Class of 2015 a snapshot of the perils in predicting blockbusters
The first half of 2016 is in the books, and while the biopharma sector's financial results weren't exactly a slam dunk, they did at least keep investors in the paint. As evidence of that, beginning with the closing bell on July 27, the Nasdaq Biotechnology Index had finished above 3,000 for the longest consecutive run since December 2015. (See BioWorld Insight, Aug. 8, 2016.)
The industry's continued profitability is driven, in part, by its billion-dollar babies. Eleven drugs launched last year that were predicted to reach blockbuster status were the focus of the Thomson Reuters Market Insight Report, 2015 Drugs to Watch, published last March. (See chart below.) Another potential blockbuster approved and launched late last year – the once-daily single tablet, Genvoya (tenofovir alafenamide/emtricitabine/cobicistat/elvitegravir, Gilead Sciences Inc.), to treat HIV-1 – was not included in the report. (See BioWorld Today, Nov. 6, 2015.)
Opdivo (nivolumab, Bristol-Myers Squibb Co., or BMS) led the list. The drug gained FDA accelerated approval in December 2014 to treat patients with unresectable or metastatic melanoma who no longer responded to other drugs. Launched early in 2015, the PD-1 inhibitor achieved first-year blockbuster success with global sales of $1.117 billion. Those revenues were eclipsed during the first six months of 2016, when the drug generated global sales of $1.544 billion.
But August's bust in the CHECKMATE-026 trial testing Opdivo as a monotherapy vs. platinum-based chemo in first-line non-small-cell lung cancer (NSCLC) could bring sky-high revenue predictions to a screeching halt.
The phase III trial, one among dozens of CHECKMATE studies in the Opdivo development program, was assessing the drug in patients whose tumors express PD-L1 at greater than 5 percent but failed to show statistical significance on the primary endpoint of progression-free survival. BMS is testing Opdivo in ongoing studies in combination with Yervoy (ipilimumab, BMS) in stage IV NSCLC and other indications, and a number of additional Opdivo studies, in combination with Yervoy and other agents, are planned.
The Opdivo/Yervoy combination gained accelerated approval from the FDA last year to treat BRAF V600 wild-type unresectable or metastatic melanoma. (See BioWorld Today, Oct. 2, 2015.)
'BMY will need to regroup on its monotherapy strategy'
Findings from the CHECKMATE-026 trial setback took the company, analysts and investors by surprise, sending BMS shares (NYSE:BMY) down $12.05, or 16 percent, to close at $63.28 on Aug. 5, after the data were disclosed. (See BioWorld Today, Aug. 8, 2016.)
For now, five-year consensus sales forecasts reported by Thomson Reuters Cortellis still give Opdivo a commanding lead among the blockbusters on the original list. (See chart below.) But fallout began almost immediately after the CHECKMATE-026 data were disclosed. In an earnings report on BMS, Leerink Partners LLC analyst Seamus Fernandez dropped his price target on BMS shares, along with his sales forecasts for Opdivo. Fernandez had previously predicted that 2021 Opdivo sales would come in at $13.96 billion, below the consensus target, and he revised that estimate downward by more than $2 billion, to $11.855 billion.
"We no longer forecast monotherapy sales of Opdivo in [first-line] non-small-cell lung cancer given complete failure on the progression-free survival endpoint in patients whose tumors express the PD-L1 at ≥5 percent," he wrote, adding, "We believe BMY will need to regroup on its monotherapy strategy."
Merck & Co. Inc.'s Keytruda (pembrolizumab), approved and launched just a few months shy of 2015, is the likely beneficiary of Opdivo's distress. Keytruda garnered 2015 sales of just $566 million, and Thomson Reuters estimates peg five-year sales at approximately $7.058 billion. But with Keytruda showing signs of success not only in its initial indication in melanoma but also in NSCLC and colorectal cancer, the PD-1 inhibitor could turn the tables on Opdivo.
"We fully expect the market momentum to favor MRK's Keytruda over the next several months," Fernandez wrote. "Simply put, BMY has a failed [first-line] study while MRK has a big win." Conversations with lung cancer key opinion leaders suggested that "momentum is already building for Keytruda" in first-line NSCLC, he added.
Although, in a follow-up note, Fernandez acknowledged that his initial analysis might been unduly harsh, given that BMS has not yet conducted a formal analysis of >50 percent expressers in CHECKMATE-026, he stood by the revisions to his model, re-stating his belief that the physician community, increasingly, will perceive differences between Opdivo and Keytruda in first-line NSCLC.
