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Gene Therapy Pharma Intelligence

 

Roche Looks To New Launches As Biosimilars Bite

A healthy launch for hemophilia product Hemlibra and a continuing strong ramp-up for multiple sclerosis drug Ocrevus are expected to help offset European competition forHerceptin and Rituxan for Rocheas it reports its annual results on Jan. 31.

Investors are keen to hear management’s 2019 guidance and its expectations for biosimilar entries, which are particularly pertinent for a company that makes more than 80% of its sales from biologics.

The blockbuster cancer drugs Avastin(bevacizumab),Rituxan(rituximab) and Herceptin (trastuzumab) accounted for 40% of Roche's revenue in 2017, but all three are under threat from biosimilars in Europe and eventually the US (growth in China remains strong).

IQVIA data suggest Celltrion Inc.’s rituximab biosimilar Truximatook a 36% market share in the five major EU markets in the third quarter, while trastuzumab biosimilarHerzumaachieved a market share of 6% in the first three months after launch. (Also see "Celltrion’s Rituximab Biosimilar Enjoys A Market Share Of More Than A Third In Europe" - Generics Bulletin, 3 Jan, 2019.)

Whether Rituxan will experience a similarly speedy drop in market share in the US remains to be seen. Celltrion and its US commercialization partner Teva Pharmaceutical Industries Ltd.gained US Food and Drug Administration approval for Truxima on Nov. 28 last year; a settlement agreement with Roche and Genentech Inc., was announced weeks earlier, and although no details were disclosed, the product is expected to be launched in the first half of 2019. It was approved for three non-Hodgkin’s lymphoma indications (they make up most of Rituxan sales which is also licensed for CLL and RA).

Avastin is also due to lose US patent protection this year, but here competition may be staved off by legal maneuvering.

Analysts at Morningstar say that with the launch of Perjeta(pertuzumab) in 2012 and Kadcyla (trastuzumab emtansine) in 2013, Roche is in a strong position to continue expanding its breast cancer franchise beyond Herceptin, regardless of biosimilars.

Credit Suisse analysts also see more future potential in the adjuvant setting for immuno-oncology products as a whole, with carry over for Roche’sTecentriq(atezolizumab), and data readouts should start coming through this year.

For the fourth quarter, analysts at Deutsche Bank expect Ocrevus and Perjeta will have continued to drive new product growth. “Tecentriq's stuttering growth is an uncertainty but investors now seem immune to its news flow (albeit consensus revisions for the product remain slow in coming).”

Another product whose performance will be closely watched given previous uncertainties on the pace of penetration in this chronic market is hemophilia product Hemlibra (emicizumab), but early indications are that it has got off to an excellent start, the analysts noted.

Meanwhile, Chairman Christoph Franz recently all but ruled out any deals of the size of Takeda Pharmaceutical Co. Ltd./Shire PLCorBristol-Myers Squibb Co.and Celgene Corp., telling CNBC at the World Economic Forum in Davos, Switzerland, that the company was “extremely cautious” about mega-mergers, echoing comments from Pfizer Inc.’s new CEO Albert Bourla at J.P. Morgan that such deals are a distraction from core activities. Franz added that small and medium-sized deals creating partnerships in certain targeted areas were more the focus for Roche.

Celgene's First Bristol-Free Call Since Merger Announcement

Celgene will have it first big investor event without its acquirer Bristol-Myers Squibb in attendance when the company hosts its fourth quarter earnings call on Jan. 31.

It will be investors' first opportunity to hear from Celgene executives alone about Bristol's $74bn purchase of the company, since Bristol CEO Giovanni Caforio fielded most of the questions during the firms' joint call on Jan. 3 to announce the deal. Caforio also answered about twice as many questions as Celgene CEO Mark Alles during the fireside chat that was conducted instead of Celgene's usual company presentation at the J.P. Morgan Healthcare Conference on Jan. 7.

The patent life of Celgene's top-sellerRevlimid(lenalidomide) – the multiple myeloma backbone therapy that generates about two-thirds of the company's revenue – will continue to draw a lot of questions from analysts. (Also see "Multiple Myeloma: A Growth Market Set To Shrink As Revlimid Generics Hit" - Scrip, 11 Sep, 2018.)

The first Revlimid generic is expected to hit the market in 2022, but there's a lot of uncertainty about the specifics of such a launch while litigation with Dr. Reddy's Laboratories Ltd. is ongoing. While that legal battle is slated to go to trial in late 2019 or early 2020, which would kick off a process of court decisions and appeals lasting until 2022 or later, it's possible that Celgene could settle the case with the generics maker before then and end some of the uncertainty associated with Revlimid's future revenue.

Celgene is racing forward with several potential blockbuster drug candidates in the interim so that it can launch new products that may help make up for the revenue lost when Revlimid generics hit, so the company undoubtedly will take many questions about the later-stage assets in its pipeline.

