Therapeutic focus – diagnostic agents gaining clarity

Analysis

As a sector that generates solid but unspectacular annual growth, with its biggest-selling product yet to reach $500m and dominated by just a handful of companies providing limited disclosure, the in-vivo diagnostic imaging agent market has traditionally attracted relatively modest levels of interest compared to more valuable and dynamic therapy areas.

According to consensus forecast data from EvaluatePharma, the global diagnostic imaging market was worth $6.24bn last year and is set grow 3% annually to reach $7.93bn by 2014 (see table below). However, with three new diagnostic agents approved so far this year the sector is punching above its weight by representing 15% of the latest tally of 20 new molecular entities. With the next few weeks expected to provide a PDUFA verdict for Vasovist, an advisory committee review for Imagify and phase II results for Zemiva, December could prove a pivotal month for the valuations of smaller players such as EPIX Pharmaceuticals, Acusphere and Molecular Insight Pharmaceuticals.

Modest values and growth

In terms of sub-groups of diagnostic agents, the overall market is currently dominated by the X-ray contrast media products, such as GE Healthcare’s Visipaque and Omnipaque, a picture that remains unchanged in 2014 with group sales of $3.3bn.

However, the sector’s growth is expected to be supported by the magnetic resonance imaging (MRI) contrast media agents, such as Bayer’s Magnevist and Gadovist, growing 6% annually to $1.3bn by 2014.
 

Diagnostic imaging market - sub category analysis
  WW annual sales ($m)  
  2007 2014 CAGR (07 - 14)
   X-Ray contrast media  2,865  3,329  2%
   MRI contrast media  876  1,312  6%
   Other contrast media  2,501  3,284  4%
Total diagnostic imaging market  6,242  7,925  3%

Given the highly specialist nature of diagnostic agents, the sector is dominated by three European companies: GE Healthcare as the market leader following GE’s acquisition of Amersham in 2004, Bayer as a direct result of its purchase of Schering AG in 2006 and private Italian group Bracco.
 

  Diagnostic imaging market - top ten companies
    WW annual sales ($m)  
    2007 2008 2009 2010 2011 2012 2013 2014 CAGR (07 - 14)
 1  GE Healthcare  1,831  1,902  2,026  2,064  2,081  1,911  1,779  1,670  (1%)
 2  Bayer AG  1,258  1,335  1,296  1,303  1,308  1,298  1,306  1,322  1%
 3  Bracco  758  893  876  890  908  930  954  980  4%
 4  Molecular Insight Pharmaceuticals  -  -  3  29  194  461  686  922  -
 5  Covidien  360  554  577  605  633  660  688  716  10%
 6  Astellas Pharma  330  406  444  490  533  571  610  649  10%
 7  Guerbet  414  485  497  527  557  588  618  648  7%
 8  Daiichi Sankyo  330  328  317  300  289  278  266  255  (4%)
 9  Lantheus Medical Imaging  -  508  380  332  301  280  264  251  -
 10  Nycomed  156  175  171  175  178  181  184  187  3%
   Other  806  117  131  175  210  250  290  326  
  Total Market  6,242  6,704  6,719  6,890  7,193  7,408  7,645  7,925  3%

Regarding individual imaging agents, Visipaque was the industry’s biggest-selling product in 2007 with revenues of $443m. This year looks like providing something of a threshold landmark for the sector with Visipaque sales expected to exceed $500m for the first time.
 

Diagnostic imaging market - top five products * WW annual sales ($m)  
Rank Product Generic Name Company Pharmacological Class Market status 2007 2014 CAGR (07 - 14)
 1 Zemiva iodofiltic acid I-123 Molecular Insight Pharmaceuticals Radiodiagnostic agent Phase II  -  888  n/a
 2 Ultravist iopromide Bayer AG X Ray contrast media Marketed  322  501  6%
 3 Visipaque iodixanol GE Healthcare X Ray contrast media Marketed  443  437  (0%)
 4 Omnipaque iohexol GE Healthcare X Ray contrast media Marketed  416  427  0%
 5 Magnevist gadopentetate dimeglumine Bayer AG MRI contrast media Marketed  413  417  0%
* excludes Bracco's imaging agents as individual product sales not disclosed by Bracco

Crucial phase II data for Zemiva

However, one product that has attracted significant interest and valuation is Molecular Insight Pharmaceuticals’ Radiodiagnostic agent, Zemiva. With a potential launch in 2011, analysts are currently forecasting sales of $275m by 2014, potentially valuing the product at $981m, according to EvaluatePharma’s NPV Analyzer.

