Pharming has had a good run of late, buoyed by shortages of competing products, but this week the party ended. An initiation note with a sell recommendation from Kempen & Co on Friday has been followed today by the bombshell of a US complete response letter for a key label extension covering its lead drug, Ruconest.
The stock was off 20% in early trade today, meaning that the company has now lost nearly half its value since last week’s Kempen note. Ruconest is approved for episodic hereditary angioedema (HAE), and today’s setback, concerning prophylactic HAE use, highlights just how exposed the product has become.
After all, prophylactic use has been touted as crucial to enable Ruconest to reach 2024 sales of $607m, as EvaluatePharma sellside consensus estimates. Last year, fuelled by shortages of Shire’s Cinryze and CSL’s Haegarda, Ruconest sold $100m for episodic HAE, with a particularly strong first half.
But with the shortages now largely resolved, and two quarters of flat Ruconest sales, the bears at Kempen reckon that the acute HAE indication realistically carries peak sales of just $88m. This is why today’s FDA rejection is such a blow.
Pharming says the agency has requested an additional clinical trial, even though in January it had deemed its application, based on one open-label and one randomised phase II study, “sufficiently complete to permit a substantive review”.
The company wants to generate the data necessary for a prophylaxis approval, but the risk is that it is fast running out of time. Cinryze already carries a prophylaxis indication, and so does Haegarda.
All three are C1 esterase inhibitors, but while Shire’s and CSL’s are human plasma-derived, Pharming’s is extracted from the milk of transgenic rabbits, and thanks to this manufacturing difference the Dutch group was immune to last year’s shortages. Cinryze and Haegarda are forecast to sell $611m and $207m respectively this year.
Pharming’s problems do not end there. Shire’s lanadelumab, an anti-plasma kallikrein MAb trademarked Takhzyro, was approved last month for HAE prophylaxis, and is seen selling $1.5bn in 2024. Little wonder that even before today’s Pharming setback Kempen saw Ruconest prophylaxis sales reaching just $150m, citing the drug’s relatively poor efficacy, inconvenient dosing schedule and mode of administration.
More bullish analysts at Stiefel say Ruconest's retention rates have been good, and while acknowledging the likely market shift caused by Takhzyro they reckon there is enough room for Pharming to play here.
But like Cinryze Ruconest is delivered IV, in contrast to Takhzyro and Haegarda’s more convenient subcutaneous route of administration. A final point in the bear thesis is that Biocryst has an oral kallikrein inhibitor, BCX7353, in phase III and slated for launch in late 2020.
Perhaps Valeant, which handed back US Ruconest rights in 2016, realised such problems early on (Pharming bets the house on Ruconest, November 22, 2016). Even if Pharming can quickly resolve the issues preventing Ruconest’s expanded US approval, the game could already be up.