Schizophrenia is a severe, chronic mental illness affecting 2.4 million adults in the US. Symptoms are classified as positive (e.g. delusions, hallucinations), negative (e.g. lack of responsiveness, social withdrawal), or cognitive (e.g. disorganized thought, difficulty maintaining concentration). Patients have changes in brain activity and structure, thought to be caused by alterations in the brain’s development due to environmental and genetic factors.

Pharmacological agents targeting neurotransmitter receptors are divided between First Generation Agents (FGAs) and Second Generation Agents (SGAs, or atypical antipsychotics). The FGAs are effective for positive symptoms and work by blocking dopamine D2 receptors in a part of the brain. However, because they also block dopamine elsewhere, they can cause movement disorders (extrapyramidal symptoms, EPSs) similar to Parkinson’s disease. One movement disorder, tardive dyskinesia, can be permanent, even if the drug is withdrawn. SGAs have a lower rate of EPSs and tardive dyskinesia, and partly as a result of this, have taken the vast majority of the market. There is disagreement on how SGAs achieve lower EPSs, with one theory proposing weaker D2 binding and another implicating different receptors that may modulate dopaminergic pathways (particularly serotonin 5-HT2A and 1A).

Differences in efficacy between drugs have not been large, with the exception of Clozaril (NVS) for treatment resistant patients, and possibly Zyprexa (LLY). Serious side effects have limited use of Clozaril, however, and both drugs are hampered by weight gain and other metabolic side effects (changes in glucose and lipids). Seroquel (AZN) and Risperdal (JNJ) are leaders in the antipsychotic market, though the latter will have generic competition in 2008. Both can also worsen metabolic parameters, though not as severely, and Risperdal has a higher risk for EPSs than other SGAs. A subsequent entrant with a good metabolic profile, Geodon (PFE), has lagged due to other side effects and dosing issues, and has been surpassed by Abilify (BMY), which also has a good metabolic profile. Abilify has lagged the market leaders as a late entrant, possibly due to a tendency to cause initial akathisia (a sense of restlessness). Invega (JNJ), an extended-release formulation of the active ingredient in Risperdal, was approved in December 2006, and has had a slow launch. We think JNJ will have difficulty converting patients from Risperdal before it becomes generic, when there could be restrictions on its use prior to a patient trying Risperdal. Seroquel XR (AZN), an extended release formulation of Seroquel, was approved in May 2007. It should have more time for patients to convert, though once Seroquel becomes generic, there may be restrictions on use of Seroquel XR for new patients.

Especially since Clozaril has better efficacy than other agents, development efforts are focused on finding ways to improve efficacy, but without the side effects limiting current drugs.

Bifeprunox (WYE), which showed mixed results in short-term trials, recently received a non-approvable letter for the acute treatment of schizophrenia, though it could be approved for maintenance treatment with additional long-term data. While it has a relatively good metabolic profile, its efficacy is below comparators, so we do not have large market projections for the drug. Little information has been released about asenapine (Organon), a drug in Phase III development dropped by Pfizer in late 2006, and we are concerned that Organon will not say whether efficacy was numerically similar to active comparators, which could place it in a similar situation to bifeprunox. As a result, we have a negative likelihood of approval, pending more details, and also limited market projections.

Iloperidone (VNDA, NVS, SNY, TTP) is another drug in Phase III. While we are similarly concerned that more details from initial trials conducted by Novartis have not been released, the FDA reportedly only required one additional study, conducted by Vanda, which did show efficacy similar to an active comparator. It is still unclear whether iloperidone will have major advantages relative to existing options (and we have questions about its relative efficacy), but Vanda is touting a pharmacogenomic test that identifies patients who are more likely to respond. If the pharmacogenomic test for efficacy does not also predict response for other drugs, we think it could give iloperidone some edge in the market, though without more details about results, we are conservative in our current projections.

Paliperidone palmitate (JNJ and ELN) is an injectable formulation of Invega, which is given monthly and is especially useful for non-compliant patients. While a trial comparing it to bi-weekly Risperdal Consta is still pending, given paliperidone palmitate’s longer duration of action, we think it will take a large share of the long-acting market.

AZ-004 (ALXA) is another interesting formulation: a vaporized version of the FGA loxapine. It has had reasonable efficacy results in a Phase II trial, though not as good as Zyprexa. Its novel delivery system should give it a niche position in the treatment of acute patients.

Pimavanserin and ACP-104 are drugs in early stage development by Acadia Pharmaceuticals (ACAD). Pimavanserin, which specifically targets 5-HT2A receptors, recently showed it could bring the efficacy of a low dose of Risperdal to that of a higher dose. If these results are confirmed and it does not add other side effects, it could be useful in patients who respond well but have side effects with higher doses of Risperdal, and potentially other agents, though formulation into a combination pill would aid compliance. ACP-104 is a metabolite of Clozaril. It would be speculative at this point to think it could avoid Clozaril’s side effects, so we are cautious about the drug. If it has similar side effects but is more efficacious, it would have a niche role, and if it avoids the side effects and has at least similar efficacy, it could do quite well.

Idazoxan targets the alpha2 receptor, for which Clozaril also has a relatively high affinity. In a pilot study in the 1990’s, idazoxan added to an FGA showed efficacy results almost as good as Clozaril alone in treatment resistant patients, though there were methodological issues with the trial. The finding is quite interesting, though since Risperdal also has a high affinity for the receptor, we wonder whether idazoxan, if it indeed works, would really be able to extend the maximum efficacy of existing SGAs. If not, it could still be useful to reduce the dosage of other drugs, like pimavanserin. We are also concerned why the drug was not more actively pursued right after the pilot study. Results from a Phase IIa trial could bolster confidence in the drug, but these may not be released in the near future, unless the company decides to become publicly traded.

LY2140023 (LLY) is a prodrug targeting an interesting novel receptor, mGlu2/3, which modulates glutamate release. It was disappointing that numerical results from a Phase II trial were not as great as for Zyprexa, similar to the situation with bifeprunox. Lilly plans to study higher doses.

A number of other early stage drugs with other interesting mechanisms of action are also in development, including antagonists of the dopamine D3 receptor. A group of these early drugs target cognitive improvement, and the National Institutes of Mental Health is funding the initial studies of various candidates in an effort to spur development in this area.

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