8:04 PM
Jun 29, 2018
 |  BioCentury  |  Finance

Eyes on launches

Why buysiders are eyeing sales rather than clinical data in 3Q18

The annual summer slowdown isn’t restricted to just the stock market this year, as the clinical catalyst calendar also appears to be on holiday in 3Q18.

Buysiders are therefore turning their attention to a spate of ongoing or upcoming product launches, with a keen focus on new modalities such as CAR T and gene therapies.

The first half of the year featured numerous clinical showstoppers, such as Incyte Corp.’s Phase III ECHO-301/KEYNOTE-252 trial to treat unresectable or metastatic melanoma.

The study evaluated Incyte’s epacadostat, an indoleamine 2,3-dioxygenase 1 (IDO1) inhibitor, plus Merck & Co. Inc.’s anti-PD-1 mAb Keytruda pembrolizumab vs. Keytruda monotherapy. The trial was stopped after a DMC review showed it had missed the primary endpoint of improving progression-free survival (PFS).

Incyte’s shares have declined 19% since the disclosure, and the result has caused investors to reassess immuno-oncology combinations trials across the board, shaking confidence in several analogous programs.

The second quarter also featured the annual data dumps during the American Association for Cancer Research (AACR) and American Society of Clinical Oncology (ASCO) meetings.

The third quarter promises to be much quieter.

“I don’t see anything binary that could affect the space like IDO,” said Otello Stampacchia of Omega Funds.

All of the 13 buysiders polled by BioCentury agreed, with the downside being that a lack of newsflow could be more acutely felt when volatility inevitably picks up in late summer.

“You hope to have more catalysts for major innovation to balance the drug price discussion that may ramp up around the elections,” said Alex Karnal of Deerfield Management.

While clinical catalysts are light, buysiders have plenty of ongoing and upcoming launches to track, including many by biotechs that have made the leap from clinical- to commercial-stage organizations.

And given the market’s penchant to “short the launch,” strong sales metrics could force short sellers into retreat and amplify stock performance.

Ready to launch

The launch trajectories of new therapeutic modalities and the first approved products by nascent commercial biotechs will take center stage this summer.

Brad Loncar of Loncar Investments is watching for initial sales of Spark Therapeutics Inc.’s Luxturna voretigene neparvovec and the continued uptake of CAR T therapies Kymriah tisagenlecleucel from Novartis AG and Yescarta axicabtagene ciloleucel from Gilead Sciences Inc.

Given the novelty of these technologies, the management teams have guided conservatively early on.

“I want to see how these technologies that are undeniably exciting in the clinic pan out as commercial products,” said Loncar.

Luxturna is the first FDA-approved in vivo gene therapy. It is indicated to treat biallelic retinal pigment epithelium-specific protein 65kDa (RPE65) mutation-associated retinal dystrophy.

Spark priced the therapy at $425,000 per eye, announced an outcomes-based pricing arrangement with Boston-based regional insurer Harvard Pilgrim Health Care Inc. and is exploring alternative payment models with the Centers for Medicare & Medicaid Services (CMS).

Preliminary sales numbers are expected in early August.

“I don’t see anything binary that could affect the space like IDO.”

Otello Stampacchia, Omega

Kymriah received a second FDA approval to treat adults with relapsed or refractory diffuse large B cell lymphoma (DLBCL) after two or more lines of therapy. The May 1 approval follows its landmark August 2017 approval to treat patients up to 25 years old with B cell precursor acute lymphoblastic leukemia (ALL) that is refractory or in second or later relapse.

Novartis reported initial sales of $12 million in 1Q18.

Yescarta is approved to treat relapsed or refractory large B cell lymphoma after two or more lines of systemic therapy, and generated $40 million in 1Q18 sales.

Gilead gained access to the drug via its $11.9 billion takeout of Kite Pharma Inc. in August 2017.

EMA’s CHMP issued positive opinions for Kymriah and Yescarta on June 29 and the candidates will now be reviewed by the EC.

Ivo Staijen and Gavin MacGregor of HBM Partners and Marshall Gordon of ClearBridge Investments are watching the launches of new products from BioMarin Pharmaceutical Inc. and Ultragenyx Pharmaceutical Inc. (see “Burgeoning Bellwethers”).

On May 24, FDA approved BioMarin’s Palynziq pegvaliase-pqpz to treat phenylketonuria (PKU) in patients who have uncontrolled blood phenylalanine levels on current treatment.

Ultragenyx and partner Kyowa Hakko Kirin Co. Ltd. received FDA approval on April 17 for Crysvita burosumab-twza (KRN23, UX023) to treat X-linked hypophosphatemia in patients aged one year and older, which was the first approval for the indication.

In February, the European Commission granted conditional approval to Crysvita to treat XLH with radiographic evidence of bone disease in children aged one and older, and in adolescents with growing skeletons.

Initial sales for Crysvita --...

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