The first-quarter reporting season is in full swing, and in the spotlight are several drug launches being undertaken by small developers. The pandemic is making life tough for biopharma groups big and small, but for some Covid-19 is arguably providing a smokescreen for a poor performance or product.
This analysis by Evaluate Vantage shows that not all small company launches go disastrously – witness Biocryst’s impressive first quarter. Elsewhere, the jury is still out on the likes of Global Blood and Morphosys, but things look grim for Esperion.
The table below shows a selection of recent US launches presided over by small companies, quantifying launch performance via two metrics: change in the group’s share price since launch, and change in 2021 forecast since launch, per sellside consensus from Evaluate Pharma.
|Selected recent US drug launches by small companies|
|Product||Company||US launch date||Share price change since launch||2021 forecast change since launch|
|Caplyta||Intra-Cellular Therapies||Mar 2020||170%||-35%|
|Tepezza||Horizon Therapeutics||Jan 2020||150%||890%|
|Orladeyo||Biocryst Pharmaceuticals||Dec 2020||44%||7%|
|Xpovio||Karyopharm Therapeutics||Jul 2019||3%||10%|
|Ayvakit||Blueprint Medicines||Jan 2020||-5%||-29%|
|Lupkynis||Aurinia Pharmaceuticals||Jan 2021||-33%||-4%|
|Nexletol||Esperion Therapeutics||Mar 2020||-35%||-62%|
|Oxbryta||Global Blood Therapeutics||Dec 2019||-44%||4%|
|Qinlock||Deciphera Pharmaceuticals||May 2020||-44%||86%|
|Source: Evaluate Pharma.|
A quick glance suggests that far more groups are struggling than over-achieving. At least some of the companies on the wrong side of the ledger can blame Covid-19 for their woes. Global Blood is one: the group boasted of launching its sickle cell therapy Oxbryta within days of FDA approval in late 2019, but saw prescriptions stall as the pandemic hit.
The company says sales will pick up as life gets back to normal, and is eyeing a return to meaningful growth in the second half of the year. With Covid vaccination in the US now in full swing, it could soon become apparent whether there is indeed demand for the drug.
Morphosys also cited pandemic headwinds when first-quarter sales of its leukaemia therapy Monjuvi missed expectations following launch last August. With the introduction in its early stages, it is probably too early to raise substantial concerns, although investors appear to be nervous.
Horizon Therapeutics was also hit by Covid-19, but in a different way. That group had overseen a successful launch of its thyroid eye disease treatment Tepezza, only to have supplies disrupted after the US government prioritised manufacturing of Covid-19 vaccines at Horizon’s contract manufacturer, Catalent.
Things already appear to be looking up for Horizon: after a first quarter in which it booked Tepezza sales of just $2m, supply has now resumed to high demand, and the company expects product sales of over $1.27bn this year.
Overall, Horizon is one of the winners in this analysis, as is Biocryst, which showed that the pandemic does not have to be a hindrance: first quarter sales of the company’s oral hereditary angioedema prophylactic Orladeyo smashed consensus. The company said it had been successfully switching patients from injected therapies, which confirms real demand for the drug.
It is also likely that some of the stragglers in the table above would have had a hard time regardless of Covid-19.
Esperion might be one such group. With almost half of its shares sold short, the company holds the dubious title of one of the most heavily shorted stocks on Nasdaq; no prizes for guessing how the launch of Nexletol is going. First-quarter sales of the cholesterol-lowering drug disappointed, and the company blamed the pandemic and the resulting drop in doctor visits.
These are certainly good reasons for poor sales, but doubts about Nexletol’s future have been around for longer than Covid-19. For a while Esperion was considered to be a prime takeout target, and the company’s struggles perhaps explain why buyers stayed away.
Still, with its market cap sitting at a quarter of what it was at peak in 2018, maybe future interest cannot be ruled out. Lowball takeouts eventually emerged for Tesaro and Portola, two other small developers with disappointing launches, which appeared in a similar analysis by Evaluate Vantage almost two years ago (After Alnylam’s solo maiden launch, here comes the tricky bit, August 13, 2018).
But the poor track record of most of the other companies in that previous analysis shows exactly why investors fear solo launches. Companies like Puma and Clovis are just about limping on, while Achaogen is bankrupt.
With Covid-19 to contend with, times are even tougher for small drug developers. Perhaps it is a wonder that any of these groups have managed successful launches during this testing period.
The table in this story has been updated to correct Horizon's share price change since Tepezza's launch.