Vernalis’s decision to undergo major restructuring is a direct result of the non-approval of the company’s sNDA submission for Frova, for the treatment of menstrual migraine. A successful application had been anticipated to double the revenue potential of Frova.

In September 2007, the FDA turned down a supplemental New Drug Application (sNDA) for Frova (frovatriptan) for the treatment of menstrual migraine. Initially, this move meant that Vernalis missed out on a $40 million milestone payment from its collaborating partner, Endo Pharmaceuticals. However, calculations based on scenario forecasts identifying the financial implications of the outcome of this application estimate that approval for menstrual migraine would have been worth an additional $70 million per year across the seven major markets (7MM) at peak brand sales in 2015.

The financial loss has left Vernalis with no choice but to restructure. The company has announced it is reducing its headcount from 210 to approximately 90. With 75 of the 90 staff anticipated to be in R&D it will basically return to being a discovery and development firm. The company now plans to turn its focus to its innovative discovery programs which will be pursued up to and including proof of concept clinical studies to the point when it can be partnered.

The significant restructuring plan means that Vernalis will divest all its US commercial operations, including those for Apokyn (apomorphine hydrochloride injection) for Parkinson’s disease (PD). Vernalis will continue developing six product candidates, four in house - compounds for PD, ischemic stroke, neuropathic pain and obesity - and two under collaborative arrangements with Biogen Idec (PD) and Novartis (cancer).

Vernalis’s most advanced pipeline candidate, and so the first product for which it may seek an out-licensing deal, is the potential PD treatment V1512 (melevodopa-carbidopa). Results are expected shortly from a pharmacokinetic-pharmacodynamic study prior to the evaluation of the drug in a phase III program. If successfully launched, V1512 will enter a highly competitive dopaminergic market full of cheap levodopa generics and Novartis’s recently launched triple-combination product Stalevo (carbidopa-levodopa-entacapone). As a result, Datamonitor has forecast yearly 7MM sales of V1512 to reach $90 million by 2016.

With the failed indication expansion of Frova, and uninspiring forecast for its next lead candidate V1512, Datamonitor regards this change in business focus as an important and necessary step

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