Wednesday, November 12, 2008

Pharmaceutical company scores med-tech home run

By Jeff Sturgeon 981-3251
Jeanna Duerscherl The Roanoke Times

Vyvanse, an ADHD drug, was developed by New River Pharmaceuticals, which had a lab at the Virginia Tech Corporate Research Center.

Inside a recent issue of Time magazine, a two-page advertisement hailed the work of medical minds in Southwest Virginia.

The ad directed chronic time-wasters among the millions of adults with attention-deficit hyperactivity disorder to try a new drug.

It's Vyvanse, invented by New River Pharmaceuticals, a small, private company that had an office in Radford and laboratory space leased at the Virginia Tech Corporate Research Center in Blacksburg.

Like a missile that soared out of sight, New River Phamaceuticals rode to prominence on a successful initial public stock offering and sold in 2007 for $2.6 billion. It is part of global drug company Shire plc in England with no local operations.

Swallowed in a corporate merger, you won't find New River in the phone book, on the Web or on a table placard at the next chamber banquet.

The company is gone, but what remains of its legacy?

For some entrepreneurs in the New River and Roanoke valleys, it's a big deal that a nationally important drug was developed in this business community. They say the company generated inspiration and cash from which the region continues to profit.

"It has inspired a lot of folks," said Sam English, a Roanoke-based business consultant, biochemist and analyst who works with early stage companies in the life sciences industries.
Others are less impressed.

While taking away nothing from what New River achieved, they say they don't expect a series of medical technology companies to follow, but remain sold on the promise that science and technology-driven businesses hold for the region.

Vyvanse has shown success treating patients with ADHD
By one objective measure, Vyvanse, a Schedule II stimulant, is one of the region's greatest business successes.

The drug is on course to bring in gross revenue of $300 million this year, making Vyvanse a bigger enterprise than many area companies.

For example, Roanoke-based Luna Innovations, which grew out of Blacksburg, is on pace to bring in about $40 million in 2008 revenues. At the top of the spectrum, Roanoke-based Advance Auto Parts sold $4.8 billion in merchandise last year.

Sales of Vyvanse are similar in size to the revenues of Stanley Furniture, a symbol of Western Virginia's old economy that recorded $307 million in sales last year.

Analysts have projected that, with adult ADHD increasingly diagnosed, the drug could be a blockbuster -- a pill whose sales exceed $1 billion a year.

"I have used Vyvanse on several hundred patients from age 5 to some of my now-adult patients in their 20s and 30s with a high degree of success," said Dr. Michael Sisk, a clinician at Roanoke Neurological Associates.

With a few exceptions, Vyvanse triggers the fewest side effects of the central nervous system stimulants prescribed for ADHD, he said. He described the scientists who made Vyvanse as "brilliant."

New River Pharmaceuticals was founded in 1996 and off and running with an initial public stock offering in 2004.

Investors believed that New River would launch important new drugs and stayed with the company through periods of heavy spending on drug development before the first dollar came in.
At times during the first year it was a publicly traded company, it had the fastest growing stock in the United States less than a year old.

As Vyvanse grew in promise, a 2005 partnership with Shire plc generated a payment of $50 million to New River. That was followed by a second such payment after the Food and Drug Administration accepted the drug for review.

By early 2006, following news that more drugs were in the works and favorable national media attention, the company's market capitalization (the value of its stock) climbed to $1 billion.
In April 2007, Shire, the leaking maker of ADHD drugs, paid $2.6 billion for New River.

Drug is No. 5 in its class and could go higher
Vyvanse, which went on sale in July 2007, now makes up about 10 percent of all ADHD drugs sold.

It is the fifth most-prescribed stimulant for the disorder, according to IMS Health, a Pennsylvania health care information and consulting company.

At least 1 million people are taking Vyvanse, most of them children whose parents are looking for relief from the constant rambunctiousness that accompanies the disorder, said Matt Cabrey, spokesman for Shire. He said Shire and New River believed they could position Vyvanse to become the emerging ADHD medicine of choice after top-selling Adderall goes off patent in April.

"And it's proven to be the case," Cabrey asserted.

NRP, shorthand for New River Pharmaceuticals, shows up in tiny letters on the midsection of Vyvanse capsules.

But that's about all the ongoing credit New River receives for its contribution to the project's success.

R.J. Kirk, the Pulaski County businessman who founded New River Pharmaceuticals, said some of the money the company made is still here as business investment capital.

Still here, too, are some of the people who worked at New River.

Throw in the jolt of self-confidence New River inspired in business people, and perhaps a bit of pride, and Kirk sees innovation and commercialization flourishing all the more.

English said business leaders he has encountered elsewhere for a long time did not differentiate Southwest Virginia from the Northern Virginia-District of Columbia region.

They can now thanks in part to New River's impact.

"I wouldn't go so far as to say it put it on the map, but it let some folks know we've got some exciting things happening here," said English, a former Carilion Biomedical Institute analyst who now has his own firm, CIE Partners.

Aric Bopp, who directs the New River Valley Economic Alliance, sees a mixed impact.
"The good of it is that our young startup companies have had the opportunity to see just how much financial reward can be realized and how exciting of an opportunity can exist in the region," Bopp said.

"The bad is that with the purchase of New River Pharmaceuticals by Shire Pharmaceuticals, people also get to see that some of these opportunities don't last forever and how some of the jobs created by these exciting opportunities will inevitably come and go from the region."
Jim Flowers, who runs VT KnowledgeWorks in Blacksburg, warned against expecting too much from the sector New River Pharmaceuticals was in -- which he described as the medical technology end of biotechnology focused on treatment of disease.

"Although New River demonstrated that a med-tech home run can happen here, that does not mean that they will happen here with any regularity," Flowers said. "I don't think the New River success has created any particularly noteworthy local legacy other than some serious wealth in Radford."

Kirk, who controls some of that wealth, is a thoughtful investor looking out for his organization's best interests and "not in the regional economic development business," Flowers said.

For one thing, the region currently has no significant engine of research generating business opportunities in the medical technology subsector, a focus for Kirk's team, he said.

Flowers said entrepreneurs are succeeding to find footholds in a broad range of scientific and technical fields and he is excited by the promise that holds.

"The shift from a manufacturing mind-set to a creative mind-set is palpable and has begun to deliver in a serious way," he said.

Money made from sale of NRP still working locally
Kirk said by e-mail that New River's work force, which he said never exceeded 39 people, did break up when Shire bought the company.

Some went to Shire, which has offices in England and Wayne, Pa. Some work for other companies that Kirk's Radford-based private investment firm is supporting.

"Many local investors and New River employees earned (from their stock purchases and options) millions of dollars each. I am personally acquainted with many local investors who earned very substantial returns and these people are still in the New River and Roanoke Valleys, investing still," Kirk wrote.

Kirk's Third Security, which provided early funding to New River Pharmaceuticals, has grown to nearly 50 people. It has invested $50 million in Intrexon Corp. in Blacksburg, a biotech company that Kirk said is pursuing a more ambitious and potentially more valuable research agenda than New River.

Intrexon, which is developing biotherapeutic control systems to improve the effectiveness of medicines, occupies some of the space that New River used to lease at the Blacksburg research center, Kirk said.

Kirk said some business people seem to find it hard to believe Southwest Virginia will produce more biotech successes on par with Vyvanse.

"I ask, 'Why not?' " Kirk said.

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