A Citizen Petition that Jazz Pharmaceuticals (JAZZ) filed with the FDA in July of 2012 has been rejected, says the company, negating one more barrier to entry for potential makers of generic Xyrem, Jazz’s lead product and a prescription medication for narcolepsy. The Citizen Petition addressed the requirements for submission of any Abbreviated New Drug Application (ANDA) referencing Xyrem, a protocol through which generic manufacturers prove product equivalency, and requested that the FDA rescind the acceptance of any previously-accepted ANDA’s not containing a proposed risk evaluation and mitigation strategy (REMS). Jazz argued that any ANDA not containing a proposed REMS should not be accepted on the grounds that the request would not contain the same labeling as Xyrem. Additionally, the company had hoped to restart a 30 month stay-of-approval clock on applications that were later amended with a REMS, restarted from the time that Jazz was notified of the added REMS. This is, in fact, the second Citizen Petition from Jazz to be rejected by the FDA in two months, and following denial in November, shares traded down 6% over the two ensuing trading sessions.
Jazz has been fighting a generic Xyrem entrance since 2010, when Roxane Laboratories notified Jazz of its ANDA filing in a Paragraph IV certification notice. Jazz filed a patent infringement suit, and under Hatch-Waxman Statutes had a 30 month window following in which the FDA approval of Roxane’s ANDA would be stayed. The timeframe for closure of ongoing patent infringement litigation, however, is quickly ending. April 18, 2013 will mark 30 months unless Jazz receives a positive court ruling, which may mean that Roxane could have a generic form of Xyrem on the market in the second half of 2013. Xyrem was approved to treat cataplexy in patients with narcolepsy in 2002, and was approved for its second indication, the treatment of excessive daytime sleepiness in patients with narcolepsy, in 2005. In the last two years, Xyrem generated sales of $233.3M and $142.6M, and is on track to deliver north of $300M in 2012 ($265M at Sept. 30). We do note that generic forms of Xyrem will still face hurdles to entrance, as the product’s active ingredient, sodium oxybate, is a Schedule I controlled substance requiring an extensive REMS strategy. Jazz also has a formidable patent estate covering the drug, and patent infringement litigation is ongoing. JAZZ rallied considerably in mid-September when a court ruling, although not final, appeared positive for Jazz (read more here). Considering the market’s reaction when the first Citizen Petition was rejected by the FDA last month, however, and the removal of one more barrier to entry, JAZZ may remain under pressure.