JP Morgan 2017 – What they said (part 2)

Eli Lilly

Holding an ace in the pack, Eli Lilly's David Ricks – presenting for the first time in his new capacity as CEO – suggested differentiation will define future success in the diabetes market. Ricks was referring largely to the SGLT2 inhibitor Jardiance, co-marketed with Boehringer Ingelheim, which last month received FDA approval for reducing the risk of cardiovascular death in adults with type 2 diabetes and cardiovascular disease. Building on good access for Jardiance, Lilly expects to see early commercial progress as a result of the label update once company sales reps begin educating physicians on the clinical data, said Ricks. Expectations are high with Ricks noting in a breakout session that Lilly's ambitions for Jardiance exceed the size of the DPP-4 inhibitor class. With the drug having demonstrated what Ricks described as a "dramatic reduction in hospitalisation rates from heart failure," in the EMPA-REG study, the CEO was also keen to talk up additional trials in heart failure patients that Lilly and Boehringer previously announced last year. Ricks also confirmed, however, that while the company is committed to this investment, the studies are yet to begin.


Seemingly thwarted in a second recent M&A bid, Sanofi was understandably happy to talk up the potential of Dupixent (co-developed with Regeneron) which should be approved by the end of the first quarter. "We are excited about the drug with good reason," said CEO Olivier Brandicourt, who sought to play down any comparison to the restricted US payer access environment which has characterised Sanofi and Regeneron's previous launch, the PCSK9 inhibitor Praluent. In that scenario payers had benefited disproportionately from the launch of two competing products (Amgen's Repatha) in quick succession allowing them to aggressively play pricing strategies off against each other, said Brandicourt. Furthermore, the level of unmet need in moderate-to-severe atopic dermatitis is substantially higher, he added. Initially it will be critical that Sanofi and Regeneron identify those most severe of patients who cannot derive benefit from other therapies, said Brandicourt, and discussions with payers in this respect have been positive. As the market grows there may be an opportunity to target Dupixent at less severe AD patients, he added. 

Bristol-Myers Squibb

Bristol's session at JPM17 was dominated by discussion around the breadth of its Opdivo combination strategy in first-line non-small cell lung cancer, an area where it remains ahead of the competition, said CEO Giovanni Caforio. This may be true from an R&D perspective but Bristol once again finds itself trailing competitor Merck & Co. where it matters; Merck surprised investors on Tuesday by confirming it has filed the combination of Keytruda plus chemotherapy in first-line patients irrespective of PD-L1 status with the FDA; an application which has been accepted by the agency some 9 to 12 months ahead of expectation. Approval would provide earlier than expected access to a large revenue opportunity for Merck while simultaneously ratcheting up the pressure on at JPM that winning the first-line lung cancer market is now critical to their checkpoint inhibitor aspirations; they have moved a step closer.   


Like most large cap pharma companies asked about future drug pricing trends in the US  market, GlaxoSmithKline management suggested that it is near impossible to predict how the landscape will evolve. Presumably influenced by their own experiences in the US respiratory market, strategy head David Redfern suggested that consolidation of the US insurance market will be of equal importance in shaping future trends as policy from Washington. GlaxoSmithKline is banking heavily on continued momentum in the HIV market to build on the recent success of Tivicay; asked about price pressure in this particular market Redfern suggested that coverage is extensive and pricing has always been "sensible," in part due to continued innovation. Referencing the recent submission of its closed triple therapy for COPD, head of pharmaceuticals Patrick Valance noted that "a lot of patients end up using LABA, LAMA and ICS therapies." The company's competitive advantage here is significant, added Redfern stemming both from first-to-market status and once-daily dosing. Treatment guidelines may continue to evolve but a broad portfolio of products, coupled with GlaxoSmithKline's universal Ellipta device should prove crucial in easing any switch of patients from one regimen to another. 


Roche remains confident that innovation will continue to be rewarded in the US market regardless of administrative changes, said pharmaceuticals head Daniel O'Day. Biosimilars represent one potential means to reduce drug spending and the Swiss company is somewhat uniquely exposed given the revenues it derives from the cancer therapies Avastin, Herceptin and Rituxan. "Overall we feel well positioned for the biosimilar impact," noted O'Day, "we will compete appropriately." Offsetting this competition is Roche's production line in new drug launches, of which the PD-L1 inhibitor Tecentriq is the latest addition to the company's marketed portfolio. Second-line NSCLC data presented at ESMO is "reflected nicely in the market," said O'Day and once-every-three week doing is helping to drive adoption, he added. In the first-line setting the majority of patients will benefit most from combination therapy and we are "at the tip of the iceberg," in how to identify the most suitable treatment, said O'Day. The company will presumably take some heart in Merck's PD-1/chemotherapy filing this week – Roche is prioritising a similar approach – despite the potential loss of ground to a key rival. 


Following the latest setback to Juno's JCAR015 in November – when its lead study was halted due to additional deaths from cerebral oedema – CEO Hans Bishop admitted this week that it was increasing unlikely the asset would be resurrected. Assuming this is the case, JCAR017 will replace '015 as the company's lead CAR-T product. With Bishop noting that '017 was always likely to supersede '015 in time, Juno investors may be advised to play the long term game in this area of cutting edge research.


For biotech investors looking to use the JP Morgan Healthcare conference as a barometer for industry sentiment, Sarepta's presentation and the body language of CEO Edward Kaye was something to be watched closely. The company secured a controversial FDA approval for its Duchene Muscular Dystrophy treatment Exondys 51 last year but Sarepta has subsequently hurt by suggestions that aggressive push back from payers would result in 2017 sales falling well below consensus expectations.

By conforming that fourth quarter sales reached $5.4 million and that 250 DMD patients have filed the relevant paperwork required to secure insurance reimbursement for Exondys, Kaye was able to allay fears of a worst case scenario for the drug; prompting the company's share price to rise 20 percent in response to his presentation. Those patients who have completed the relevant paperwork have tested positive for genetic compatibility with Exondys with Kaye confirming the reimbursement process typically takes between one to three months. There is no firm consensus among analysts regarding projected Exondys sales this year and Sarepta is not yet providing guidance; Kaye said, however, that he is hopeful of a steady increase in revenue over the course of 2017 with 2018 sales likely boosted by European approval towards the end of this year.


Donald Trump may have delivered a potentially devastating blow to pharma on Wednesday by suggesting he will pursue Medicare pricing negotiations but he has also promised to support domestic companies through tax reform and a repatriation 'holiday' for cash held by US players overseas. This may, in the grand scheme of things, provide insufficient compensation given Trump's claim that via its pricing strategies pharma  is "getting away with murder." Pfizer, nevertheless, spoke enthusiastically about repatriation in particular, a not-surprising turn of events given the company has approximately $80 billion in ex-US earnings designated for permanent reinvestment overseas and an appetite for further M&A in order to expand its immediate or near term revenues.

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