Roche on the wrong side for once in shifting analyst forecasts

Roche’s reputation as a peerless R&D powerhouse has taken a battering in the past year, and as a consequence two of its abandoned projects have made the list of top downgrades of the past 12 months.

On the positive side, upgrades for clinical-stage projects from Vertex Pharmaceuticals and Merck & Co in cystic fibrosis and hepatitis C respectively illustrate shifting landscapes in these fields. Novartis’ heart failure product LCZ696, meanwhile, continues to pay off as decisively positive mortality data have driven up 2018 forecasts by nearly $2bn in the past 12 months (see tables below).

Franchise extensions

Vertex Pharmaceuticals is facing changing fortunes for its cystic fibrosis franchise: while Kalydeco saw one of the biggest downgrades of the last 12 months, the future for its soon-to-be approved Orkambi looks rosier. The follow-on drug, a combination of the Kalydeco active ingredient ivacaftor and a second agent, lumacaftor, was the biggest winner as confidence builds ahead of its 5 July PDUFA date. A positive adcom panel vote in May has also spurred expectations.

Meanwhile, there was another big upgrade for Novartis’s heart failure therapy LCZ696, which looks set to be a future blockbuster. Like Orkambi, LCZ696 is currently awaiting approval in both the US and EU, but it is already generating a buzz after the Paradigm-HF study was stopped early on positive results. Add to this the fact that the drug is expected to be the first significant heart failure therapy in over a decade and you have a recipe for sales of $2.6bn by 2018.

Five biggest upgrades to R&D assets over the last 12 months
Product Company Status Therapeutic Subcategory 2018 WW sales
Orkambi Vertex Pharmaceuticals Filed Other respiratory agents 4.13 +2.86
LCZ696 Novartis Filed Angiotensin II antagonists 2.64 +1.83
Grazoprevir/Elbasvir Merck & Co Filed Anti-virals 2.63 +1.35
Tenofovir Alafenamide Gilead Sciences Filed Anti-virals 1.52 +1.04
PB272 (neratinib) Puma Biotechnology Phase III Other cytostatics 1.61 +0.98

Recent developments suggest that excitement around Puma Biotechnology’s breast cancer candidate neratinib is misplaced. Analysts pushed up their 2018 forecast for the drug by almost $1bn, but that was before high rates of side effects made investors apprehensive. It would not be surprising to see a corresponding downgrade in sales predictions once analysts have taken the latest data into account.

Analysts seem convinced that Gilead Sciences can extend the life of its HIV offering with tenofovir alafenamide, a prodrug version of its HIV stalwart Viread, which is due to come off patent in 2017. While Viread’s 2018 revenues are forecast to halve to around $500m by 2018 with the advent of generic competition, this should be offset by sales of the new drug, which promises similar efficacy but at a lower dose and with decreased toxicity. Currently under review in both the US and Europe, tenofovir alafenamide is slated for launch in December 2015.

Contributing to the downgrade of Gilead’s marketed sofosbuvir-based hepatitis C franchise was Merck & Co’s rival contender grazoprevir/elbasvir, which saw a corresponding uplift in its forecast, no doubt helped by promising results from the C-Edge phase III trial programme presented at the International Liver Congress in April. Merck submitted a new drug application to the FDA based on the C-Edge data at the end of May, and hopes to apply for approval in Europe and other markets by the end of 2015.

But while Merck has the upper hand for now, Gilead is not down and out: the latter is developing a triple combination codenamed GS-9857/SOF/GS-5816 that could reach the market in 2018.

Clinical failure, changing expectations

Roche’s appearance twice on the downgrades list is the surprise of this analysis. Bitopertin’s aim was schizophrenia, a disease area where the Swiss company has not been active, and it failed to meet primary endpoints in six phase III studies. Onartuzumab, also known as MetMAB, was the first C-met targeting monoclonal antibody in development, and it failed to generate positive results in non-small cell lung cancer.

Five biggest downgrades to R&D assets over the last 12 months
Product Company Status Therapeutic Subcategory 2018 WW sales
Tasquinimod Active Biotech/Ipsen Failed Phase II Anti-angiogenics - (0.68)
Bitopertin Roche Failed Phase II Anti-psychotics - (0.37)
Onartuzumab Roche Failed Phase III Anti-neoplastic MAbs - (0.28)
Epratuzumab UCB Phase III Immunosuppressants 0.14 (0.22)
Plecanatide Synergy Pharmaceuticals Phase III Other gastro-intestinal agents 0.21 (0.20)

That combined $650m downgrade is roughly equal to the group that has the toughest time in the last 12 months, Active Biotech. With partner Ipsen, it has ceased development of tasquinimod, which was unable to show an overall survival benefit in prostate cancer. This has removed a forecast $680m from the 2018 forecast.

It is not immediately clear why epratuzumab has seen its forecasts shrink so dramatically. Readout of the phase III Embody-1 and Embody-2 trials in lupus are due any day now for UCB, and if successful this anti-CD22 antibody would likely be due for an upgrade – only one new drug for this condition, Benlysta, has been approved in the last 50 years, so there is room for improvement.

Finally, Synergy Pharmaceuticals has been going it alone with plecanatide, its constipation-predominant irritable bowel syndrome (IBS-C) project. Success for its phase III programme in IBS-C and chronic idiopathic constipation could see its forecasts begin to turn back up.

The total value of the top upgrades easily outweigh those of the downgrades in this analysis of R&D assets, the reverse of the situation with marketed products (Big downgrades outweigh upgrades for pharma’s biggest products, June 4, 2015). The analyst community’s continuing bullishness surrounding R&D productivity certainly helps this buoyant view of the promise of pharma and biotech pipelines.

To contact the writers of this story email Jonathan Gardner, Madeleine Armstrong or Edwin Elmhirst in London at news@epvantage or follow @EPVantage on Twitter

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