Biotech Values

[DewDiligence]

Novartis’ Next Mega-Blockbuster?

[No, I’m not talking about Gilenya, but rather QVA149, an inhaled combination treatment for COPD that could take share from Advair and Spriva (#msg-56227067, #msg-41509884). One of the constituent drugs in QVA149 is Indacaterol (a/k/a/ Onbrez Breezhaler, QAB149), a LABA that goes before an FDA advisory panel next week as a monotherapy. (The other drug in QVA149 is NVA237, a LAMA that NVS licensed from Vectura.)

QAB149 received an FDA CRL in Oct 2009 (#msg-42658767) despite its being approved in the EU a month earlier (#msg-41904142 ). If there is any hang-up in getting QAB149 approved as a monotherapy, it would lessen the probability that NVS could launch QVA149 as planned in 2013.]

http://www.reuters.com/article/2011/03/02/novartis-gsk-respiratory-idUSLDE72108F20110302

›Wed Mar 2, 2011 10:14am EST
By Ben Hirschler and Katie Reid

LONDON/ZURICH, March 2 (Reuters) - Novartis (NVS) and GlaxoSmithKline (GSK) are battling to dominate the market for next-generation respiratory drugs, with the Swiss upstart banking on a positive U.S. review next week to help its cause.

A green light for new drug indacaterol from a U.S. panel on March 8 would give Novartis the cornerstone it needs for its key combination drug, QVA149, which some analysts are already tipping as a potential $5 billion-a-year seller.

If successful, that two-in-one inhaled treatment for chronic lung disease would eat into sales of both GSK's $8 billion drug Advair and Pfizer's (PFE) $3.6 billion Spiriva.

"This could be a $20 billion market and Novartis may set a new standard in COPD (chronic obstructive pulmonary disorder)," said Helvea analyst Karl-Heinz Koch.

"There is still so much potential to improve what is out there. COPD is still not well treated."

A smooth ride, however, is not guaranteed because indacaterol is a so-called long-acting beta agonist (LABA) -- a class of drugs that has raised safety concerns at the Food and Drug Administration (FDA) when given to asthmatics.

The FDA already rebuffed indacaterol once in October 2009 [#msg-42658767]

Its advisory committee will next week assess two doses of indacaterol and it is important for Novartis that the higher 150 microgram dose is endorsed along with the lower 75 mcg.

JP Morgan analysts peg the probability of backing for both doses at 60 percent -- a result they say would mark a big boost to confidence in Novartis's respiratory pipeline, which has the potential to add up to 8 percent to the company's value.

Crucially, it would consolidate Novartis's lead over GSK in the race to develop a treatment for COPD that combines a LABA with a long-acting muscarinic antagonist (LAMA) to produce a more effective, convenient therapy.

Once-daily QVA149 is well into final-stage clinical trials and may reach the U.S. market in 2013, while GSK's rival LABA/LAMA drug only entered Phase III testing last month.

Indacaterol is already on sale as a monotherapy in Europe under the brand name Onbrez Breezhaler [#msg-41904142 ] and had revenues of $33 million in 2010. Its U.S. name will be Arcapta Neohaler.

NEW KID ON THE BLOCK

Until recently, Novartis was not on the radar as a major force in lung drugs, which are typically difficult to make because of the inhaler devices they require for delivery.

Now the field is emerging as pivotal to its future -- not just through the drive into new branded drugs but also via its work with partner Vectura (VEC.L) on generic copies of products like GSK's Advair and AstraZeneca's (AZN) Symbicort [#msg-56771288].

Given the difficulties of developing respiratory drugs, a lot of analysts have so far been cautious about building big expectations for QVA149 into their models.

Many currently forecast QVA149 sales of $1.0-1.5 billion, although independent analyst BioMedTracker puts it at $3.3 billion by 2020 and JP Morgan sees a peak of $5 billion.

Andrew Weiss of Vontobel predicts $2.8 billion but thinks Novartis still faces significant challenges, especially if U.S. experts decide next week to play it safe on dosing.

"If it doesn't get the higher dose approved, then it will be stuck with a drug that is approved at a dose that is not that effective," he said.

What's more, a novel LABA/LAMA combination is not the only game in town. GSK also has high hopes for its "son of Advair" drug, Relovair, being developed with Theravance (THRX), which combines a LABA and an inhaled corticosteroid (ICS).

Here, the British company believes it has a clear edge, since Novartis has decided not to develop its rival LABA/ICS product for the U.S. market.‹