Zydus Cadila Readies Injectables Push Amid Tepid US Growth Outlook
COVID-19 Vaccine Found Safe In Phase I Trials
Executive Summary
Zydus Cadila expects domestic sales to improve and the US generics business to grow in “mid to high” single digits during FY21 after both saw a coronavirus-related hit in Q1. Meanwhile, approvals for a few biologics are expected, its COVID-19 vaccine candidate has just entered Phase II studies and remdesivir launch looms.
After an 8% fall in first quarter US sales over the previous quarter led by the impact of COVID-19 and the seasonal drop in sales of oseltamivir, Zydus Cadila expects “mid-to-high” single digit growth in its biggest market during financial year 2021. Prospects for India sales, which also dipped during Q1, are seen improving too.
As one of the main contributors to US revenue, Asacol -HD (mesalamine) delayed release tablets for treatment of mild to moderate ulcerative colitis, ran through a 180-day exclusivity, the company attempted to fill the gap via introduction of new injectables and transdermals.
During the post-earnings call, management discussed efforts to build long-term revenue through biologics in emerging markets, injectables in the US and new chemical entities (NCEs) globally. Meanwhile, sizeable revenues are expected from its COVID-19 vaccine candidate and remdesivir that it has licensed from Gilead Sciences, Inc. but has yet to launch.
The plasmid DNA vaccine candidate, ZyCoV-D, against SARS-CoV-2, has progressed to Phase II studies after being found safe and well tolerated in Phase I Indian studies. Over 1,000 volunteers signed up for the PhaseI/II adaptive clinical trials. In the Phase III study “anywhere between 5,000 to 10,000” patients are expected to be enrolled, managing director Sharvil Patel said.
Zydus Cadila is among the Indian companies that are developing vaccines against SARS-CoV-2. It’s joined by the likes of Serum Institute of India Pvt. Ltd., Bharat Biotech, Panacea Biotec Ltd. and Indian Immunologicals Ltd. (Also see "Novavax-Serum Institute Seal Win-Win Deal For COVID-19 Vaccine" - Scrip, 6 Aug, 2020.)
Clinical trials for its other COVID-19 hopeful, pegylated interferon alpha-2b are underway in India and Mexico and the company is in the process of filing an investigational new drug application with the US Food and Drug Administration (FDA) for treating mild cases of the disease. (Also see "With Interferon, Zydus Cadila Launches Third Salvo Against COVID-19" - Scrip, 21 Apr, 2020.)
During Q1, sales of active pharmaceutical ingredients (APIs) rose substantially but contributed only around 4% to consolidated revenue of INR36.6bn ($488.4m), which was up 4% year-on-year. Net profit, at INR4.54bn, rose 49.5% year-on-year, the jump appearing sharper on account of an extraordinary expense in the same quarter last fiscal year.
Plans For NCEs
The company hopes to get the US FDA’s advice on trial design for Phase III studies of its NCE saroglitazar magnesium for non-alcoholic steatohepatitis (NASH) indication as well as primary biliary cholangitis (PBC) in 3-6 months now.
Earlier, this advice was to be sought by the second quarter. Zydus Cadila’s attempt to take saroglitazar ahead as an orphan candidate for PBC could be a risk-mitigation strategy should the NCE not prove to be effective in NASH.
The company has already received marketing approval from the Drugs Controller General of India for saroglitazar to treat non-cirrhotic NASH, making it the first treatment to be approved for the condition.
It’s noteworthy that in the US, several NASH candidates have failed during Phase III trials even as competition in the nascent field is still building as seen from Merck & Co., Inc.'s acquisition of Hanmi Pharmaceutical Co., Ltd.’s candidate for NASH.
Meanwhile, Intercept Pharmaceuticals, Inc. has fallen short while Genfit SA is seeking Phase III trials of its failed NASH candidate elafibranor for PBC. (Also see "Merck Picks Up Hanmi’s Dual Agonist Efinopegdutide, But For NASH" - Scrip, 4 Aug, 2020.) (Also see "Genfit Not Fully Exiting NASH, Despite Terminating RESOLVE-IT" - Scrip, 23 Jul, 2020.)
