May, 2017

Unexpected events during the end of 2016 took a toll on general optimism and expectations for 2017.  The impact of Demonetisation, US election results, Currency volatility, Brexit and other events occurring Worldwide was felt and 2017 began on a low key note.  However, analysis of events of the 1^st quarter in the pharma sector brings a note of cheer and hope!  Markets have recovered; negative sentiments are replaced with acceptance and goals set to overcome challenges in most sectors.

What has been Good for the Pharma sector so far? Drug approvals, innovations, licensing Merger and acquisitions etc. targeting growth and value creation continued as usual if not better. With 12 new drugs approved in the first quarter, FDA approval action has been the best since 2011. There are about 20 new drug and biologics applications pending for the year.

Noteworthy First time drug approvals for new indications:

• Ocrevus (PPMS/Roche), Austedo (Huntington chorea/Teva), Ingrezza (Tardive dyskinesia/ Neurocine), Dupixent (Atopic Dermatitis/ Sanofi/Regeneron), Bavencio (mMerkel Cell Carcinoma/ PD-L1, PFE). Some approvals in the latter part of 2016 are worth mentioning again- Biogen Idec’s Spinraza for Spinal Muscular Atrophy (SMA) and Sarepta’s Exondys for Duchenne Muscular Dystrophy (DMD).
• Plethora of PARP inhibitors (Ovarian Cancer) in the market, the first in the class, olaparib (Lynparza/ AstraZeneca), was approved in 2014, and Rucaparib (Rubraca /Clovis) in 2016 for treating advanced BRCA-mutant ovarian cancer. Pfizer/Medivation’s Xtandi approved for Prostate cancer and is considered one of the best in class though it’s in a different indication. Niraparib/ Zejula (TESARO) approved this year has an edge over the other two in ovarian cancer  as it is approved for patients with and without BRCA mutations and  also is approved specifically for use in primary peritoneal cancer, a rare malignancy that is generally considered as ovarian-like.  Niraparib is also out licensed to Janssen for prostate cancer. We are working on a detailed analysis and report on this class of drugs to see which one will be as successful as talazoparib (Xtandi, Medivation/ PFE) approved in Prostate Cancer in creating value for the company and patients?  Sales of Xtandi crossed $2bn in 2016 justifying Pfizer’s $14bn payment of Medivation.  Is Tesaro going to move in similar footsteps?

Noteworthy HCV drugs for all subtypes and including younger patients- Sovaldi (sofosbuvir) and Harvoni (ledipasvir and sofosbuvir) to treat hepatitis C virus (HCV) in children ages 12 to 17. Harvoni and Sovaldi were previously approved to treat HCV in adults. Paediatric treatment options for six major genotypes, or strains, of HCV. These are the first direct-acting antiviral treatments approved for children and adolescents with HCV.  However, the market for HCV treatments is set to decline further with fewer patients to treat following major breakthroughs in science that brought to market highly effective, fast-working cures.  Major Pharmas (Gilead, BMS, Merck, Abbott, etc.) are looking at the emerging markets/ Asia to tap the large HCV population but will have to apply a different strategy (pricing/discounts/ Joint ventures) in these markets. If these markets are penetrated fully we may soon have a world free of HCV infection!

Approval of Complex Biosimilars (Enbrel, Humira, Remicade, etc) in the US – The commercial prospects of approved biosimilars and those in the pipeline are looking good as favourable guidelines are scheduled to be ruled out soon to encourage uptake in major markets. 

Pricing strategies (wholesale acquisition cost-WAC) for new drugs are targeting affordability, volume sales, larger market share and lower burden on the patient.

M&A- Roche-Actelion, Takeda-Ariad, Astellas-Ogeda. More candidates are in the line as companies are aggressively looking for value creation and growth to hedge the impact of patent expiry of their blockbusters.  New approvals and positive clinical data could trigger more M&A activity.

