Although many say the drug industry is entering the "post-blockbuster era" as mega-sellers such as Lipitor lose their patents, there are drugs in the pipeline expected to pass the traditional blockbuster benchmark of $1 billion in global annual sales.
Here's a preview of four of them, expected to launch in the next 12 months, that have attracted much interest from Wall Street.
Sovaldi: Gilead Sciences' (GILD) hepatitis C treatment, formerly known as sofosbuvir, is one of the most anticipated new drugs in the industry in quite some time. Everyone and his mother expect the FDA to approve it by its Sunday deadline, thanks to the strong safety and efficacy data produced in its clinical trials.
Analysts are modeling an already-blockbuster $1.7 billion in sales next year, climbing to $8 billion in 2018, making it one of the best-selling drugs in the world.
Expectations are so high because Sovaldi promises substantial improvement on existing treatments for a serious disease. It's both more effective and has fewer side effects than the standard regimen of pegylated interferon, and it can be swallowed rather than injected.
The only live question at this point is where Gilead will price the drug. ISI Group analyst Mark Schoenebaum's informal survey of buy-side analysts last month found an average estimate of $85,000 for 12 weeks of treatment, but sell-side estimates have been running as high as $100,000. The price depends partly on how the FDA chooses to label the drug, which remains to be seen.
Nivolumab: Bristol-Myers Squibb (BMY) has been taking a go-big-or-go-home approach with this drug, conducting some 25 clinical trials in various types of cancers.
Most of those trials won't be complete for a while yet, but Wall Street is holding out hope that its so-far excellent data on squamous non-small-cell lung cancer — one of the deadliest and most stubborn forms of the disease — will support an FDA filing in early 2014, followed by approval late in the year.
The FDA has granted fast-track designation for that label, as well as for advanced melanoma and kidney carcinoma. Current consensus is modeling $57 million in sales next year, ballooning to $4.7 billion by 2020. Since nivolumab will likely be combined with another Bristol drug, Yervoy, joint sales could bring the company $6.9 billion a year, according to Schoenebaum's survey.
New Class Of Drugs
Nivolumab is in a new class of drugs called PD-1 inhibitors, which have attracted much interest in the industry.
Morningstar analyst Damien Conover told IBD that the drugs help the patient's immune system recognize which cells in the body are cancerous, thereby aiding the natural defenses. "This has been talked about from a theoretical standpoint for decades, and we really haven't seen drugs do this well except maybe Yervoy," he said.
Merck (MRK) and Roche (RHHBY) are also working on PD-1 inhibitors that are doing well in early testing. This means more potential competition, but Conover says their performance validates the underlying mechanism and boosts his confidence that nivolumab will make it to market.
• Idelalisib: This cancer drug captured a few headlines in October when maker Gilead halted its late-stage trial of chronic lymphocytic leukemia (CLL) early because the efficacy was so good it didn't need to go any further.
More details of the study will be revealed at the annual American Society of Hematology conference this weekend, but analysts are optimistic about a 2014 launch. RBC Capital Markets' Michael Yee wrote in a Nov. 18 note that he expects idelalisib to be approved for the smaller indolent non-Hodgkins lymphoma indication by the second half of next year, and probably for CLL by year-end.
Pharmacyclics' (PCYC) ibrutinib will probably have a head start on the CLL market, since the FDA has already approved it for mantle-cell lymphoma, and is reviewing it for CLL.
Nonetheless, analysts expect idelalisib to ramp quickly. Consensus calls for just $26 million in sales next year, jumping to $1 billion by 2017.
• Apremilast: Will apremilast really be a blockbuster? That depends on whom you ask. Celgene (CELG) has guided $1.5 billion to $2 billion in 2017 sales for the drug, which is currently under FDA review for psoriatic arthritis. The launch is expected in the first quarter.
Though Celgene plans to add psoriasis to that label, Wall Street has still mostly been unconvinced, since psoriasis trial data released in June did not seem to offer a substantial improvement on existing treatments. Current consensus calls for 2017 sales of just $872 million.
Psoriasis treatment usually involves multiple drugs, ranging from cheap steroids to pricey biologics like AbbVie's (ABBV) giant Humira.
Celgene's case for apremilast rests on finding a golden middle ground. "I think Apremilast is going to have a unique profile," CFO Jacqualyn Fouse told Deutsche Bank's BioFEST conference this week. "We need to have a great benefit-cost profile, and we think that we do."
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