And Fernandez wasn't the only analyst revisiting prospects for Opdivo through the CHECKMATE-026 prism. Credit Suisse analyst Vamil Divan admitted "we were stunned" by the findings, which he called a "game-changing" miss for BMS, downgrading the company's shares to "neutral" from "outperform." He remained optimistic about the Opdivo/Yervoy combination, which "could help BMY reestablish itself in the lung cancer market," but cautioned that Merck "will likely already be a dominant player by then."
And Jefferies LLC analyst Jeffrey Holford called the CHECKMATE-026 findings "a double whammy" for BMS, also predicting that Merck "will now likely dominate the strongly PD-L1 overexpressing portion of the [first-line] NSCLC market" and may enjoy a "halo effect" in the second- and third-line NSCLC market. He pegged the peak sales opportunity for Opdivo in NSCLC at $6.7 billion.
Can PCSK9 class gain traction?
A year from now, five-year forecasts for Opdivo will likely have a different look – perhaps dramatically so – from today's. And Opdivo is just one example of the vagaries of forecasting peak sales for potential blockbusters, as indicated by changes between the two drug lists. Market competition and launch uptake have reshuffled expectations for 10 of the 11 drugs, and Merck's Gardasil 9 – predicted at the time of launch to achieve 2019 sales of $1.637 billion – dropped off the updated list for lack of a current consensus forecast, according to Charlotte Jago, Thomson Reuters senior editor, who authored the original report.
In terms of sales, the top 2015 performer was Abbvie Inc.'s Viekira Pak to treat hepatitis C virus (HCV). After a late 2014 FDA approval, the combination of ombitasvir, paritaprevir and ritonavir tablets co-packaged with dasabuvir tablets squared off last year against Gilead Sciences Inc.'s Harvoni (sofosbuvir/ledipasvir), generating $1.639 billion in revenues. But given the crowded HCV field, which included approvals this year for Merck's once-daily Zepatier (elbasvir/grazoprevir) and Gilead's fixed-dose combo tablet, Epclusa (sofosbuvir/velpatasvir), Viekira Pak revenues are not expected to grow through 2021, moving it nearly to the bottom of the blockbuster pack. (See BioWorld Today, Feb. 1, 2016, and June 29, 2016.)
Uptake has been the issue for the PCSK9 inhibitor Praluent (alirocumab, Regeneron Pharmaceuticals Inc./Sanofi SA), which garnered the No. 2 spot in Drugs to Watch in 2015 based on original sales projections, which have slid by two-thirds over the past year. Although the drug was approved a month before Amgen Inc.'s Repatha (evolocumab), the latter has found more favor with analysts, thanks to a court decision over PCSK9 patents that favored Thousand Oaks, Calif.-based Amgen. But both antibodies had modest first-year sales, at $9 million and $12 million, respectively. (See BioWorld Today, July 27, 2015, Aug. 28, 2015, and March 22, 2016.)
Their trajectory has not improved this year. In August, Tarrytown, N.Y.-based Regeneron reported that Praluent had second-quarter sales of $24 million, behind $27 million for Repatha. The companies reported first-quarter sales of $13 million and $16 million, respectively. At the time, Leonard Schleifer, Regeneron's founder, president and CEO, characterized the Praluent launch as "ongoing," and the company acknowledged a lag time before commercial and government payers could conduct formulary reviews, make reimbursement coverage decisions and process patient claims. Amgen officials, meanwhile, are awaiting cardiovascular outcomes trial data and a discussion with the FDA before strengthening the Repatha label to offer a more compelling argument to payers. (See BioWorld Today, April 29, 2016, May 6, 2016, and Aug. 5, 2016.)
Whether and to what extent the PCSK9 class can gain traction remains to be seen. An August study in the Journal of the American Medical Association didn't help the case, concluding that PCSK9 inhibitor use in patients with heterozygous familial hypercholesterolemia or atherosclerotic cardiovascular disease "did not meet generally acceptable incremental cost-effectiveness thresholds." Researchers suggested that prices of drugs in the class would need to be reduced from more than $14,000 a year to $4,536 to meet the cost threshold of $100,000 per quality-adjusted life-year, or QALY.
