GSK moat breached as FDA issues generic Advair guidance
One of the enduring franchises in big pharma looks ready to fall. The FDA said it would consider applications from substitutable generic versions of GlaxoSmithKline’s biggest seller, the asthma drug Advair, with the caveat that any challengers will need to leap a higher hurdle than normal to get the regulator’s OK.
In draft guidelines issued yesterday, the US drug agency said it would demand a short efficacy study in addition to proof of bioequivalence before approving any copycat version of the inhalable drug, an extra step not usually demanded of small-molecule candidates. But investors took the view that this extra step would not deter competitors – GSK shares fell 3% to £15.98 in afternoon trading today.
Whether the FDA would indeed allow directly substitutable competition has been a long-running controversy – GSK’s Diskus inhaler was thought to be a major barrier (Glaxo banking on Advair longevity, January 14, 2010). Generics giant Teva, for example, gave up and instead pursued the more difficult 505(b)(2) approval route using the same active ingredients in its Spiromax device.
The agency answered the question yesterday, with a document laying out the data necessary to establish bioequivalence of products containing fluticasone propionate and salmeterol xinafoate, the corticosteroid and long-acting beta agonist (LABA) active ingredients in Advair. The draft document, which is not necessarily the final word on the issue, should come as a relief to the companies such as Novartis and Mylan that are now queuing to enter – market exclusivity for the active ingredients has expired, but the patent for the Diskus device stands until 2016.
Thus many analysts have until now forecast little generic erosion for Advair, an $8bn-a-year product that was the world’s second-best-selling drug last year. That a situation will probably change in coming weeks as analysts take the FDA’s advice on board and begin assessing the chances of generic entry before the additional loss of intellectual property protection in 2016. The more bearish analysts from Bernstein Research had Advair sales dropping to £2.35bn ($3.69bn) in 2020.
On the other hand, the draft guideline was a catalyst for the Bernstein analysts to upgrade Mylan to “outperform” with a $44 price target, from $33 previously. Mylan shares rose 4% to $37.85 in early US trading today.
In any case, Glaxo has been busy preparing a lifecycle extension to its respiratory franchise with the newly approved next-generation LABA/steroid Breo Ellipta in chronic obstructive pulmonary disease (COPD), along with the LABA/long-acting muscarinic agonist (LAMA) Anoro Ellipta, which comes before an FDA advisory panel today (Event – Backing for Anoro would breathe life into GSK respiratory franchise, August 19, 2013).
As with biosimilars, though, the path for Advair generics is not as clear cut as with plain white pills. The biggest difference is in the efficacy study, a level above the bioequivalence usually demanded of generics.
The FDA’s document calls for a four-week study of the lowest strength of both products, to ensure that the generic substitute improves lung function equivalently to Advair. It would be shorter than the 12-week pivotal trials on which Glaxo achieved FDA approval, to be sure, but it is greater than simply measuring the rate and potency of chemical absorption. Based on conversations with respiratory specialists, Leerink Swann analyst Jason Gerberry concluded that the trials should last about one year and require no more than 1,000 patients.
It is just this sort of demand for clinical studies that has discouraged biotech firms from pursuing a biosimilar authorisation in the US (FDA punts on interchangeability in biosimilar rule, February 10, 2012). However, in the case of Advair substitutes Bernstein analyst Tim Anderson characterised the regulatory requirement as “relatively benign”.
The other wild card is how hard Glaxo pushes back against the draft guideline, and how closely regulators listen. Leerink’s Mr Gerberry said the specialists he had consulted did not believe the FDA would change the guidance much because the lung function endpoint is seen as a reasonable surrogate for longer-term maintenance.
While it was inevitable that Advair would eventually face low-cost competition, Glaxo should consider itself lucky that it has been able to hold on to its top seller beyond the end of the usual patent horizon. With this news, however, it will be all the more important for its new respiratory products Breo and Anoro to perform well – they might not completely replace Advair, but they will be an important bulwark.