Q3 Pharma Earnings Preview: Novo Nordisk, Shire And Teva
Executive Summary
Pricing pressure and difficulties with market access in competitive classes will be common themes as Teva, Novo Nordisk and Shire report third quarter sales and earnings.
Teva To Be Pressed On Launch Updates
Teva Pharmaceutical Industries Ltd. investors will be looking to management for some positive updates on the launch of the new migraine drug Ajovy (fremanezumab) after finding out earlier this month the drug would be excluded from Express Scripts Holding Co.'s national formulary, which is covering Amgen Inc./Novartis AG's Aimovig (erenumab) and Lilly's Emgality (galcanezumab) instead. The pharmacy benefit manager announced Oct. 17 that it will give preferred formulary placement to Teva's two rivals in 2019 instead. (Also see "Teva Stands By Migraine Strategy After Ajovy Misses Boat On Express Scripts Deal" - Scrip, 17 Oct, 2018.)
Now investors will be waiting for an update on the important launch of the CGRP inhibitor, including how market access is playing out with other key payers.
Ajovy has a potential dosing convenience that Teva could leverage; it can be taken monthly or quarterly, whereas the other two CGRP products are both dosed monthly. Amgen/Novartis and Lilly have both undertaken extensive sampling programs to support their respective launches, with a focus on building volume.
Teva hasn't had an opportunity to address investors publicly since Ajovy was approved in September. (Also see "Is Quarterly Dosing For Teva's Ajovy Enough To Differentiate It From Other CGRP Inhibitors?" - Scrip, 17 Sep, 2018.) The launch represents one big growth opportunity for the company that is otherwise facing a lot of challenges, particularly when it comes to the US generics business and the specialty brand Copaxone (glatiramer), which is on a downward trajectory following the launch of generics.
The drug maker has another big opportunity, this one on the generics side of the business. The US FDA approved Teva's generic version of Mylan NV's emergency allergy medication EpiPen (epinephrine) in August. It's the first generic approved by the FDA, outside of Mylan's own authorized generic product. (Also see "Teva To Launch First Generic EpiPen In 'Coming Months'; FDA Heralds Approval Of Complex Product" - Pink Sheet, 16 Aug, 2018.)
The drug-device combination was a challenging generic to get across the finish line but Teva hasn't provided investors with an update on when the generic will launch or how much it will cost. Given that Mylan's third-party manufacturer Pfizer Inc. has faced issues making EpiPen, resulting in a shortage, it's interesting that Teva hasn't updated investors on the timeline for launch.
US generic revenues continued to struggle across the sector in the first half of the year. Whether or not the headwinds are subsiding is another question investors will be looking for answers to.
Pricing Uncertainty Top Of Mind At Novo Nordisk
Novo Nordisk AS's management will have numerous themes to address when updating analysts and investors on its third-quarter performance on Nov. 1. Key topics will be pricing pressures in the US market where half the company's sales are generated, and uncertainty over the uptake and pricing of its all-important GLP-1 products for fighting diabetes and obesity on which its future growth depends.
Market forecasts will have been slightly impacted in the third quarter by Novo Nordisk's plans to cut 400 R&D positions in China and Denmark, about 250 positions in the US, and about 150 positions in Japan and Korea, moves that will have caused analysts to adjust estimated R&D and SG&A cost lines in an attempt to account for the severance packages that these cuts will incur.
The revamp, announced by the company in September and heralded at its half-year update, reflects the Danish diabetes fighter's decision to move firmly into stem cell research and its need to more fully integrate AI and computer sciences into its drug development. (Also see "Novo Nordisk CSO Says R&D Revamp Reflects New Stem Cell And AI Focus" - Scrip, 20 Sep, 2018.)
Novo Nordisk is expected to voice satisfaction over successfully poaching AstraZeneca's global chief of cardiovascular and metabolic diseases to head its underperforming biopharma division from next April.
Expected product updates will include the ramping up of Ozempic's (semaglutide) launch. In the Danish group's second-quarter earnings call management pointed out that US formulary access for Ozempic was above 60% for commercial and Part D combined and that it still expected to realize more than DKK1bn ($154m) in Ozempic sales in 2018. (Also see "With Novo Nordisk Dependent On GLP-1s, Even Perceived Price Pressures Can Hurt " - Scrip, 9 Aug, 2018.) Recent US prescription data suggests that uptake has improved in the latest three months.
Novo Nordisk when presenting its third-quarter update is expected to be asked its views on the potential threat to Ozempic in treating obesity posed by rival Eli Lilly & Co.’s dual GIP and GLP-1 receptor agonist LY3298176, which recently demonstrated promising clinical results, but which is not likely to reach the market until at least 2022. (Also see ""Impressive" HbA1c And Weight Reductions Spur Phase III Plans For Lilly's Dual Incretin Agonist" - Scrip, 4 Oct, 2018.) Analysts say that Lilly in the meantime is less likely to lower prices in the GLP-1 space. Ozempic is meanwhile being studied in a Phase IIIa program (STEP) for a 2.4mg dose of Ozempic in obesity which is expected to complete in 2020.
Also awaited is the latest update on moves to progress the group's once-daily oral GLP-1 agonist semaglutide, which has steadily shown efficacy in reducing blood sugar levels and weight in adults with type-2 diabetes. (Also see "Novo Nordisk Adds Momentum To Oral Semaglutide With Good PIONEER 5 Data " - Scrip, 21 Aug, 2018.)
Shire’s Quarter May Rest On Familiar Franchises
While investors await finalization of the merger of Shire PLC with Takeda Pharmaceutical Co. Ltd., the Irish firm’s third quarter success may hinge on continued growth for its immunoglobulin portfolio and growth in hereditary angioedema, following the August approval of its prophylaxis agent Takhzyro (lanadelumab-flyo).
Scheduled to report its third quarter results on Nov. 1, Shire is coming off a second quarter during which its relatively low-profile immunoglobulin products for rare immunological and neurological diseases – Cuvitru, Gammagard and Hyqyvia – posted 20% year-over-year sales growth. (Also see "Hemlibra Effect Is Muted At Shire - For Now" - Scrip, 31 Jul, 2018.) This helped Shire’s immunology franchise post 13% growth to $1.15bn during a three-month stretch in which its hematology portfolio endured a 1% drop-off (to $951m), due partly to competition from Roche’s new hemophilia A therapy Hemlibra (emicizumab).
In an Oct. 12 note, Deutsche Bank analyst Richard Parkes predicted that the immunoglobulins would continue solid growth in the 10% range on the quarter. Continued uptick there could be vital for Shire, since Parkes expects only increasing downward pressure on the Shire hemophilia products due to Hemlibra, including a projected 35% decline for Shire’s inhibitors Adynovate and Advate.
Besides that narrative, Parkes thinks investor focus mainly will center on Shire’s launch expectations for Takhzyro in HAE, which the firm hopes to help claw back market share from CSL Behring, which has made inroads in recent quarters with its prophylactic Haegarda (C1 esterase inhibitor). (Also see "With Takhzyro Approval, Shire Could Reclaim HAE Prophylaxis Market From CSL Behring" - Scrip, 24 Aug, 2018.) Shire enjoys strong market share in HAE overall, with its portfolio of Cinryze for prophylaxis and both Firazyr (icatibant) and Kalbitor (ecallantide) for acute attacks.
Increasingly focused on rare diseases, Shire also likely will outline launch strategy for Veyvondi (vonicog alfa), which recently obtained EU approval to treat von Willebrand disease. (Also see "Shire Snags EU Okay For Von Willebrand Drug Veyvondi" - Scrip, 12 Sep, 2018.)