Glaxo’s melanoma win will give well needed oncology boost

The FDA’s surprise double approval yesterday of two melanoma drugs represents an important win for GlaxoSmithKline, as it struggles to revive flagging sales growth. The compounds, dabrafenib and trametinib, are two bright spots in the company’s late stage pipeline, which has so far this year scored three notable US regulatory wins; asthma product Breo Ellipta was approved earlier this month.

To be branded Tafinlar and Mekinist, the melanoma drugs also represent an attempt by Glaxo to strengthen its presence in oncology, a therapy area in which it has struggled to gain much traction despite substantial effort. However, analysts are forecasting the company’s oncology sales to more than double by 2018, to $2.8bn, according to EvaluatePharma data. While this still leaves Glaxo just outside the top 10 biggest sellers of cancer drugs, it would not take much to improve its ranking (see tables).

Top 11 companies ranked on 2018 world wide oncology sales
WW Rx & OTC Sales  ($bn) Market Share Market Rank
Company 2012 2018 CAGR 2012 2018 2012 2018
Roche 23.0 29.0 +4% 33.8% 25.7% 1 1
Celgene 5.4 10.0 +11% 7.9% 8.8% 3 2
Novartis 7.0 9.1 +5% 10.2% 8.0% 2 3
Bristol-Myers Squibb 2.9 6.8 +16% 4.2% 6.1% 7 4
Pfizer 2.8 5.9 +13% 4.1% 5.2% 8 5
Johnson & Johnson 2.7 3.9 +6% 4.0% 3.4% 9 6
AstraZeneca 3.5 3.5 0% 5.1% 3.1% 4 7
Eli Lilly 2.9 3.5 +3% 4.2% 3.1% 6 8
Sanofi 3.0 2.9 -1% 4.3% 2.5% 5 9
Astellas Pharma 0.3 2.8 +48% 0.4% 2.5% 26 10
GlaxoSmithKline 1.2 2.8 +16% 1.7% 2.4% 13 11

As the table above shows, outside the global dominance of Roche and substantial portfolios of Celgene and Novartis, the other big players have similar-size pipelines. Glaxo will be heartened to see its position growing over the coming years; in no small part this is thanks to Tafinlar and Mekinist which are predicted to sell $468m and $422m respectively, by 2018.

Estimates for these agents could now grow with approval, and could also get a boost if upcoming trials testing the drugs in combination are positive (Event – Glaxo awaits dabrafenib approval to kickstart melanoma strategy, May 29, 2013).

The company will also be looking for growth in existing franchises to shore up its position, although a couple of key launches in recent years have disappointed. Breast cancer therapy Tykerb has failed to make substantial inroads into the HER2-positive market, while leukaemia drug Arzerra has struggled to compete against more entrenched therapies.

GlaxoSmithKline late stage oncology pipeline
Phase Product Pharmacological Class Lead indication Today's NPV ($m)
Approved GSK2118436 (dabrafenib) B-Raf kinase inhibitor Melanoma 1,479
Trametinib MEK inhibitor Melanoma  1,272
Phase III MAGE-A3 Anti-MAGE-A3 vaccine Melanoma; Non-small cell lung cancer  561
Phase II GSK1363089 c-Met & VEGFr-2 kinase inhibitor Renal cell carcinoma; Stomach cancer; Head & neck cancers 103
Eniluracil Pyrimidine analogue Breast cancer -
WT1 Anti-WT1 vaccine Breast cancer -
GSK2110183 Akt kinase inhibitor Ovarian cancer; Langerhans' cell histiocytosis -
OMP-59R5 Anti-Notch2/3 MAb Pancreatic cancer; Small cell lung cancer -
GSK2636771 PI3K inhibitor General cancer indications -
SNDX-275 (MS-275) HDAC inhibitor Breast cancer -
HGS-ETR1 Anti-TRAIL-R1 MAb Non-small cell lung cancer; Multiple myeloma; Hepatoma, liver cancer -

Much of the value ascribed to Glaxo’s oncology pipeline rests with Tafinlar and Mekinist which, now they are approved, leave a somewhat bare late-stage showing.