• Roche’s multiple sclerosis (MS) drug, Ocrevus, is poised to become the future driver for the company which is faced with declining sales of its “big three” blockbuster cancer drugs, Herceptin, MabThera and Avastin.  Ocrevus (ocrelizumab) is the first disease-modifying drug approved for the debilitating primary progressive form of multiple sclerosis. Ocrevus binds to CD20 cell surface proteins expressed on certain B cells, but not on stem cells or plasma cells, leaving functions of the immune system preserved.  It could take over the Interferon beta-1a market (Rebif) as it has outperformed Rebif on the three major markers of disease activity. Ocrevus’ $65,000 annual price tag came in near parity with the cheapest MS drug, glatiramer acetate which has an annual price of $63,200, and below other commonly used MS therapies.
• Furthermore, Novartis’ MS drug, BAF312, for Secondary Progressive Multiple Sclerosis (SPMS), could be approved in the second half of this year. Patients suffering from MS thus have reason to smile as there may be a drug for all the forms of MS- RRMS, SPMS, PPMS.
• Sanofi and Regeneron’s Dupixent (IL-4/13 inhibitor) is a new option for people with moderate-to-severe atopic dermatitis (eczema), whose disease is inadequately controlled with topical prescription therapies, or when those therapies are not advisable. Dupixent comes in a pre-filled syringe that is injected by the patient. Dupixent was priced at a wholesale acquisition cost (WAC) of $37,000 a year, well below the most commonly cited comparator of psoriasis biologics, Humira adalimumab which has an annual WAC just shy of $58,000 a year.  Costs to patients, payers, and health systems could be lower after discounts, rebates, or patient assistance programs.  Sanofi is expected to aggressively push Dupixent as its Lantus insulin faces biosimilar competition and Praluent cholesterol drug could be pulled from the US market following a legal challenge from Amgen.
• Teva’s Austedo (deutetrabenazine) gained FDA clearance for the treatment of chorea associated with Huntington’s disease (HD) and is also likely to expand in other indications like treating Tourette syndrome and tardive dyskinesia or TD.  This is expected to be a multi-billion drug for Teva. The WAC for Austedo, a deuterium-substituted analogue of Xenazine tetrabenazine, is $60,000 a year – a 61% discount to the $152,000 price tag for a daily 50mg dose of Xenazine, a branded generic marketed by Valeant Pharmaceuticals International Inc. The cheapest tetrabenazine generic, launched in February, costs $39,700 annually for a daily 50mg dose.
• Neurocrine Biosciences’s Ingrezza (valbenazine); however, has won approval for treatment for tardive dyskinesia (TD) before Austedo in April 2017. The condition is characterized by uncontrollable movement of the body or face and is experienced by patients taking anti-psychotics or other medications that block dopamine receptors in the brain. Neurocrine’s drug could have a clear advantage, as it has been approved without the black box warning on depression and suicidal ideation that its rival Austedo must carry. With another partnered drug Elagolix (in endometriosis) poised for launch after AbbVie reported positive data for Elagolix in uterine fibroids Neurocrine investors  and company will finally be rewarded for their patience.
• Avelumab (Bavencio/PFE/PD-L1) approved for the first time for the treatment of both adults and pediatric patients age 12 or older with Merkel cell carcinoma.  Other PD-1/ PD-L1 targeting drugs approved in other indication include atezolizumab (Tecentriq/ Roche), or PD-1, nivolumab (Opdivo/ BMS) and pembrolizumab (Keytruda/Merck).

Noteworthy approvals for orphan diseases in 2016 with a novel mechanism of action, include, Biogen Idec’s Spinraza (SMA) and Sarepta’s Exondys (DMD).

• Spinraza (nusinersen) is the first drug approved to treat children and adults with Spinal Muscular Atrophy (SMA), a rare and often fatal genetic disease affecting muscle strength and movement. Spinraza is an injection administered into the fluid surrounding the spinal cord. SMA is a hereditary disease that causes weakness and muscle wasting because of the loss of lower motor neurons controlling movement. There is wide variability in age of onset, symptoms and rate of progression. Spinraza is approved for use across the range of spinal muscular atrophy patients.
• Exondys 51 (eteplirsen) injection, the first drug approved to treat patients with Duchenne muscular dystrophy (DMD).  Exondys 51 is specifically indicated for patients who have a confirmed mutation of the dystrophin gene amenable to exon 51 skipping, which affects about 13% of the population with DMD (Sept. 2016).

Biosimilars Sales on the Rise – The challenge for biosimilars companies was to bring to market medicines based around larger, more complex proteins and monoclonal antibodies. This hurdle seems to have been crossed with the approval of biosimilars of Amgen’s Enbrel (etanercept) Johnson’s Remicade (infliximab) and AbbVie’s Humira (adalimumab). The patent of these and several other blockbuster drugs have expired or due to expire and IMS Health estimates biosimilars could save up to $110 billion in health systems across Europe and the US, by providing cheaper competitors to well-established biologic drugs.

Biosimilars seasoned and current leader Sandoz clocked a billion dollars in total biopharmaceuticals sales for the first time in 2016. US market may soon see more biosimilar launch as a ruling by the US Supreme Court this year could end the potential additional six-month wait for biosimilars to hit the US market once approved. Another key development in 2017 will be final guidance from the FDA on interchangeability of biosimilars with the originator product.

• Johnson & Johnson’s $30 billion takeover of Actelion
• Japan’s Takeda bought cancer drugs firm Ariad for $5.2 billion and is reportedly preparing for further acquisitions to boost its pipeline.
• Japan’s Astellas acquisition of Belgian biotech, Ogeda (pvt), following a mid-stage trial success for its fezolinetant as a treatment for hot flushes related to menopause.
• Astellas will pay $500 million upfront for 100% of the equity in Ogeda, and another $300 million if the drug meets clinical and regulatory milestones.
• Rumours are circling around Bristol-Myers Squibb acquisition while Novo Nordisk is also looking to make acquisitions as key diabetes drugs come under pressure in the US.

US FDA Drug Approvals in 2017