Two Approvals Mark a Busy Week at the FDA

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FDA

The FDA has been busy this week, approving both Vonvendi, Baxalta Incorporated’s (NYSE:BXLT) Von Willerbrand disease treatment, and Bendeka, Teva Pharmaceutical Industries Ltd. (NYSE:TEVA) and Eagle Pharmaceuticals, Inc’s (NASDAQ:EGRX) oncology drug. Both approvals initiated some upside in the companies involved, so let’s take a look at the drugs in question in an attempt to put a dollar value on their impact on revenues.

First then, let’s look at Vonvendi. As mentioned, the FDA approved the drug for a Von Willerbrand disease indication, which makes it the first recombinant (just means produced through genetic engineering) treatment for the disease. VW is a condition that causes insufficient blood clotting, which in turn causes abnormal bleeding in a patient. It comes about as a result of a patient having a deficient (or not having at all) something called the Von Willebrand factor (vWF), which is a protein vital to the platelet adhesion process (this process is at the root of the blood clotting process). It’s a pretty common condition, affecting up to 1 in 100 people in the US, but severity ranges pretty widely, so Vonvendi won’t go out to a large portion of the potential patient population; of course, however, it still has a pretty big market. The science behind this one is pretty complicated – gene therapies normally are – but in a nutshell, the treatment is a mix of proteins that aid the clotting process. As such, it is an on demand treatment, rather than an ongoing therapy, designed to treat specific and real time episodes of heavy bleeding.

So what’s the potential for the drug from a financial perspective? Well, with an indication like VWD, its all about education. Globally, there are only 16,000 (approx.) individuals currently receiving therapy for the condition. For a disease that has an incidence rate of 1 in 100, a figure as low as 16,000 suggests a massive under-diagnosis. As a result, Baxalta is embarking on a mission to educate physicians and patients, before it fully commits to a launch. With this strategy, the company expects a slow start, with forecasts of $15 million revenues in 2016 and $30 million in 2017. However, once the company is able to market the drug to the total population (currently it is just 18 and over, and a large portion of sufferers are children) analysts forecast peak sales of $400 million.

So, moving on, let’s look at our second approval – Bendeka. This one came about as a result of a colab deal inked back in February between generics king Teva and Eagle Pharma. The deal saw Teva take over commercialization responsibility, while Eagle developed the drug to approval, with the former paying the latter a $30 million upfront fee and earmarking $90 as milestones – the vast majority for which Eagle has now presumably become eligible. The FDA approved the drug in two oncology indications – chronic lymphocytic leukemia (CLL) and B-cell non-Hodgkin lymphoma (NHL) that has progressed during or within six months of treatment with rituximab or a rituximab-containing regimen. The drug is a rapid infusion reformulation of a drug already approved in the cancer space, bendamustine (rapid infusion just refers to a one-off, IV administration that usually takes about 10-15 minutes). It is what’s called a nitrogen mustard – the same compound found in mustard gas – and targets tumor cells with the goal of inducing apoptosis.

From a financial perspective, once again, this one is not so straightforward. The current formulation of bendamustine is a Teva product, so the new formulation is effectively competing with Teva’s already commercialized product. Having said this, with the rapid infusion, it is likely Teva will convert all of its bendamustine indications (the drug is used across a range of cancers outside of CLL and NHL) to the new formulation. With the current indications, analysts forecast revenues of circa $750 million in the US. An undisclosed portion of net sales will go to Eagle, but even with the royalty payments, if Teva can expand the approval base beyond the US (these cancers both have a higher incidence rate in Europe than they do in the US) the company could easily be looking at a $1 billion blockbuster with this approval.

At time of writing, a few hours before the Thursday opening bell, Eagle is trading at a 5% loss across Wednesday’s session, Teva is up 1.2% pre market and Baxalta is up 0.6% on yesterday’s open.

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