Analysts are assigning value to a couple of other cancer research projects, most notably MAGE-A3, a high risk therapeutic cancer vaccine being tested in two large phase III studies in lung cancer and melanoma (Event – MAGE-A3 vaccine must prove its worth, December 14, 2012). While most predict failure, positive news would be a major win for the company.

Foretinib, a small molecule inhibitor of MET and VEGF2, is also being closely watched, although is only in phase II development so some way from proving its worth.

Valuable assets

As the table below shows, analysts are predicting very different futures for the oncology pipelines at big pharma. This measure is also a reflection of previous successes – a company that has delivered will be assumed able to do it again.

This goes some way to explain the huge value being placed on Bristol-Myers’ pipeline, equal to 21% of the company’s market value. Much of this, $13.8bn, rests with BMS-936558, or nivolumab, the lead anti-PD1 antibody which looks set to steal the show at the Asco cancer conference over the coming days (Asco preview: Bristol’s PD-1 combo seizes the early limelight, May 16, 2013).

The drug has huge expectations to meet, and with phase III data some way away it will be some time before these heady forecasts are tested.

Big pharma oncology anlaysis
Company NPV of oncology assets ($bn) NPV of oncology pipeline ($bn) NPV as % of share price  NPV of marketed oncology drugs ($bn) NPV as % of Share Price Market Cap ($bn)
Roche 123.7 4.7 2% 119.0 53% 221.9
Novartis 34.4 2.7 2% 31.7 19% 166.4
Bristol-Myers Squibb 28.9 15.8 21% 13.2 17% 76.7
Pfizer 19.3 5.8 3% 13.5 7% 200.6
AstraZeneca 15.3 0.5 1% 14.7 23% 65.4
Eli Lilly 14.7 4.7 8% 10.0 16% 60.7
Johnson & Johnson 13.7 0.8 0% 12.9 5% 240.6
Sanofi 8.6 1.8 1% 6.8 5% 143.6
GlaxoSmithKline 8.4 3.4 3% 5.0 4% 128.2
Merck & Co 6.6 1.4 1% 5.2 4% 141.5
AbbVie 3.8 1.0 1% 2.8 4% 69.5

For Glaxo, meanwhile, the table above does not paint a picture of a cancer giant in the making. A big proportion of its pipeline would need to deliver for its fortunes to change in the next few years.

However as the table below shows, its success with Tafinlar and Mekinist is not to be understated. As the seventh and ninth most valuable cancer drugs in development, Glaxo's efforts in oncology have paid off in these cases, and both these products have the potential to grow substantially in value over the coming years.

Big pharma's most valuable oncology pipeline assets 
Rank Product Company WW Phase (Current) Pharmacological Class Today's NPV ($bn) NPV as % of Share Price
1 BMS-936558 Bristol-Myers Squibb Phase III Anti-programmed death-1 (PD-1) MAb 13.8 18%
2 IMC-1121B Eli Lilly Phase III Anti-VEGFr MAb 3.6 6%
3 RG3638 Roche Phase III Anti-mesenchymal epithelial transition (c-Met) MAb 3.5 2%
4 Palbociclib Pfizer Phase III Cyclin-dependent kinase (CDK) 4 & 6 inhibitor 3.1 2%
5 CYT387 Gilead Sciences Phase II Janus kinase (JAK)-1/2 inhibitor 1.7 2%
6 Elotuzumab Bristol-Myers Squibb Phase III Anti-CD37 MAb 1.5 2%
7 GSK2118436 (dabrafenib) GlaxoSmithKline Approved B-Raf kinase inhibitor 1.5 1%
8 Inotuzumab ozogamicin Pfizer Phase III Anti-CD22 MAb-calicheamicin conjugate 1.4 1%
9 Trametinib GlaxoSmithKline Approved MEK inhibitor 1.3 1%
10 Orteronel Takeda Phase III 17-alpha-hydroxylase/C17,20 lyase inhibitor 1.2 3%

To contact the writer of this story email Amy Brown in London at AmyB@epvantage.com or follow @AmyEPVantage on Twitter

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