First quarter data reveal new drug launches remain challenging


Encouraging sales data at the beginning of the year from a handful of drug launches prompted hopes in some quarters that although choppy market conditions prevail, they are still chartable for companies with new products to sell (Investors buoyed by signs of speedier drug launches, January 6, 2012).

In the wake of the first-quarter results season, a look at the sales data emerging from the likes of Dendreon, Seattle Genetics and Human Genome Sciences reveals that for many companies in the throes of a product launch, life remains tough. Exceptions certainly exist; Regeneron and Incyte for example prove that demand does exist for expensive therapies with something new to offer. Overall, the data serve to underline that while bringing a new product to market is a notable achievement for small drug developers, in these straitened times it represents the start of a new and equally challenging journey (see table).

Ongoing struggles

Possibly the highest profile launch among this group, Dendreon’s travails are well documented – from reimbursement hurdles to manufacturing issues – and ultimately the company, and its share price, are suffering from heightened competition elsewhere in the prostate cancer space (Strong competitor data reveals the real threat to Provenge, March 9, 2012).

However the launch is still underwhelming two years in – first quarter sales were broadly in line but the company’s cautious guidance for growth this year disappointing, while profits remain elusive. A year ago consensus for sales in 2012 stood at an incredible $883m and today’s figure, already less than half of that, looks likely to shrink in coming months.

Currently embroiled in a hostile takeover attempt from long time partner GlaxoSmithKline, Human Genome has suffered similar problems with lupus treatment Benlysta on the reimbursement front, while drumming up interest among doctors proved harder than anticipated. The company claims the picture is improving although archived consensus forecasts paint a different picture of optimism among analysts. Having halved over the last 12 months consensus for sales this year looks likely to drift lower still.

Holding back

With both Seattle Genetics and Incyte barring the release of weekly prescription information to data tracking services, cognisant of the influence these can have on share price and sentiment, first quarter statements from both these groups were awaited with interest.

Seattle proved the damp squib of the pair, with both first quarter sales of lymphoma treatment Adcetris and guidance for its performance this year disappointing. Consensus is likely to drift lower, however with more data due on the antibody drug conjugate in broader uses the product’s ultimate potential remains unclear.

Incyte meanwhile, whose Jakafi for myelofibrosis which has been on the market three months less than Adcetris, provided a bright spot, with first quarter sales considerably higher than anticipated. Consensus for 2012 now looks likely to rise – UBS lifted its number from $70m to $101m – and confidence in the launch is building.

However with both of these companies in very early launch stages and data only emerging every three months, further caution is justified in both cases. Either could surprise in coming months, with good or bad news, as the decision to hold back prescription data hobbles attempts to track progress more closely. How executives manage expectations in the meantime will no doubt influence investors’ opinions of this tactic for the future, and it will be interesting to see how this plays out.

Poor hit rate

Cadence, Savient, Avanir and Intermune have all been struggling to build confidence in their respective new offerings, and first quarter data broadly failed to lift hopes for recoveries.
Selling new products respectively for pain, gout, pseudobulbar affect and idiopathic pulmonary fibrosis, the companies are approaching very different markets with very different products and have all confronted particular challenges.

As can be expected, all remain confident in their respective product’s futures and larger organisations with greater marketing experience might not have done the job any better. But their struggles and the fallout in terms of collapse in investor confidence demonstrate the risks of taking on such a challenge for small companies, and their shareholders.

Regeneron meanwhile demonstrates it can be done. With a huge beat on first quarter figures and a massive upgrade to annual forecasts on the way, Eylea so far is the stand out success story.
This equates to a hit rate of two out of nine so far - and both Jakafi and Eylea launches are still in the early stages. However that statistic itself should serve to temper enthusiasm for new product launches.

Product launch analysis
Company Product First Introduction Forecast 2011 WW sales ($m)  Actual 2011 WW sales ($m)  Consensus Q1 sales ($m) Actual Q1 sales ($m) 2012 consensus sales (pre Q1) ($m) Current company 2012 sales guidance ($m)
Dendreon Provenge 04/2010 206 214 81 82 368 none given
Human Genome Sciences Benlysta 03/2011 58 52 32.9 31.2 211 none given
Seattle Genetics Adcetris 08/2011 27 43 39.3 34.5 152 140-150
Regeneron Pharmaceuticals Eylea 11/2011 1 25 59 124 192 500-550
Cadence Pharmaceuticals Ofirmev 01/2011 22 11 12 8 92 none given
Savient Pharmaceuticals Krystexxa 12/2010 24 6 3 3.1 31 none given
AVANIR Pharmaceuticals Nuedexta 02/2011 6 6 6.3 9.2 30 none given
InterMune Esbriet 09/2011 4 3 5.9 4.9 49 none given
Incyte Jakafi 11/2011 3 2 8 19 68 none given

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