With health insurers pushing like never before for discounts and price cuts, drug makers face bigger challenges than just getting their products through the Food and Drug Administration. Still, new drug launches should continue at a good clip over the rest of the decade.
In 2015, the FDA gave the green light to 45 novel drug compounds for a wide range of maladies, including cancer, cystic fibrosis and heart disease, edging past the previous year’s tally of 41 to mark the highest number of new drug approvals in a single year in almost two decades.
Looking out over the rest of the decade, an estimated 225 new medicines will be introduced globally, compared with the 184 novel therapies launched between 2010 and 2015, according to a report by IMS Health.
It is never easy to predict which drugs will not only win approval by the FDA, but generate sales big enough to surprise the market and therefore boost the stock price of the big drug makers. But we’re going to give it a try. Our research and conversations with industry experts lead us to believe that the five drugs below will advance the treatment of serious illness, have a high probability of regulatory approval in 2015, and eventually generate annual sales of more than $1 billion — the definition of a blockbuster.
All five of the promising drugs we identified last year were approved by U.S. regulators, though commercial launches have had mixed results. For instance, Pfizer’s (ticker: PFE ) breast cancer drug Ibrance had a strong start, with full-year sales of $723 million, and is on track to hit blockbuster status this year. Yet Novartis ( NVS ) is having trouble getting doctors to prescribe its heart-failure drug Entresto, and Regeneron Pharmaceuticals (REGN ) was bested recently by rival Amgen ( AMGN ) in a patent lawsuit over their dueling cholesterol drugs.
Despite promising new treatments on the horizon for multiple sclerosis, eczema and cancer, drug makers face stiff headwinds. Following two big years at the FDA, the drug industry’s class of 2016 is a bit short on ground-breaking prospects that meet our criteria. Meanwhile, high drug prices have left patients, politicians and health insurers suffering sticker shock. Gilead Sciences ( GILD ), for example, initially charged $84,000 for a 12-week course of Sovaldi. And the cholesterol-lowering drug Praluent from Regeneron, which initially listed at roughly $14,600, has had a slow launch.
“Overall, the FDA has been supportive of innovation from drug makers, but it is insurance reimbursement and pricing that will be the key challenges,” says Leerink analyst Seamus Fernandez.
Here is our list of the five most promising new drugs for 2016 and their sales potential.
Five Drugs to Watch
| Drug | Companies | What It Treats | 2020 Est. Sales |
| ocrelizumab | Roche | multiple sclerosis | $3 billion |
| lifitegrast | Shire | dry eye | $1 billion |
| atezolizumab | Roche | cancer | $2.6 billion |
| crisaborole | Anacor Pharmaceuticals | atopic dermatitis | $950 million |
| Remsima | Celltrion and Pfizer | rheumatoid arthritis | $1.5 billion |
Sources: Decision Resources, Mirabaud Securities, SunTrust Robinson Humphrey, JMP Securities, NH Investment & Securities
Ocrelizumab
This multiple sclerosis drug from Roche ( RHHBY ) could mark a big advance for the treatment of the debilitating disease.
Granted, multiple sclerosis, which afflicts 2.3 million people worldwide, is a crowded field, with several drugs available for the most common form of the disease, known as relapsing remitting multiple sclerosis. But for the 15% of MS patients suffering from a more serious form, called primary progressive, ocrelizumab could be their first shot at a real treatment. Data unveiled in October showed a 24% reduction in disease progression.
“It is an untapped market,” says Nick Turner, an analyst with Mirabaud Securities, citing consensus estimates for $3 billion in global sales by 2020.
Roche is expected to file an FDA application before the end of June. Regulators granted ocrelizumab “breakthrough status” last month, which expedites the review process. Analysts expect an FDA decision before year end.
Lifitegrast
This treatment for dry-eye syndrome has had a rocky road at the FDA. The agency rejected the drug in October, requesting more clinical trial data. Shire ( SHPG ) returned with a resubmission three months later that included new Phase 3 study data showing a significant improvement in patient symptoms.
Roughly 25 million Americans suffer from dry-eye disease. Allergan ( AGN ) already markets the drug Restasis, approved by the FDA in 2002, but critics say it is only marginally effective.
Shire is counting on lifitegrast and other medicines to meet a goal of boosting sales to $10 billion by 2020. The drug, which is designed to reduce inflammation, may reach sales of $1 billion by then, says John Boris, an analyst with SunTrust Robinson Humphrey.
The FDA is slated to render a decision by July 22.
Atezolizumab
This experimental drug from Roche could be the first new treatment for bladder cancer to hit the U.S. in years.
Atezolizumab, which is administered intravenously, allows the immune system to attack tumors by blocking the PD-L1 protein on the surface of cancer cells. In studies released last year, the drug shrank tumors in 27% of lung cancer patients and in 15% of patients with an aggressive form of bladder cancer.
Two drugs that use a different mechanism to accomplish the same goal — Bristol-Myers Squibb’s ( BMY ) Opdivo and Merck’s ( MRK ) Keytruda — are already on the market for lung cancer. Yet, Roche’s atezolizumab is further along in the approval process than Bristol, Merck and AstraZeneca in bladder cancer, with the FDA slated to render a decision by Sept. 12. Consensus estimates have sales at $2.6 billion by 2020.
Crisaborole
Atopic dermatitis isn’t fatal. Yet this chronic form of eczema is painful, poorly controlled by existing drugs and afflicts roughly 25 million Americans, creating a huge market for Anacor Pharmaceuticals ( ANAC ).
In fact, the drug maker’s experimental skin ointment, designed to inhibit the PDE4 enzyme that plays a role in inflammation, could become its first blockbuster. Data released in July showed that crisaborole cleared up mild-to-moderate atopic dermatitis in at least 30% of patients. Sales could “easily reach $2 billion,” says JMP Securities analyst Don Ellis.
In early January Anacor filed an application seeking FDA approval. The FDA has until Jan. 7, 2017, to render a decision, though an approval could come before year end.
Remsima
Korean drug maker Celltrion and its partner Pfizer are poised to score a big win for companies laboring to develop cheaper-priced versions of expensive biologic drugs, known as biosimilars.
Last month, an FDA advisory panel voted to recommend the agency approve Remsima, a biosimilar version of Johnson & Johnson’s ( JNJ ) arthritis drug Remicade. It isn’t the first biosimilar to hit the U.S. market. Novartis won the biosimilar race last year with a cheaper-priced copy of Amgen’s Neupogen. But Remsima, which is already for sale in Europe, could be the first biosimilar version of a monoclonal antibody approved for sale in the U.S., opening the door for regulatory approval for increasingly complex compounds to hit the market with prices running 20% to 30% less than the original drug.
That discount, however, may not be enough to ensure widespread use of Remsima. Big questions remain regarding interchangeability, since biosimilars, unlike traditional generics, are not exactly identical to the brand drug. Meanwhile, J&J has sued Celltrion in federal court, which could delay Remsima’s arrival for several years.
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