Biogen and Gilead top tables with most valuable R&D assets

Analysis

While the expected failure of a second Alzheimer’s candidate, Eli Lilly’s solanezumab, looks likely to mark the exit of two of the most high-profile projects from the industry’s R&D pipeline, these agents were never valued particularly highly by equity analysts. With low expectations of success came tempered sales forecasts, leaving other products deemed more likely to win in the clinic to attract higher valuations.

Biogen Idec’s BG-12 remains the industry’s hottest property, with a net present value of $11bn, according to EvaluatePharma data, although with regulatory decisions due later this year the MS pill is much more of a known quantity. For products still in clinical development Gilead’s hepatitis C candidate GS-7977 is by far the most valuable, with a huge $18.5bn NPV. Unsurprisingly, big pharma-owned products dominate the ranking tables elsewhere; these need to deliver as the industry struggles to rebuild investor confidence in R&D (see tables).

Replacements

With an NPV of only $679m solanezumab does not even make it into the top 50 most valuable R&D projects. Clearly these numbers do not reflect the value of the product should it succeed, but considering the absolute failure and swift abandonment of bapineuzumab the chances of this happening are very low.

Lilly does have a contender in the table below, however, in its insulin biosimilar project, being developed in partnership with Boehringer Ingelheim. This is a version of Sanofi’s Lantus, and phase III data are due later this year.

Pfizer and Johnson & Johnson, having put bapineuzumab to bed, both have other highly valued products to turn attention to. The biggest event on the horizon for the former is FDA approval of tofacitinib, an RA pill that is widely expected to get a green light by August 21. J&J meanwhile has a contender in the hepatitis C race in TMC435, a protease inhibitor licensed from Medivir, one of the industry’s most hotly tipped R&D projects.

Most valuable products awaiting approval
Rank Product Company Pharmacological Class Today's NPV ($bn) NPV as % of Market Cap
1 BG-12 Biogen Idec Fumarate 11.04 32%
2 Tresiba/Ryzodeg franchise Novo Nordisk Insulin 8.57 12%
3 Quad Gilead Sciences NRTI, HIV integrase inhibitor & CYP3A inhibitor 4.53 10%
4 Tofacitinib Pfizer JAK-3 inhibitor 4.28 2%
5 Breo/ Relvar Theravance Beta 2 adrenoreceptor agonist & corticosteroid 3.38 117%
    GlaxoSmithKline   1.71 1%
6 Enzalutamide Medivation Androgen receptor antagonist 3.08 85%
    Astellas Pharma   2.38 11%
7 Bexsero Novartis Meningococcal B vaccine 2.94 2%
8 Actimid (CC-4047) Celgene Immunomodulator 1.55 5%
9 Abilify Depot Otsuka Holdings 5-HT1A & dopamine D2 partial agonist & 5-HT2 antagonist 1.30 8%
    Lundbeck   0.50 12%
10 Aubagio Sanofi PDGF tyrosine kinase & dihydroorotate dehydrogenase inhibitor 1.29 1%

Following a string of recent FDA approvals for smaller drug developers – the obesity agents Qsymia and Belviq from Vivus and Arena and Amarin’s Vascepa, formerly AMR101 – which all owned highly valued assets, the table above is now dominated by large players.

A few are considered more likely than others to win approval – anything other than a green light would be a huge surprise for the likes of BG-12, Quad, tofacitinib and enzalutamide. And for many the focus has already shifted to how the product is likely to fare once on the market. One of the highest-risk products in this regard here is Novo Nordisk’s new insulin. With long-acting biosimilars approaching the market and cost pressures deepening, carving a niche for an expensive new product is going to be tough, even for the experienced diabetes player.

Pressure to deliver

The table of most valuable products that remain in the clinic is even more dominated by big pharma, and this is not unexpected given the costs associated with drugs at this stage.

Exceptions are ibrutinib, which is partnered with Johnson & Johnson under a profit-share deal, and Actelion’s macitentan. The Swiss drug developer delivered encouraging results from a pivotal trial earlier this year (Actelion breathes easier after macitentan trial success, April 30, 2012).

Shares in big pharma shares have performed pretty well over the past 12 months, for a number of reasons. Many companies are already traversing a path down the patent cliff, allowing investors to look to life beyond the precipitous drop in sales and profits, while the turbulent economic conditions have increased the appeal to investors of “safer” and dividend-paying drug stocks (Big pharma and biotech shares remain in demand over first half of year, July 3, 2012).

However, faith in the R&D model remains low. The failure of the Alzheimer’s drugs was expected, but will reinforce a view held by many investors of expensive and disaster-prone pipelines. These highly valued products need to start delivering with greater regularity.

Most valuable R&D products
Rank Product Phase Company Pharmacological Class Today's NPV ($bn) NPV as % of Market Cap
1 GS-7977 Phase III Gilead Sciences Hepatitis C nucleoside NS5B polymerase inhibitor 18.50 42%
2 Trastuzumab-DM1 Phase III Roche Anti-HER2 (ErbB-2) MAb-DM1 maytansinoid conjugate 3.98 2%
3 Alpharadin Phase III Bayer Radiotherapy agent 3.38 5%
4 Dolutegravir Phase III GlaxoSmithKline HIV integrase inhibitor 2.94 2%
5 TMC435 Phase III Johnson & Johnson Hepatitis C NS3/4A protease inhibitor 2.80 1%
6 RG3638 Phase III Roche Anti-cMet MAb 2.15 1%
7 New insulin glargine product Phase III Eli Lilly Insulin 2.13 4%
8 Ibrutinib Phase III Pharmacyclics Bruton's tyrosine kinase inhibitor 2.04 52%
9 MK-0822 Phase III Merck & Co Cathepsin K inhibitor 2.03 2%
10 Macitentan Phase III Actelion Endothelin receptor antagonist 1.81 30%

To contact the writer of this story email Amy Brown in London at amyb@epvantage.com

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