Zydus Cadila has also received US FDA approval for Phase I studies of desidustat, a novel oral hypoxia-inducible factor prolyl hydroxylase inhibitor (HIF-PHI), for chemotherapy-induced anemia. Besides, approval from the regulatory authority in Mexico has been received to conduct clinical trials for desidustat to manage COVID-19. (Also see "Zydus Cadila Explores Orphan Drug Indication For NASH Candidate" - Scrip, 6 Feb, 2020.)
The NCE has shown a good safety profile so far in two Phase III trials conducted on chronic kidney disease patients.
Biologics Seen “Meaningful” From FY22
Apart from NCEs, the company is also counting on biologics to ramp up revenues in emerging markets FY2022 onwards.
An array of approvals is expected over six to nine months, which will then lead to “meaningful sales in the coming year.” Among the critical approvals are those in Russia, Latin America, Colombia and Mexico, Patel said.
“As of now, PEG-G-CSF, trastuzumab, bevacizumab, adalimumab, followed by rituximab and follicle-stimulating hormone and parathyroid hormone are in the first wave of products we have filed or are filing for,” he elaborated.
The company’s API and formulations facilities have been audited for all the geographies it has filed for, so “we are regulatory-wise clear in terms of our capabilities on the manufacturing side” he added.
Besides, local studies have also been done in some markets as required. While the company will also target developed markets, the “first wave” of marketing will be limited to Latin America, some African countries, the Middle East and Southeast Asia.
Injectables To Contribute From FY23/24
Meanwhile, the company has also been building a strong pipeline of injectables via in-licensing and expects this portfolio to begin delivering strong revenue growth from FY2023-24.
Regulatory filings for 45 products have been made while another 30 injectables are yet to be filed. “We've also been able to partner in first-to-file products, so we believe that in the next two to three years, we will have at least 20-plus injectable products, which will have good value proposition in terms of limited competition and complexity and help us build our overall injectable franchise,” said Patel.
According to an IQVIA report, injectables are the second-largest form of drug delivery systems, accounting for approximately 39% of the global pharmaceutical market by value in 2019. The global injectables market was estimated at $432bn in 2019, growing at a compound annual growth rate of approximately 10.1% from 2014 to 2019. (Also see "Fosun’s IPO Plan For India’s Gland Hits Multiple Targets" - Scrip, 15 Jul, 2020.)
Currently, the injectables business contributes only around $15m and it’s expected to scale up to around $150-200m in FY 2024. The company plans to manufacture some injectables at three of its own sites and others at partner sites in Europe and some parts of Asia.
Elaborating on the company’s strategy of developing the right product mix while minimizing supply chain risks, Patel said “We have a lot of injectables with complex chemistry for which there are no patents, so there are no generics. Some of them are those with shortages in the US market and then there are good volume products.”
Cost Rationalization, Digitalization Efforts
Efforts to grow sales aside, Zydus Cadila is also looking at cutting costs where possible. During the first quarter, other expenses fell due to lower spends on marketing and promotional activities as well as administrative expenses.
Ganesh Nayak, COO, noted that one of the most important learnings during the COVID-19 led lockdown has been that there are better and more agile ways of doing business. "From connecting with customers and business partners through digital means to working from home while maintaining the same level of efficiency were important lessons of this pandemic,” he said.
The company intends to continue these efforts using technology tools and has launched an enterprise-wide cost-transformation initiative, working on the principle of zero-based budgeting.
Elaborating on digitalization efforts, Sharvil Patel said: “It will be a doctor-patient connect and we are talking about how do better scientific medical education, which is a large part of what we do, and how do we have lesser frequency of calls and more precise calls, which will improve productivity of our sales reps and also reach a larger audience through the digital platform.”
Site Transfers From Moraiya Continue
Meanwhile, Zydus Cadila continues to transfer injectables from its manufacturing facility in Moraiya, which had received a warning letter, to Liva near Baroda in Gujarat state.
During the first quarter, succinylcholine chloride injections were relaunched after getting regulatory approval for a site transfer to Liva. Similarly, doxycycline was also transferred, with the approval obtained via a desktop audit.
“Doxycycline is on a new line, which gives us the confidence that we'll get further site transfer approval for two lines. So, that would mean that Liva will see further ramp-up of site transfer from Moraiya,” said Patel.
Remediation is complete at Moraiya and the company has written to the FDA with a review request, hoping for an inspection by December and a resolution by the first quarter of 2021.
Zydus Cadila launched three new products during Q1. It received approvals for 12 new products, including four tentative approvals and filed five additional abbreviated new drug approvals with the US FDA.