Shifts in Consensus Leave Novartis's Pipeline Both a Winner and a Loser

January 27, 2015 Shifts in consensus leave Novartis's pipeline both a winner and a loser

Jacob Plieth

Questions over pivotal study design notwithstanding, Novartis today highlighted the heart failure pill LCZ696 as its key launch of 2015, no doubt fortified by the enthusiasm with which the sellside has embraced the project: LCZ696 is the most heavily upgraded R&D asset of the past 12 months.

An analysis of EvaluatePharma’s forecasts reveals that an additional $2.7bn was tacked on to consensus 2018 sales expectations after LCZ696’s success in the Paradigm-HF trial last September (see table below). Meanwhile, pivotal setbacks explain three of the year’s biggest R&D downgrades, with Roche’s bitopertin and onartuzumab and Novartis’s other heart failure asset RLX030 facing long delays.

Novartis has completed the final components of LCZ696’s US filing for heart failure with reduced ejection fraction, while the CHMP has given the EU filing accelerated assessment, shortening the review process to just 60 days. The project has US breakthrough status, and if the FDA gives it accelerated review – surely now a formality – the US green light could come as soon as August.

Everything changed with the early stopping of the pivotal Paradigm-HF study, though much is still unclear (Translating trial to practice a big task for Novartis heart failure pill, September 5, 2014). Undaunted, analysts see LCZ696 as one of the industry's six future blockbusters expected to launch this year.

Five biggest upgrades to R&D assets over the past 12 months

2018e WW sales Change Project Company Therapy area ($bn) ($bn)

LCZ696 (filed) Novartis Heart failure treatment 2.80 +2.65

PB272 (phase Puma Breast cancer (pan-Her2 1.74 +1.2 III) Biotechnology inhibitor)

Alirocumab Anti-hyperlipidaemics (PCSK9 Sanofi 1.18 +0.74 (filed) MAb)

Toujeo (filed) Sanofi Long-acting insulin 1.12 +0.72

Evolocumab Anti-hyperlipidaemics (PCSK9 Amgen 1.05 +0.65 (filed) MAb)

Expectations around Puma’s neratinib, meanwhile, look seriously overblown. The ExteNET trial readout caused a surge in Puma’s valuation in July, and the sellside moved fast to justify the bull case – even though there is little to suggest that Puma is about to be bought out any time soon, and questions remain around neratinib’s side effects and place in the market.

Toujeo saw its forecasts rise after the disclosure of the full dataset from the Edition programme at the American Diabetes Association meeting. This, combined with Sanofi's US legal defence against Lilly's Lantus biosimilar, makes it look increasingly like the French group will be able to launch the long-acting insulin brand extension and execute a switching strategy before competitive pressure weighs too heavily.

Sanofi/Regeneron’s alirocumab, meanwhile, is vying with Amgen’s evolocumab to become the first marketed anti-PCSK9 MAb. The $67.5m Sanofi and Regeneron spent to buy Biomarin’s priority review voucher has put alirocumab slightly ahead, and yesterday the US FDA accepted the filing for priority review.

Down and out

Roche had a rough 2014 by its high standards, and phase III failures for its schizophrenia project bitopertin and onartuzumab in lung cancer were among the setbacks. Bitopertin is part of a sortie into CNS, and remains in phase II in obsessive-compulsive disorder, but analysts have erased all forecasts for the glycine reuptake inhibitor. The remaining trial was due to finish late last year; should phase III plans fail to emerge in the next few months it should probably be viewed as abandoned.

On the other hand, onartuzumab still has a decent chance at becoming a revenue-generating asset as phase III trials in gastric cancer have yet to read out. However, this was another case of analysts writing off an eagerly awaited project. Illustrating how difficult 2014 was in the clinic for Roche, the two projects listed here accounted for $1bn in forecast 2018 revenue.

Five biggest downgrades to R&D assets over the past 12 months

2018e WW sales Change Project Company Therapy area Status ($m) ($m)

Failed Bitopertin Roche Anti-psychotic 0 (670) phase III

Afrezza Mannkind/Sanofi Inhaled insulin Approved 191 (534)

Congestive heart RLX030 Novartis Filed 428 (476) failure

c-Met anti-cancer Failed Onartuzumab Roche 0 (431) antibody phase III

Synergy Constipation/IBS Plecanatide Phase III 215 (421) Pharmaceuticals treatment

The case of the inhaled insulin Afrezza is more instructive about the biases of analysts covering small-cap companies versus those covering big pharma. Before Afrezza’s approval those covering MannKind reckoned blockbuster sales were possible; after Sanofi licensed it the forecasts became more modest, a shift reflected in EvaluatePharma’sconsensus.

Given the massive expectations for LCZ696, Novartis’s devotion to RLX030 (serelaxin) is admirable, if questionable. The recombinant hormone was knocked back last year by regulators in the US and Europe who wanted to see confirmation of its benefit in preventing heart failure getting worse, as the Relax-AHF trial hinted. Full data from the 10,000-patient programme will be reported in 2015 and 2016.

Plecanatide’s downgrade stems from falling expectations for a fast launch, particularly in Europe. While remaining bullish on the blockbuster promise of the irritable bowel syndrome project, analysts from Cantor Fitzgerald point out that Constella, the European name for Actavis and Ironwood Pharmaceuticals’ competitor Linzess, has fallen short of initial expectations.

Given the focus on oncology in recent years it is surprising to see cardiovascular projects so well represented in these rankings; this could be a reflection of late-stage activity. It will be interesting to see if these products manage to match expectations in the market - disappointment could see cardiovascular research return to the same back burner where it spent the preceding decade.

To contact the writers of this story email Jacob Plieth, Jon Gardner or Amy Brown in London at [email protected] or follow@JacobEPVantage, @JonEPVantage or @AmyEPVantage on Twitter