Alexion and Baxalta thrive in orphanage

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FDA approval of Kanuma confirms Alexion Pharmaceuticals as one of the top orphan drugmakers in the world. The Connecticut-based group has turned success with Soliris into a rare-disease franchise, albeit partly via an expensive-looking takeout of Synageva Biopharma that brought Kanuma into its collection.

As if to emphasise the sector’s shift towards orphan drugs, the US regulator approved a second rare-disease agent yesterday: Baxalta’s Vonvendi for von Willebrand disease. With orphan drugs’ share of prescription sales expected to grow to nearly 18% in 2020 from 14% today, Alexion and Baxalta have found themselves in a market sweet spot.

Kanuma’s US approval follows by three months its EU authorisation, decisions that unlock a revenue stream forecast to reach $670m by 2020. The agent treats lysosomal acid lipase deficiency, a condition in which a lack of the enzyme leads to accumulation of fat in the gut, causing malabsorption of nutrients, as well as damage to the liver and other organs. An estimated 1 in 300,000 to 1 in 40,000 people have it, depending on ethnicity and geographical location.

It was the main reason Alexion handed over $8.4bn of its shares to Synageva shareholders in May. With a net present value of $3.9bn, according to EvaluatePharma’s consensus, that transaction looks like a costly way to access this orphan asset (Alexion puts its stock to use at last, May 6, 2015).

Alexion must believe that shrewd marketing or premium pricing will be able to generate greater revenue than the sellside is currently forecasting. If anybody can do it, perhaps Alexion can. Certainly its performance on Soliris has defied analysts’ forecasts, with upgrades being common since its launch.

At $310,000 average annual cost, Kanuma will be cheaper than the $564,000 US pricetag of Soliris, well known as the world’s most expensive drug.

Good problem to have

The group also earned a rare paediatric review voucher as part of the US decision, the second it has received under this programme after that issued with Strensiq’s approval (Alexion sits on Strensiq nest egg, October 26, 2015).

The $350m or so it now can reasonably expect to receive from another company looking to speed up approval in theory helps offset the Synageva transaction, but when this is combined with the Kanuma NPV Alexion still is well short of its M&A bill.

After the Strensiq approval, Alexion executives said they wanted to use that voucher themselves. Having two vouchers is a good problem to have, as only one of its three phase II projects – ALXN1007 – does not have an orphan designation and thus would likely be in need of accelerated review, being tested for graft vs host disease of the lower gastrointestinal tract. Given this fact, it seems more likely that one of the vouchers is now up for sale.

Baxalta's Vonvendi, meanwhile, becomes the first recombinant agent to be launched in von Willebrand disease, an inherited bleeding disorder. Human von Willebrand factors have been launched alongside factor VIIIs like CSL’s Humate P. However, Baxalta notes that its new drug has only trace amounts of factor VIII, allowing physicians to administer both together to stop a bleeding episode.

The product is forecast to be the biggest seller in this indication in 2020, at $224m. It looks like Vonvendi will own this space – showing that even within a competitive market like bleeding disorders there are victories to be had for astute orphan developers.

To contact the writer of this story email Jonathan Gardner in London at jonathang@epvantage.com or follow @ByJonGardner on Twitter

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