If a company designs a 16,000-patient trial, skewed massively in its favour, with a new version of a drug whose predecessor only narrowly missed, chances are it thinks a positive result is a dead cert and wants the market to think so too.
This is just one reason why yesterday’s failure of Summit, a massive survival study of the COPD drug Breo, is such a setback for GlaxoSmithKline. Add into the mix that Glaxo’s bold claim to turn around its respiratory division now lies in tatters, and the future of the UK group’s embattled chief executive, Sir Andrew Witty, looks even less secure than before.
After all, it was Sir Andrew who has maintained Glaxo’s focus on respiratory drugs, a division that, based partly on Summit, was to have returned to growth next year. Meanwhile, bets on Glaxo’s safe but unexciting vaccines and consumer health businesses – while ditching established oncology drugs and eschewing M&A – are, in the current market, puzzling.
Make no mistake: Summit could have made a significant difference to Breo, notwithstanding that this had always been basically a me-too drug. With Glaxo’s mainstay respiratory blockbuster Advair under pricing pressure, Sir Andrew himself perfectly summed up the importance of a survival claim to the Breo label.
“It may well be that other drugs could demonstrate the same thing, but nobody else has been able to do that so far. If [Summit] is positive we will be ... making it a very central part of the profile of Breo, and I think it will be a very defining point,” he said on Glaxo’s second-quarter call. “If we get this claim, only we can promote it.”
No survival advantage
It was not to be, however, as Summmit yesterday failed to show a statistically significant survival benefit for Breo. The study’s statistical design meant that, this primary endpoint having been missed, neither of the two secondaries could be relied on.
All this despite Summit’s design; Glaxo was doing nothing as risky as trying to find whether Breo was better than Advair – it was just comparing the new drug versus placebo or either of its standalone components. Advair had narrowly missed showing a survival benefit in the smaller Torch study (17.5% reduction in all-cause mortality with p=0.052).
Summit’s increased powering – it recruited 16,590 patients, well over twice as many as Torch – and focus on more severely ill COPD patients had at least some analysts giving it a high chance of success. JP Morgan speculated in January that a positive readout could add $1bn to Breo sales.
Out of breath
Sellside consensus forecasts compiled by EvaluatePharma suggest that the drug will generate $1.4bn of revenue in 2020, giving it an NPV of $6.3bn. For a product that brought in just £94m ($144m) in the first half of this year, and which now has nothing to distinguish it from Advair, whose patent goes next year, this is surely out of reach.
The risk to Sir Andrew of a domino effect caused by failure to return Glaxo’s respiratory franchise to growth is considerable. He already has several setbacks under his belt, and has had to contend with some shareholders’ disquiet at his tenure; an attempt to kitchen sink a disastrous set of annual results and “rebase” Glaxo’s business from 2015 has now fallen flat (Glaxo strategy underwhelms as near-term outlook dims, May 7, 2015).
Glaxo recently appointed as chairman Philip Hampton, who has a reputation as a turnaround specialist.
Investment bankers might be hoping that the Summit setback prompts a big M&A move from Glaxo, though this would represent a major strategic U-turn. Indeed, the only good thing about Summit is that it makes Glaxo look smart for having refused to buy out Theravance, the Breo originator whose stock has slumped 14%.
Glaxo shares were virtually unmoved today, with the apathy likely linked to its generous dividend policy, which has caused Bernstein’s Tim Anderson to liken the group to a “bond with a nice yield of 5%”.
Still, with two strikes already against Sir Andrew it is hard to see him surviving another profit warning.