Chief among them is the S1P receptor modulator ozanimod that previously was rejected by the US FDA, but is slated for resubmission in the first quarter of this year. (Also see "More Bad News: Celgene Reveals Refuse-To-File Letter For Ozanimod In MS" - Scrip, 27 Feb, 2018.)

Following closely behind is the anemia drug candidate luspatercept, which Celgene and partner Acceleron Pharma Inc.expect to submit for approvals to treat myelodysplastic syndromes and beta-thalassemia in the first half of this year. (Also see "'Totality Of Data' Make A Case For Luspatercept In Beta-Thalassemia, MDS" - Scrip, 3 Dec, 2018.)

Celgene pre-announced its 2019 guidance and reiterated its 2020 guidance of $19bn-$20bn in total revenue on Jan. 7; the latter reflects new drug launches between now and next year.

The company said it achieved its 2018 guidance of $15.2bn in net products sales, including $9.7bn from Revlimid, and forecast $17bn-$17.2bn in 2019 net sales, including $10.8bn from Revlimid, $2.4bn from the multiple myeloma drug Pomalyst/Imnovid(pomalidomide), $1.9bn from the psoriasis/psoriatic arthritis drug Otezla(apremilast) and $1.1bn from the solid tumor drug Abraxane(nab-paclitaxel) – all representing growth from last year.

Jefferies analyst Michael Yee pointed out in a Jan. 17 earnings preview note that Celgene's guidance for this year is above consensus; analysts expected $16.8bn in 2019 net sales on average, while the Jefferies estimate is $16.5bn.

Nevertheless, Yee sees Bristol's acquisition of Celgene as an accretive transaction through 2024. He expects the deal to win shareholder approval and close on time in the third quarter of this year without any incoming offers to buy either of the companies.

Novo Nordisk's Diabetes Portfolio Top Of Mind

Chief points of interest when Novo Nordisk AS presents its fourth-quarter and full-year results on Feb. 1 will focus on the Danish group’s promising pipeline of GLP-1 products, including Ozempicand oral semaglutide, and how it plans to defend its formidable diabetes market share in the medium term amid rising competition and pricing pressures.

The quarterly update will be the first since the final readout of Novo Nordisk's 10 PIONEER clinical development program trials - PIONEER 6 – data that showed good results for oral semaglutide and which came early, allowing the diabetes fighter to file its oral GLP-1 in the first-half of the new year. (Also see "Novo Nordisk May Use Priority Review Voucher To Speed Oral Semaglutide To Market" - Scrip, 26 Nov, 2018.)

Investor interest is meanwhile also growing in Novo Nordisk's obesity pipeline, consisting now of programs addressing both appetite reduction and energy expenditure, with GLP-1 semaglutide top of the list. (Also see "Novo Nordisk CSO Outlines Obesity R&D Strategy, Calls Condition "Ticking Time Bomb"" - Scrip, 13 Dec, 2018.)

Although Novo has recently lost share toEli Lilly & Co.'s once-weekly Trulicity(dulaglutide), many analysts believe Ozempic's recent launch - and a daily oral GLP-1 semaglutide launching by 2020 - should allow Novo to regain lost market share, not least because of oral semaglutide's potential to serve earlier-stage diabetes patients, as well as weekly semaglutide's potential in obesity.

Novo's GLP-1 Ozempic is also being studied in liver disease (NASH) and obesity, and Novo could achieve a strong share in these nascent markets if data remain positive, analysts say.

The company controls just under 30% of the more than $50bn diabetes treatment market and nearly 50% of a $20bn insulin market.

The Denmark-based group has nonetheless been reining in costs recently, mainly due to pricing pressures in the US caused by legislation raising the portion of the Medicare Part D donut hole that's covered by manufacturers, increasing it from 50% to 70%.  (Also see "With Novo Nordisk Dependent On GLP-1s, Even Perceived Price Pressures Can Hurt" - Scrip, 9 Aug, 2018.)

But Novo Nordisk's GLP-1 strength offset restructuring costs in the third quarter, allowing management to maintain a steady operating profit growth forecast for the year. (Also see "Novo Nordisk Ups Lay Offs In R&D Push; Preps UK Supply Chain For Hard Brexit" - Scrip, 1 Nov, 2018.) Novo Nordisk is also revamping its R&D operations to bring in more use of artificial intelligence and computer skills for drug discovery and development.

Analysts will doubtless sound out management on all these issues during the company's conference call.

Merck Faces More Pressure For M&A Deals

The sales lead for Merck & Co. Inc.'s PD-1 inhibitor Keytruda(pembrolizumab) over Bristol's once dominant Opdivo(nivolumab) is likely to have widened in the fourth quarter, which will be reported on Feb. 1.