U.S. PBMs moving aggressively to advance biosimilars
The combination ACE/neprilysin inhibitor Entresto (sacubitril and valsartan), slipped two notches, to fifth place, in the updated five-year forecast. Nevertheless, the drug from Novartis AG, approved in the U.S. last July, has generally gained support for its cost-effectiveness in treating chronic heart failure. (See BioWorld Today, July 9, 2015.)
Even the Institute for Clinical and Economic Review, which panned the cost of newer cancer therapies as greatly exceeding the threshold of $50,000 to $150,000 per QALY, concluded last year that Entresto, at a list price of $4,560 per year, was "well-aligned with the degree of benefit it brings to patients."
Entresto brought in $17 million in sales in the first quarter and $32 million in the second quarter – both below consensus but closing the gap toward midyear.
Another drug from Basel, Switzerland-based Novartis, Cosentyx (secukinumab), moved up from the bottom on last year's list as early sales "smashed" consensus estimates, in the view of Jefferies' Holford. The drug, approved by the FDA in January 2015, achieved first-year revenues of $261 million, accounted for $176 million in 2016 first-quarter sales vs. a consensus estimate of $145 million and $260 million in the second quarter vs. a consensus of $211 million. (See BioWorld Today, Jan. 22, 2015.)
In cancer, Pfizer Inc.'s Ibrance (palbociclib) remained a solid performer, as originally predicted, ringing up $723 million in first-year sales. The drug moved into second place on the blockbuster list, with a five-year consensus forecast of $6.338 billion. (See BioWorld Today, April 16, 2015.)
In the rare disease space, the cystic fibrosis combination drug, Orkambi (lumacaftor/ivacaftor), from Vertex Pharmaceuticals Inc., missed early expectations. Following its approval last July, the drug accounted for $350 million in 2015 sales. (See BioWorld Today, July 6, 2015.)
But Orkambi sales may be turning a corner. The drug's first-quarter 2016 sales reached $223 million – a level analysts generally described as "soft" – but were more closely aligned with expectations in the second quarter, at $245 million.
"While falling slightly short of consensus, given generally flat Rx trends we do not believe the slight miss will be viewed as a major concern," Jefferies analyst Brian Abrahams wrote in a Vertex earnings report in July.
The same can't be said of Sanofi's diabetes drug, Toujeo (new-formulation insulin glargine), a next-generation formulation of Lantus (insulin glargine). Approved in February 2015, the once-daily, long-acting formulation, administered via a new pen, pulled in $182 million in 2015 and has been gaining ground in 2016, with first-quarter sales of $116.9 million and second-quarter sales of $160.1 million. Paris-based Sanofi made no secret of its desire to switch patients to the drug from biosimilar-threatened Lantus.
Although Toujeo moved up three notches on the updated list of drugs to watch, it faces strong headwinds after CVS Caremark struck the product from its formulary this month in favor of Eli Lilly and Co.'s Basaglar (insulin glargine), approved in the EU as a biosimilar and in the U.S. as a me-too drug. (See BioWorld Today, Aug. 4, 2016.)
The decision by CVS, one of the three largest pharmacy benefit managers (PBMs) in the U.S., to replace Toujeo with Basaglar could be a blow not just to Sanofi but to other developers of innovative drugs, making the practice of handicapping blockbusters even more challenging in the future.
"The removal of SNY's basal insulin products (both Lantus and Toujeo) from the CVS Caremark 2017 national formulary is a more aggressive move than expected," Leerink's Fernandez wrote in a flash note after the move was made public. "While SNY is reiterating its guidance of a -4 to -8 percent [compound annual growth rate] for the diabetes business in 2016-18, the formulary change highlights the pressure facing SNY's business while also showcasing aggressive moves by PBMs to advance biosimilars. The timing is particularly impactful for Toujeo as its Rx trends were tracking well, partially mitigating Lantus sales declines."
CVS Caremark is making additional changes to its formulary that could cut into blockbuster drug sales potential. Beginning in January, the PBM plans to use an indication-based formulary in therapeutic spaces such as hepatitis C and psoriasis that represent what it called "the biggest cost growth drivers for many plans." The indication-based approach is a response to the growing number of indications for pricey biologics although, tellingly, in 2014 the 10 drugs with highest total cost in the Medicare Part D program were small molecules and insulin products.
Increasing clout by U.S. PBMs could make for an interesting list of drugs to watch in 2016.
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