Hemophilia And Rare Diseases Drive European Mid-Pharmas Sobi And Recordati
Executive Summary
Sweden’s Swedish Orphan Biovitrum and Italy’s Recordati are looking towards hemophilia and rare diseases to keep up the growth of their businesses, and Q3 results have highlighted the Swedish company in particular as a potential takeover target.
Swedish Orphan Biovitrum AB (Sobi) is being mooted as a takeover target thanks to an expected marked future growth in its revenues following the securing of reimbursement approvals for its long-acting Factor VIII product Elocta (efmoroctocog alfa) in key European markets.
However, some commentators prefer Biogen’s future hemophilia-focused spin-off, Bioverativ Inc., as a likely target for troubled mid-pharma companies like Novo Nordisk AS. Analyst Mickael Chane Du of Bryan, Garnier & Co. noted that although Elocta might be a nice fit with Novo Nordisk’s portfolio, Bioverativ is perhaps a more attractive takeover target, because of its strong patient base in the US and its “pure play” focus on hemophilia. (Also see "Biogen Hemophilia Spin Out Bioverativ On Track For Early 2017" - Scrip, 9 Aug, 2016.)
But such speculation does not divert Sobi’s CEO Geoffrey McDonough, who says he wants to build a “globally relevant” innovative company in the rare diseases space, rather than specifically a hemophilia product company.
He told Sobi’s recent earnings call Oct. 27 that he was hoping to build up Sobi’s mid-stage pipeline through licensing and M&A, acquiring products that would benefit from the company’s commercial expertise in rare disease drugs, and not necessarily in the hemophilia, genetics and metabolic areas where it is currently marketing products.
Sobi already has rare disease products in early-stage development, but there does appear to be a gap in its pipeline in Phase II and early Phase III. “We really need to be in a position where we can be launching new products in 2018, 2019 and 2020,” McDonough said.
In late-stage development, the marketed interleukin-1 inhibitor for rheumatoid arthritis, Kineret (anakinra), is expected to start Phase III studies in 2017 separately in acute gout and Still’s disease, while in preclinical studies, Sobi has a modified human recombinant sulfamidase for the treatment of mucopolysaccharidosis type IIIA, SOB1003, that is expected to enter Phase I studies in 2018 for Sanfilippo A syndrome. Also in preclinical studies is SOBI005, a complement C5 inhibitor Affibody, and an interleukin-1 inhibitor Affibody product.
Such rare disease therapies might alleviate the threat from potential hemophilia therapies waiting in the wings. These could include Roche/Chugai Pharmaceutical Co. Ltd.’s emicuzumab (ACE910), for which Phase III data are expected before the end of the year, and Shire PLC’s long-acting Factor VIII product Adynovate, that was launched in the US in November (Also see "Shire Backs Hemophilia Focus With Asset Updates, Irish iPATH Study" - Scrip, 27 Jul, 2016.).
Flat Quarter-On-Quarter Sales
Despite the reimbursement wins in key European markets and the lifting of its financial outlook for the year, analysts were still concerned about the flat quarter-on-quarter sales of Sobi’s new hemophilia products, Elocta and the long-acting Factor-IX product Alprolix (eftrenonacog alfa).
But McDonough noted the launch trajectory of therapies for rare diseases can be bumpy, with patients and physicians being asked to switch from products they had been using for 20 years.
In the third quarter, Elocta’s revenues of SEK 57m ($6m) came mainly from Germany, Ireland and Scotland, and were affected by lower-than-expected switching of patients from other hemophilia treatments during the summer, while second quarter sales were SEK55m.
But late in the quarter, Elocta gained reimbursement approval in England, France, Italy and Spain, adding to its early-September reimbursement approval in Germany, and to its availability in Sweden, Denmark, Norway, Switzerland, the Netherlands, Slovenia and Ireland, events that should give a boost to the product's sales. The regional reimbursement process in Italy and Spain is also underway.
Meanwhile, Alprolix sales by Sobi totalled SEK16m in the third quarter, derived mainly from Germany and the UK, with its EU launches coming later than those for Elocta. Alprolix is also available in the Netherlands and has just been approved in Switzerland, following its EU approval in May 2016; Elocta was cleared for EU marketing in November 2015. (Also see "Sobi On The Look-Out For Licensing, M&A Opportunities" - Scrip, 18 Jul, 2016.)
Sobi also benefits from sales royalties from partner Biogen. That company has been marketing the two drugs, as Eloctate and Alprolix, in the US for several years. In the third quarter, Sobi received SEK141m in royalties for Eloctate and SEK93m in royalties for Alprolix.
In the 2016 third quarter, Sobi’s revenues grew by 49% at constant exchange rates to reach SEK1,171m, while its EBITA was SEK 282m, compared with SEK97m last year.
Recordati In Niche Markets
The rare diseases space has been targeted by other European small-to-mid-sized pharmas. Italy's Recordati Industria Chimica & Farmaceutica SPA reported that in the first nine months of 2016, rare disease therapies accounted for 16.3% of its sales, but 25.5% of EBIT. Therapies for rare and orphan diseases generated sales of €140.6m ($155m) during the first nine months of 2016, up by 25.5% in the first nine months of 2015.
The Milan, Italy-based company said it would still pursue geographic and product diversification to reduce its dependence on top-selling cardiovasculars Zanidip (lercanidipine) and Zanipress (lercanidipine plus enalapril) that still account for 16.2% of sales.
In August, the Italian company licensed the atypical antipsychotic cariprazine from the Hungarian company Gedeon Richter Ltd. for marketing in Western Europe, Algeria, Tunisia and Turkey and for which an EU marketing submission has been filed. Approval of the product, as Reagila, is expected by mid-2017, with launches on a country by country basis in 2018 through to 2019, the company said.
Recordati’s CFO and Managing Director Fritz Squindo said cariprazine would be promoted by its current sales organization, to specialists, and would not require significant investment in sales teams.
The Italian company is also developing a new therapy for the treatment of acute decompensation episodes in patients with the severe metabolic disorder, maple syrup urine disease, in a partnership with Assistance Publique, Hopital de Paris, in France. In the first nine months of 2016, Recordati’s revenues increased by 9.9% to reach €862.4m, and its net income rose by 19.5% to €182.3m.