| NEW YORK
NEW YORK Swiss drugmaker Novartis AG NOVN.VX said it will think twice in future before discarding an apparently unpromising experimental drug, after the surprise approval of Fanapt, a schizophrenia drug it tossed out after producing mixed results in clinical trials.
Novartis initially licensed Fanapt, known chemically as iloperidone, from Titan Pharmaceuticals. But in 2004, after disappointing clinical trial results, the company licensed it to Vanda Pharmaceuticals, a company formed by Mihael Polymeropoulos, formerly Novartis's vice president of pharmacogenetics.
Contrary to all expectations, the U.S. Food and Drug Administration approved Fanapt in May. Last month, in an awkward about-face, Novartis agreed to pay $200 million to acquire marketing rights to Fanapt in the United States and Canada.
"It's an interesting story, and it's a lesson," said Joe Jimenez, head of Novartis Pharmaceuticals, at the Reuters Health Summit in New York. "We have to look very hard before we give up on a compound."
In clinical trials, Fanapt was shown to be about as effective as Pfizer Inc's (PFE.N) Geodon -- the worst-performing in a class dominated by AstraZeneca Plc's (AZN.L) Seroquel, Eli Lilly & Co (LLY.N) Zyprexa, Johnson & Johnson's (JNJ.N) Risperdal and Bristol Myers Squibb Co's (BMY.N) Abilify.
Geodon generated sales of $1 billion in 2008. Sales of Zyprexa, by comparison, the biggest money-maker, were $4.7 billion.
Jimenez conceded that Fanapt is likely to be a relatively small player.
"We're not saying its going to be a blockbuster," he said, "but we believe there is an opportunity here. "
According to data from IMS Health, Seroquel accounted for 30.8 percent of the 53 million prescriptions written for antipsychotic drugs in 2008.
Risperdal and Abilify accounted for nearly 13 percent, while Geodon accounted for just 5.6 percent.
Prescriptions for Geodon, though rising, have been dampened by a potentially deadly cardiovascular side effect - one shared by Fanapt.
Vanda is eligible to receive up to $265 million in additional milestone payments if certain sales and marketing goals are reached. Vanda retains rights to Fanapt outside North America, though Novartis has an option to negotiate to co-commercialize a long-acting injectable version of the drug.
(Reporting by Toni Clarke; Editing by Tim Dobbyn)