Market Dynamics and Financial Trajectory for ZYFLO CR
Introduction
ZYFLO CR, an extended-release formulation of zileuton, is a leukotriene inhibitor used to prevent asthma symptoms and reduce the number of asthma attacks. This article delves into the market dynamics and financial trajectory of ZYFLO CR, highlighting its launch, revenue performance, and key financial metrics.
Launch and Initial Market Impact
ZYFLO CR was launched on September 27, 2007, by Critical Therapeutics, marking a significant milestone in the treatment of asthma. The launch contributed substantially to the company's revenue, with $870,000 in net product sales from ZYFLO CR in the third quarter of 2007 alone[2].
Revenue Performance
The introduction of ZYFLO CR significantly boosted the company's product revenue. In the third quarter of 2007, sales of ZYFLO and ZYFLO CR accounted for $3.1 million in revenue, which was 97% of the total revenue for that period. This represented a 66% increase in product revenue compared to the same period in 2006, largely due to the new product launch and an 11% increase in the wholesale acquisition price of ZYFLO[2].
Over the nine months ended September 30, 2007, product sales of ZYFLO and ZYFLO CR totaled $8.3 million, a 76% increase from the $4.7 million in product sales for ZYFLO alone in the corresponding period of 2006[2].
Financial Metrics and Trends
Revenue Growth
In the first quarter of 2009, Cornerstone Therapeutics, which later acquired the rights to ZYFLO CR, reported a substantial increase in net product sales. The sales of ZYFLO CR and ZYFLO contributed $5.3 million to the total net product sales of $30.5 million, marking a significant growth from the previous year[5].
Gross Margins and Costs
The gross margins from product sales, including ZYFLO CR, were 61% in the third quarter of 2007, compared to 86% in the same period of 2006. The decrease in gross margins was primarily due to higher manufacturing costs for ZYFLO CR and additional royalty obligations to SkyePharma for the use of its controlled-release technology[2].
In the first quarter of 2009, the gross margin was 90%, despite the increase in sales, reflecting the impact of higher costs associated with new product launches and royalty payments[5].
Royalty Expenses
The launch of ZYFLO CR also led to an increase in royalty expenses. In the first quarter of 2009, royalty expenses were $6.3 million, a significant increase from $1.2 million in the corresponding period of 2008. This increase was largely due to the royalties related to ZYFLO CR and other new product launches[5].
Sales and Marketing Expenses
Sales and marketing expenses for ZYFLO CR saw an increase as well. In the first quarter of 2009, these expenses were $5.4 million, up from $3.9 million in the first quarter of 2008. This increase included a $776,000 rise in co-promotion expenses primarily related to ZYFLO CR[5].
Regulatory and Marketing Challenges
Despite the financial success, ZYFLO CR faced regulatory challenges. The FDA issued warnings to Cornerstone Therapeutics over marketing materials that suggested ZYFLO CR was more effective than approved labeling indicated. These materials violated the Food, Drug, and Cosmetic Act, highlighting the need for strict adherence to regulatory guidelines[4].
Post-Marketing Performance and Clinical Implications
Post-marketing reports and clinical studies have provided valuable insights into the safety and efficacy of ZYFLO CR. The drug has been associated with elevations in hepatic function enzymes, particularly in the first month of treatment, though these elevations typically resolve upon discontinuation of the drug. There have been no reported cases of jaundice, chronic liver disease, or death attributed to these elevations[1][3].
Key Takeaways
- Revenue Growth: ZYFLO CR significantly contributed to the revenue growth of Critical Therapeutics and later Cornerstone Therapeutics.
- Financial Metrics: The launch of ZYFLO CR impacted gross margins and increased royalty and sales/marketing expenses.
- Regulatory Compliance: The product faced regulatory challenges related to marketing materials.
- Clinical Safety: ZYFLO CR has been associated with hepatic enzyme elevations, but these are generally transient and resolve upon discontinuation.
FAQs
What is ZYFLO CR used for?
ZYFLO CR is used to prevent asthma symptoms and decrease the number of asthma attacks. It is a leukotriene inhibitor available in extended-release tablets.
When was ZYFLO CR launched?
ZYFLO CR was launched on September 27, 2007.
How did the launch of ZYFLO CR impact revenue?
The launch of ZYFLO CR significantly increased product revenue for Critical Therapeutics, contributing $870,000 in net product sales in the third quarter of 2007 and leading to a 66% increase in product revenue compared to the same period in 2006.
What are the common side effects associated with ZYFLO CR?
Common side effects include elevations in hepatic function enzymes, which typically occur in the first month of treatment and resolve upon discontinuation. Other side effects may include low white blood cell counts and interactions with other medications like theophylline and propranolol.
Are there any regulatory issues associated with ZYFLO CR?
Yes, Cornerstone Therapeutics received FDA warnings over marketing materials that suggested ZYFLO CR was more effective than approved labeling indicated.
How has the gross margin been affected by the launch of ZYFLO CR?
The gross margin decreased due to higher manufacturing costs and additional royalty obligations associated with the use of controlled-release technology in ZYFLO CR.
Sources
- RxList: ZYFLO CR (Zileuton Extended Release Tablets) - RxList
- Finanzen.at: Critical Therapeutics Reports Financial Results for the Three and Nine Months Ended September 30, 2007
- FDA: ZYFLO CR (zileuton) extended-release tablets - accessdata.fda.gov
- Manufacturing.net: FDA Warns Cornerstone Over Zyflo CR Marketing
- Biospace: Cornerstone Therapeutics Inc. Reports First Quarter 2009 Financial Results