Sun Sees Urgency To Establish Low Dose Absorica In US
Executive Summary
Sun’s key specialty asset Ilumya makes progress, albeit slowly, in the US, while the firm sees ‘short window’ to ensure that Absorica LD gains grip in that market ahead of impending arrival of generic.
Sun Pharmaceutical Industries Ltd. reported modest third-quarter earnings for fiscal year 2020, with key specialty products advancing in the US and the firm acknowledging a “sense of urgency on all fronts” to ensure that its newly launched Absorica LD (isotretinoin) gains traction ahead of the arrival of generic competition.
Specialty revenues in the US improved over the second quarter, with growth led by higher seasonal sales for Levulan (aminolevulinic acid HCl) and Absorica and improving sales of Ilumya (tildrakizumab) and Odomzo (sonidegib), coupled with the contribution from Cequa (cyclosporine A, ophthalmic solution 0.09%) that was commercialized in Q3. (Also see "Sun Upbeat On IL-23 Prospects In US, Ilumya Faring ‘Reasonably’ " - Scrip, 10 Nov, 2019.)
Earlier this month, Sun launched Absorica LD, a new formulation featuring its micronization technology to optimize absorption at a 20% lower dose, in the US in addition to the existing on-market acne treatment Absorica. The lower-dose isotretinoin can be taken with or without food, doing away with the uncertainty around timing of dosing and making absorption more predictable.
Absorica LD Not Substitutable
Sun's management believes that Absorica LD 32mg, which is bioequivalent to Absorica 40mg (under fed conditions) “clearly has traction” with physicians.
“But the fact that our product is not a substitutable product would also be important because then the substitution at the retail level will reduce significantly, hopefully. And that's the message that we are also communicating at the retail level that the product is not substitutable and therefore the doctor's prescription should be honored,” Sun’s CEO (North America) Abhay Gandhi said on the earnings call in response to an analyst’s query on converting Absorica prescriptions to Absorica LD.
Sun hopes to get “good” formulary coverage for Absorica LD but also acknowledged that it has a “short window” during which it needs to try and make sure that the product’s launch is successful given the impending generic entry.
“And therefore that sense of urgency on all fronts within the organization is clearly there,” Gandhi said in response to an analyst’s question on the race against time to ensure Absorica LD gains traction before generics likely emerge in December.
In 2015, Cipher Pharmaceuticals Inc., along with its partners Ranbaxy Pharmaceuticals Inc. (now part of Sun) and Galephar Pharmaceutical Research Inc., entered into a settlement agreement with Actavis, under which Actavis can start selling its generic version of Absorica in the US on 27 December 2020 (approximately nine months prior to the expiration of the patents in September 2021) or earlier under certain circumstances.
Cipher had in August 2008 granted Sun the exclusive right to market, sell and distribute Absorica in the US; the partners amended the pact in 2018, under which Sun could launch new isotretinoin products developed "by or on behalf of" the company in the US prior to the expiration of the agreement in November 2022. The expanded deal also included royalties payable to Cipher until December 2024 based on US net sales from Sun's isotretinoin product portfolio.
Ilumya Prospects ‘Positive’
Gandhi also maintained that the company continues to add patients and increase the doctor coverage for Ilumya in the US and that the firm was “positive” on the product’s prospects for the next year.
Jefferies said it remains positive on the outlook for Sun’s specialty business and while Ilumya's ramp-up has been slow, it is still optimistic on both that product and Cequa; the investment bank re-emphasized its previous doctor survey in the US which highlighted that Ilumya could achieve peak sales of $300m.
“The ramp-up is set to be slow, occurring over the next 12 months. Ilumya's ramp-up cannot be compared with AbbVie Inc.’s Skyrizi (risankizumab-rzaa), in our view, as Skyrizi is expected to have sales of $250m in CY19, which is our expectation for Ilumya in FY23,” Piyush Nahar, equity analyst at Jefferies, said in a 6 February note.
For Cequa, which has seen a strong ramp-up in the three months since its launch, Jefferies expects $100m-plus peak sales. (Also see "Sun’s Ilumya Ramps Up In Skyrizi’s Shadow" - Scrip, 14 Aug, 2019.)
In Q3, Sun reported global specialty revenues of approximately $118m across all markets. US formulations sales (including arm Taro Pharmaceutical Industries Ltd.) were $350m (-3%), while overall sales stood at INR80.39bn ($1.12bn; +5%). Net profit for quarter declined to INR9.14bn (-26%), with resulting net profit margin at 11%.
India Business
The India business reported robust growth with sales of branded formulations up 13% to INR25.17bn in Q3 and accounting for 31% of total consolidated sales.
Sun said that the Indian formulation market offers “good long-term potential” given the favorable macroeconomic drivers of pharmaceutical consumption. The firm has also initiated an expansion of its domestic field force by about 10% to further widen customer reach, deepen penetration of its products and to ensure “greater focus on all relevant brands.”
On the compliance front, Sun said it had filed its response to the US Food and Drug Administration “detailing our steps to resolve the eight observations” issued by the agency at its Halol facility in the state of Gujarat following an inspection in December 2019. “We have committed to addressing these observations promptly,” Sun’s founder and managing director Dilip Shanghvi said on the earnings call.
Jefferies said that it expects a resolution of compliance issues at the Halol site to drive strong growth in Sun’s US ex-Taro business.