Bausch Health aims top-seller Xifaxan at new diseases to pump up growth

What do you do when you need growth, and one drug is far and away your biggest? Pump up that product as much as you can.

That’s what Bausch Health, formerly Valeant, is looking to do with Xifaxan, its gastrointestinal drug that brought in $294 million last quarter (PDF), up 26% year over year. With an already-expanded salesforce promoting the medication and an extended-release version moving up the pipeline, Xifaxan is now getting some more clinical-trial action in hopes of broadening its reach to a variety of new patients.

CEO Joe Papa was a bit cagey about the trial plans during the company’s second-quarter earnings call Wednesday. "We are looking at some additional GI indications," he said. "I’m not going to go into the specifics of it. But as we post those trials on clinicaltrials.gov, you’ll see those additional GI indications."

The new studies will test the immediate-release version of Xifaxan—the one that’s now on the market—and the still-in-development slow-release formula. The newest late-stage Xifaxan trial listing in the U.S. government's official clinical trial database is a phase 2/3 study in Crohn’s disease, first posted May 25.

The indication push comes as Xifaxan is gaining market share, thanks to the field sales team—expanded by 250 reps last year—targeting primary care physicians, Papa said. New-to-brand share is up by 20 points to 44% among prescriptions written by primary care doctors—and those prescribers are "largely" driving volume growth.

It also comes as Bausch is threatened by earlier-than-expected copycat versions of the drug. Generics giant Teva has a Xifaxan copy in the works, and the two companies are already in a patent fight that’s suspended while Teva gets its approval application together for filing. But repeated delays suggest the Israeli company is having problems with meeting some new FDA approval criteria.

"Management increasingly believes that Teva may not have an ANDA that meets the revised FDA draft guidance," Jefferies analyst David Steinberg wrote in a Wednesday note, adding that, with Xifaxan patents extending all the way out to 2029, he’s expecting the drug to retain its exclusive lock on the market for "years to come."

Another potential hitch: Pricing scrutiny and new U.S. proposals for reining in price hikes. As Wells Fargo analyst David Maris pointed out, the company didn’t specify how much price contributed to growth overall, or for its biggest products. But judging from the percentages quoted in the earnings presentation—26% sales growth for Xifaxan versus retail prescription growth of 8%. "In our view, this indicates price still matters a great deal to Bausch Health’s business model and its largest product," Maris wrote.

And then there’s Cosmo Pharmaceuticals and its would-be rival to Xifaxan, rifamycin, now in phase 2 testing for the same indication Xifaxan bears, IBS with diarrhea, or IBS-D. But it’s also under FDA review for traveler’s diarrhea, and could hit the market as soon as next year. "A launch of Cosmo’s drug in traveler’s diarrhea would result in competition with Valeant’s Xifaxan both directly in traveler’s diarrhea and potentially indirectly with off-label use in IBS-D," Maris said in January, adding that investors don’t recognize the drug as a threat.

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