When a whole new class of cholesterol-lowering drugs called PCSK9 inhibitors gained approval from the Food and Drug Administration (FDA) in 2015, it was touted as the biggest breakthrough in the fight against heart disease since the invention. statins. The launch of PCSK9 inhibitors has been accompanied by sales forecasts of over $ 1 billion. However, revenues fell far from blockbuster status, leaving drugmakers Amgen Inc. (AMGN -1.53% ), Regeneron Pharmaceuticals (REGN -1.55% ), and Sanofi SA (SNY -1.10% ) in a complicated situation.
Lately, sales of PCSK9 drugs have started to accelerate, which is rekindling investor interest. Will these drugs finally keep their promise?
What theyre doing
PCSK9 inhibitors lower cholesterol by increasing the number of bad cholesterol receptors in a patient’s liver. They do this by inhibiting the activity of a gene responsible for creating a protein that naturally breaks down these receptors. In trials, adding PCSK9 inhibitors to statins has been shown to be particularly effective, with their use lowering bad cholesterol levels by an additional 60%.
It is important to note that large studies of cardiovascular outcomes have been conducted to show that the ability of PCSK9 inhibitors to lower cholesterol also reduces the risk of heart attack, stroke, or death. These studies turned out to be conclusive, leading doctors to increasingly consider their use in patients at risk for heart disease.
A large market to target
Cholesterol lowering drugs are the most prescribed drugs in the world. In the United States alone, about 1 in 5 people aged 40 to 75 are prescribed statins. Their widespread use has been a boon to their developers, but no manufacturer has benefited more than Pfizer, the company that markets Lipitor.
Lipitor gained FDA approval in 1996 and did not lose patent protection until 2011. From 1996 to 2012, it generated more than $ 140 billion in sales for Pfizer, including nearly $ 14 billion. dollars per year at its peak.
The list of billion dollar cholesterol drugs is long. Crestor saw peak sales of $ 6.6 billion per year, Pravachol reached nearly $ 3 billion in peak annual sales, and Zocor saw peak sales of around $ 4 billion. Merck & Co.Zetia, a drug that can be used as an adjunct to statins, also steadily sold for over $ 2 billion a year before losing patent protection.
PCSK9 drugmakers go head-to-head
Regeneron and Sanofi received FDA approval for their PCSK9 inhibitor Praluent in July 2015, and Amgen Repatha’s PCSK9 inhibitor did not get the regulatory green light until about a month later. The two drugs were launched with similar prices of around $ 14,000 per year, a price that surprised many people as statins cost hundreds of dollars per year, thanks to the availability of generics.
The drug makers have argued that the price of Repatha and Praluent is reasonable given that statins do not work well for millions of people and their side effects often cause patients to stop them. This exposes payers to higher costs if the discontinuation results in more heart attacks or strokes. In addition, the drug makers have stated that a high price for these drugs is necessary because PCSK9 inhibitors are complex biologics grown in living organisms that are expensive to manufacture.
These arguments did not convince the payers, however. Unwilling to spend money on drugs they weren’t sure would reduce major heart events or deaths, insurers created barriers to patient access that limited the use of Repatha and Praluent. Insurers justified their actions by claiming that the widespread use of PCSK9 inhibitors could actually break the bank.
They’re right. There are over 10 million Americans who could benefit from further reduction in bad cholesterol, but at $ 14,000 per year, it would cost payers $ 140 billion per year to treat so many patients!
The traffic jam is broken
The ability of payers to block the use of PCSK9 inhibitors has declined dramatically over the past year following results from cardiovascular outcome studies that prove Repatha and Praluent can reduce cardiac events or save lives. Amgen reported data on cardiovascular outcomes for Repatha in early 2017, showing that Repatha reduces the risk of heart attack by 27%, stroke by 21% and coronary revascularization by 22%. Based on these results, the FDA approved Repatha for the prevention of heart attack or stroke in December 2017.
Regeneron and Sanofi unveiled the results of cardiovascular results for Praluent in March 2018. In their study, Praluent also reduced the risk of major cardiac events, and there was an observed reduction in overall mortality of 29% in patients with stubbornly high bad cholesterol levels who were north of 100 mg / dl. It is expected that when these results are submitted to the FDA, the regulator will also approve Praluent for the prevention of cardiac events.
In addition to having evidence of improved results, drugmakers also seem willing to seriously cut prices to increase volume. On March 10, Regeneron and Sanofi announced that they would discuss various options, including price reductions, with payers, and on May 1, Express scripts has agreed to make Praluent the proprietary PCSK9 inhibitor for the 25 million patients enrolled in regimens based on the Express Scripts drug formulary.
In exchange for the exclusivity, Express Scripts gets an undisclosed – and possibly significant – discount. Prior to this deal, payers would have paid around $ 9,000 per year for Praluent after rebates and rebates, and I bet the price of Express Scripts will be much lower than that.
Increase in sales
Both Repatha and Praluent’s revenue made great strides in the right direction last year, and sales have started well so far in 2018.
In 2017, Repatha’s global revenue was $ 319 million, up 126% year-on-year, and Praluent’s global sales to $ 194 million, up 68% year-on-year. In the fourth quarter of 2017, Repatha’s sales grew 69% to $ 98 million, giving it an annualized sales rate of nearly $ 400 million. Praluent’s sales grew 53%, to $ 63 million, giving it an annualized execution rate of nearly $ 250 million.
Sales momentum also continued in 2018. In Q1 2018, Repatha’s global sales were $ 123 million, up 151% year-on-year, while Praluent sales were $ 60 million. dollars, up 67% year on year.
Are these actions a buy?
The demand for PCSK9 inhibitors is growing, and that’s good news for both of these companies. But there is a fly in the ointment that investors should be aware of.
Amgen is stung in a heated patent battle against Regeneron and Sanofi. While the companies are currently awaiting an appeal decision, the court sided with Amgen in early 2017, telling Regeneron and Sanofi they had to withdraw their drug from the market. The appeal from Regeneron and Sanofi has delayed this order, but uncertainty remains as to how this will play out in the court system. If the two companies do not agree beforehand, a new jury trial is expected to open in February 2019.
It should also not be ignored that all of these companies are biopharmaceutical giants, so despite PCSK9 inhibitors generating hundreds of millions of dollars, their ability to make a difference for these companies is limited.
Nonetheless, the story of PCSK9 is compelling. Once the patent litigation is over, investors will want to consider taking stock in one or both of these companies.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Questioning an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.