With Molecular Insight’s shares suffering heavy losses in the current financial turmoil, down 70% over the last three months to $2.65 which currently values the company at $66m, phase II data this month on Zemiva’s ability to detect cardiac ischemia and acute coronary syndrome are crucial and could provide a catalyst for share price recovery.

Advisory committee for Imagify

Acusphere faces a crucial FDA advisory committee review this week for Imagify, the company’s ultrasound imaging agent to test for coronary artery disease. Although analyst coverage of Acusphere is currently limited, as by far the company’s most advanced pipeline product the review of Imagify is clearly a pivotal event.

Unfortunately for investors in Acusphere the prospects for Imagify receiving a positive review do not look good following the publication of briefing documents ahead of the meeting on Wednesday which raise serious safety concerns about the product. Having staged something of a rally in recent weeks ahead of the meeting, Acusphere’s shares plummeted as much as 60% in early trade today, to $0.30 which values the company at $16m. With just $4m in cash at the end of September, shareholders will be desperate for a positive verdict; anything short of a unanimous vote in favour of Imagify may spell the beginning of the end for the company.

PDUFA for Vasovist

One of the FDA’s final acts of 2008 is expected to be a decision on Epix Pharmaceuticals and partner Bayer’s application for MRI agent Vasovist, with a PDUFA of December 31.

Although Vasovist has been approved and used in Europe since 2006, seeking FDA approval has been a long and arduous process; the product was originally filed five years ago in December 2003 and has since received two approvable letters, after which it had to appeal for further review.

Sold in-market by Bayer, Vasovist is forecast to reach sales of $179m by 2014, resulting in royalties to Epix of $58m, valuing the drug to Epix at $70m, significantly ahead of its current market capitalisation of $15m.

Although Epix has a mid-stage pipeline attracting reasonable interest and valuation, and with $35m in the bank is in a much stronger position than Acusphere, a positive decision from the FDA on Vasovist could help inject a bit of life back into Epix’s shares, which have lost 91% of their value this year to currently trade below cash at $0.35.
 

EvaluatePharma Calendar of Events: selected events for diagnostic imaging products (next six months)
Event Type Associations Company NPV ($m) NPV as % of Mkt Cap Event Event Status Start Date End Date
US Product Approval (PDUFA)
  Vasovist EPIX Pharmaceuticals  70  480%  FDA Decision Date (PDUFA) on Vasovist as MRI Agent  Starts in 23 days  31 Dec 2008  31 Dec 2008
  Imagify Acusphere  -  - FDA Decision Date (PDUFA) on Imagify for use as an Ultrasound Contrast Agent for Myocardial Perfusion Imaging Starts in 81 days  27 Feb 2009  27 Feb 2009
US FDA Advisory Committee Meeting
  Imagify Acusphere  -  -  FDA Advisory Committee Meeting: Review of NDA for Imagify as an Ultrasound Contrast Agent for Myocardial Perfusion Imaging Starts in 2 days  10 Dec 2008  10 Dec 2008
US Product Filing
  CorVue King Pharmaceuticals  251  11% Expect US Filing for CorVue for Cardiac Perfusion Imaging In-Play (75%)  01 Oct 2008  31 Dec 2008
EU Product Filing
  Imagify Nycomed  -  - Expect EU Filing of Imagify as an Ultrasound Contrast Agent for Myocardial Perfusion Imaging In-Play (87%)  01 Jul 2008  31 Dec 2008
Phase III Trial Results
  Redectane Wilex  48  64% Phase III Trial Results for CA9-SCAN as an Imaging Agent for Renal Tumours Starts in 114 days  01 Apr 2009  30 Sep 2009
Phase II Trial Results
  Zemiva Molecular Insight Pharmaceuticals  981  1428% Phase II Trial Results for Zemiva for Detection of Cardiac Ischaemia In-Play (54%)  11 Nov 2008  31 Dec 2008
Phase III Trial Initiation
  Dotarem Guerbet  867  203% Phase III Trial Initiation for Dotarem in MRI investigations In-Play (80%)  02 Sep 2008  31 Dec 2008
  Azedra Molecular Insight Pharmaceuticals  69  101% Phase II/III Trial Initiation for Azedra for Pheochromocytoma In-Play (87%)  01 Jul 2008  31 Dec 2008

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