Supported by strong data in first-line non-small cell lung cancer (NSCLC), Keytruda began to overtake Opdivo last year and the company reported $1.89bn in sales in the third quarter, up by $1.05bn over the year-ago-period.  (Also see "Keytruda Is King, But Merck Faces Questions About Business Development" - Scrip, 25 Oct, 2018.) The checkpoint inhibitor is the company's biggest seller.

Merck's success is in contrast with setbacks for Bristol, the most recent of which was the withdrawal of a filing for Opdivo with the CTLA-4 inhibitorYervoyin first-line NSCLC with high tumor mutational burden (TMB), an emerging biomarker. (Also see "Bristol Stuck In Waiting Game As Opdivo TMB Gamble Fails To Pay Off" - Scrip, 24 Jan, 2019.) Merck may get queried on its own views about the place for TMB during its earnings presentation.

Keytruda is almost the singular focus for investors.The company typically gets questioned during earnings calls about whether it is too reliant on Keytruda and pressured to comment on M&A plans.  This year started off with a bang deal-wise, with announcements of Bristol's plans to acquire Celgene and Eli Lilly scooping up Loxo Oncology Inc.(Also see "J.P. Morgan 2019: Industry Throws A Bonanza, With An Elephant In The Room" - Scrip, 9 Jan, 2019.)

While Merck's late-stage pipeline "remains too thin," the company "deserves credit for nearly flawless execution in IO, where it has continued to outpace the competition," noted Wolfe Research analyst Tim Anderson in a Jan. 23 note previewing fourth-quarter earnings.

Anderson said the perception that Merck has only one growth driver – Keytruda – needs rethinking. There are also several growth drivers; notably the HPV vaccineGardasilis a second major growth driver that Wolfe Research believes is being under-modeled "to the tune of several billions of dollars."

"What MRK really needs to round out the story is more of a late-stage pipeline – it is too thin at the moment. What will Merck pursue on the M&A front? The answer remains elusive," Anderson said.

Gilead Seeks Return To Growth As O’Day Steps In

With its declining hepatitis C franchise expected to stabilize while the HIV business grows thanks to new combos incorporating TAF (tenofovir alafenamide),Gilead Sciences Inc.has been pointing to 2019 as the year in which it returns to growth. Ability to grow its immuno-oncology business, succeed in non-alcoholic steatohepatitis (NASH) development and the plans of incoming CEO Daniel O’Day all will be major subjects of interest during its fourth quarter/full-year 2018 earnings call on Feb. 4.

A 31-year veteran at Roche including his recent role as CEO of the pharmaceutical division, O’Day revealed Dec. 10 that he would leave Roche at the end of 2018 and gradually transition into the chairman’s and CEO’s roles at Gilead by March 1. (Also see "Gilead Lures Roche Pharma CEO O'Day As CEO; Genentech's CEO Will Replace Him" - Scrip, 10 Dec, 2018.) John Milligan exited as CEO on Dec. 31, with Chairman John Martin set to oversee the transition to O’Day and then step down on March 1.

Morningstar analyst Karen Andersen in a note after the announcement of those moves said the hiring of O’Day should bring Gilead some stability, but not address all concerns going forward for a company in transition in multiple ways. “We’re concerned that the firm might still lack the scientific expertise needed to guide accretive mergers or acquisitions, given O’Day’s marketing background,” she wrote. However, Gilead is positioned to grow its hematologic cancer and immunology businesses, the analyst added, “which both fit well with O’Day’s experience at Roche.”

Morningstar projects that CAR-T therapy Yescarta(axicabtagene ciloleucel), which posted 10% sequential growth to $75m during the third quarter of 2018, will top the $1.5bn sales mark in 2021 and eventually peak above $2bn on the strength of new indications, including second-line diffuse large B-cell lymphoma. (Also see "Gilead’s Yescarta Growth Continues, But Momentum Slowed" - Scrip, 25 Oct, 2018.)

HCV, after several years of decline, should settle into sharing a $5bn annual market with AbbVie Inc.’s Mavyret(glecaprevir/pibrentasvir)‎, Andersen said, while the HIV franchise is expected to peak at $18bn in 2021. But generic competition will start to erode those sales in 2022, at a predicted an annual pace of 12%, she added.

A key near-term valuation-driver for Gilead will be the results of its trials in NASH, including Phase III data for selonsertib in patients with advanced fibrosis and cirrhosis expected during the first half of 2019, and Phase II data for various NASH combos expected during the latter half of the year. (Also see "Gilead’s FXR Agonist Posts Questionable Results In NASH, But Offers Hope In PSC" - Scrip, 9 Nov, 2018.) Andersen predicts Gilead will launch into the NASH market in 2020, with sales peaking above $2bn eventually.

 

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