Horizon Heralds Stellar Launch Of TED Drug Tepezza
One Of The Best New Product Launches In Years
Executive Summary
Despite COVID-19, Horizon Therapeutics has pulled off a spectacularly successful launch of its thyroid eye disease therapy, Tepezza, thanks to pre-commercial activities that led to a high level of initial patient and prescriber awareness, and market access teams securing a decent reimbursement rate.
The coronavirus pandemic has impacted a number of drug launches but that is not definitely not the case for Horizon Therapeutics plc's thyroid eye disease therapy Tepezza, which has enjoyed a stunning second quarter and become one of the most successful rare disease product launches ever.
The Dublin, Ireland-domiciled company has unveiled sales of $165.9m for Tepezza (teprotumumab) in the quarter, smashing analyst consensus estimates of $69m. The therapy was approved in January in the US, its only market to date, for thyroid eye disease (TED), an autoimmune disease associated with proptosis (eye bulging), diplopia (double vision), blurred vision, pain, inflammation and facial disfigurement.
Horizon CEO Timothy Walbert acknowledged that the sales had "significantly exceeded our expectations [and] three factors are driving this outperformance”. First, he noted that the severity of TED "and its painful progressive vision threatening symptoms is a highly motivating factor for patients who seek out therapy, particularly when the medicine generated an impressive 83% response rate in its clinical program and is generally well tolerated." (Also see "Horizon Pharma Sees Mid-2019 BLA For Tepro After Solid Phase III TED Data" - Scrip, 1 Mar, 2019.)
Secondly, Walbert said that pre-launch efforts begun in early 2019 "have been highly successful in developing the market, educating key stakeholders on TED and Tepezza, and establishing and simplifying the TED patient journey. The third factor is "our expanding commercial execution, which has driven faster than expected uptake" and market research conducted by the company in June revealed "high awareness in favorable perceptions of Tepezza among our target physicians." (Also see "Horizon Ramps Teprotumumab Launch Plans Into High Gear " - Scrip, 6 Nov, 2019.)
He noted that less than 50% of those target physicians have prescribed Tepezza to date, "highlighting the significant growth opportunity we have moving forward." A number of those doctors delayed prescribing the targeted inhibitor of insulin-like growth factor-1 receptor (IGF-1R) that is administered to patients once every three weeks for a total of eight infusions, due to COVID-19, Walbert said, pointing out that "despite the fact that ophthalmologists have been among the most impacted physician specialties during COVID-19, Tepezza demand continues to grow. Our field team quickly adapted to this new environment and is successfully engaging with key physicians both in person and virtually, and we're pleased that we have seen minimal disruptions to patients who have started therapy."
The drug is not cheap ($14,900 per vial, or $200,000 per patient per year) but the CEO told analysts on a 5 August call that "payers understand the value of Tepezza, and policies are now in place for 90% of covered lives with favorable policy for approximately 75% of those." He added that Horizon had recently received a permanent J-code which will go into effect in October 1 and will help streamline the reimbursement process, noting that the firm has initiated a direct-to-consumer campaign to drive TED awareness.
Walbert concluded by saying that Tepezza "is disrupting long-held notions of treating TED that have been in place since the 1950s" as surgery was the only option for treating patients in the chronic phase. Physicians are beginning to use the therapy in these chronic patients rather than opting for surgery, he noted, and Horizon has accelerated the initiation of its Tepezza trial in patients with chronic TED to year-end 2020; in chronic TED, the disease is no longer progressive but significant manifestations such as proptosis and diplopia remain.
In addition to the 15,000 to 20,000 acute TED patients Horizon is targeting at present, Walbert estimated the chronic population to be an extra 70,000 patients. On that basis, the company has increased its peak US annual net sales estimate for Tepezza to greater than $3bn from a previous forecast of over $1bn; for full-year 2020, the guidance has been upped to $650m from $200m.
The reaction of analysts has been one of awe. Gary Nachman at BMO Capital Markets described the second quarter as "incredibly strong," with the Tepezza launch "significantly exceeding the very high expectations for it, despite a challenging environment." He added that the raised sales guidances "represent very achievable targets with room for further upside, especially if Horizon can penetrate a decent portion of the chronic TED market."
Analysts at Jefferies agreed that investors had expected a good quarter but "Horizon delivered and in a big way [that] far exceeded the most optimistic projections." They added that "Tepezza has now become one of the best new product launches in years," and were impressed about sales being likely to pass $650m in 2020, "and not even for a full year – and during a pandemic no less."
The rest of Horizon's portfolio also did well in the second quarter and total sales soared 44% to $462.8m. After Tepezza, the most notable performance came from Krystexxa (pegloticase) for chronic refractory gout which contributed $75.2m, down 6% due to COVID-19 factors but $6m more than analyst consensus estimates.
Following the results, Horizon also announced a public offering of $700m of its ordinary shares. The company said it intends to use the net proceeds to fund future acquisitions or licensing deals.