in 2011. Its founder, Victoria Hale, founded Medicines360, sits on the board, and led the clinical development of Liletta.

OneWorld Health relied on donations to do development work on infectious disease treatments. Medicines360 has also required donations—it was launched with a five-year funding commitment from an anonymous donor to carry it through a 1,750-person Phase 3 clinical trial—but it now wants to prove it can be self-sustaining with its two-tier model.

Why start with IUDs? Weir says the anonymous donor wanted to fund an effort to lower unwanted pregnancies, and birth control pills aren’t nearly as effective for several reasons. Women forget to take them, and they don’t like the side effects. Because pills aren’t always used properly, the failure rate is around 9 percent, according to the U.S. Centers for Disease Control and Prevention. The failure rate for the type of Medicines360’s IUD, which the FDA approved for three-year use, releasing a small amount of the contraceptive levonorgestrel every day, is 0.2 percent.

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