Over the past 10 years, the Dow Jones Industrial Average has seen a 10-year climb with small calendar-year dips seen in 2015 (-2.23%) and 2018 (-5.63%), but topping out at around 28,000 toward the end of 2019. Investors can only wonder: How long can that bull market last?
This year is a U.S. presidential election. Among the leading candidates for one of the two major parties are a number who advocate a single-payer health care system. And in the run-up to the election, all candidates for both major parties are bound to make the politician’s perennial promise: To reduce drug costs for American consumers. Investors can only wonder: What’s that going to mean? (Of interest, in late December the Trump Administration issued a notice of proposed rulemaking that, if finalized, would allow the import of certain prescription drugs from Canada, including biologics.)
With those macro issues as background, in the microcosm of ophthalmic therapeutics two blockbuster drugs for treating retinal disease, Lucentis and Eylea, face patent expirations over the next few years. And those invested in this space can only wonder: What’s our micro-crystal ball say about that?
Unfortunately, like most crystal balls, the micro-crystal ball for Lucentis and Eylea offers both clarity and fogginess. Clarity, in that the market for treatment of neovascular (wet) age-related macular degeneration (AMD) is huge; fogginess in that competing treatments and biosimilars wait in the wings, and the respective strengths of the makers and marketers—and the deals that might emerge among them—are varied and often unknowable.
“The market for AMD is growing strongly as a consequence of an aging population…and is currently worth around $9 billion annually,” analyst Michael Nawrath told Reuters in October. “In the next 10 years, the market is expected to double in size.”
Anti-vascular endothelial growth factor (VEGF) drug Lucentis (ranibizumab, Genentech-Roche/Novartis), was approved by the U.S. Food and Drug Administration (FDA) in 2006. Anti-VEGF drug Eylea (aflibercept, Regeneron Pharmaceuticals/Bayer), has been chipping away at Lucentis’ market share since its U.S. approval in 2011. In 2018, Lucentis global sales were around $3.7 billion last year compared with Eylea’s $6.4 billion.
The U.S. patents for Lucentis and Eylea will expire this year, and their European patents will expire in 2022 and 2025, respectively, according to Sharma et. al.1 Eylea also comes off patent in 2022 in China and Japan.
The patent situation for Lucentis may not carry quite the urgency for Novartis (NYSE: NVS), which has ex-US marketing rights to Lucentis, as Eylea-related patents do for Regeneron (NASDAQ: REGN) and Bayer (which markets Eylea outside the US), as Novartis announced FDA approval of another anti-VEGF product, Beovu (brolucizumab), for the treatment of wet AMD last October. In its clinical trials, Beovu outperformed Eylea in terms of fluid resolution while offering similar vision gains on a 3-month dosing regimen. Some sources expect Beovu to become a “best-in-class” product, racking up almost $2 billion in sales by 2024.
Beovu’s list price is around $11,100 for the first year and $7,400 annually thereafter when injected every 3 months, an amount Novartis says is comparable to that for Eylea. Just over half of the patients on Beovu maintained quarterly dosing at the 1-year mark; the remainder went to dosing every 2 months. Eylea is also approved for quarterly dosing after the first year, although dosing once every 2 months is more effective, according to Eylea’s label. According to one report, Beovu may exceed $4 billion in sales by 2026, while others are predicting a more modest $1.3 billion in 2024.
For its part, Regeneron seems intent on milking its current patents for all it can get. Eylea may enjoy U.S. patent protection well into 2024, thanks to statutes offering 12-year exclusivity (for Eylea, the starting gun was its initial approval in 2011) as well as a 6-month extension for a pediatric indication and a high-dose formulation of Eylea now under study with a patent that extends through 2032.
In a conference call with investors last November, Regeneron CEO Leonard Schleifer was cagey. “I’m not going to comment on our patent situation here,” he said. “I can say one thing for sure—our data exclusivity runs…into 2024, so we have a reasonable runway there.”
But a 5-year runway may simply be too short. Pharma analyst DoctoRx wrote the “traditional 5-year window [is when most] analysts begin thinking of a drug’s income stream as either about to vanish (due to generics) or shrink (from biosimilars).”
Among candidate drugs competing with Lucentis and Eylea in wet AMD treatment: Roche (parent company of Genentech) is working on a “bispecific” combination anti-VEGF/Ang-2 inhibitor faricimab. Allergan and Swiss-based Molecular Partners are studying a long-acting DARPin anti-VEGF candidate abicipar. Lucentis may also gain additional life from a refillable implant Roche is developing. And Lucentis has always had to contend with the off-label use of less expensive (albeit compounded) anti-VEGF agent Avastin (bevacizumab), which has been found to have equivalent safety and efficacy as Lucentis.
Lucentis and Eylea are biologics, so will avoid generic competition. But biosimilars are on their heels, and may or may not be slowed by patent protection. Biogen (NASDAQ: BIIB) recently announced a new proposed transaction with Samsung Bioepis Co., Ltd. to secure exclusive rights to commercialize SB11, a biosimilar for Lucentis and SB15, a biosimilar for Eylea, in the United States, Canada, Europe, Japan, and Australia. In all, about six biosimilars to Lucentis and Eylea are under development.
Unlike drugs approved under a new drug application (NDA), biologics approved under a biologics license application(BLA) are not required to list related patents with the FDA. Here’s what the FDA website says about biologics:
In contrast to chemically synthesized small molecular weight drugs, which have a well-defined structure and can be thoroughly characterized, biological products are generally derived from living material—human, animal, or microorganism—are complex in structure, and thus are usually not fully characterized.
The situation forces stakeholders to consider a number of important questions: 1) How similar, really, is a biosimilar? 2) How safe and effective is the biosimilar going to be relative to the original biologic? And 3) How much are the foundational patents for biologics really worth?
These questions may be especially important to investors in Regeneron. Will Eylea, which produces about 60% of Regeneron’s sales, fall to biosimilars in 2023-24? Or will Regeneron’s dosing patent, which expires in 2032, limit or prevent biosimilars from effectively competing with Eylea throughout the period?
At this point, the bulls forecast growth for Eylea through 2022-23 while the bears see declines starting just about now. The consensus view is for a gradual decline in Eylea sales beginning next year.
The micro-crystal ball sees but one fact clearly: That wet AMD, in an ever-aging population, currently affects 20 million people worldwide.
- Sharma A, Reddy P, Kuppermann BD, Bandello F, Lowenstein A. Biosimilars in ophthalmology: “Is there a big change on the horizon?”.sClin Ophthalmol. 2018;12:2137–2143. Published 2018 Oct 24. doi:10.2147/OPTH.S180393