Does Valeant have the ad dollars to keep Siliq competitive in psoriasis?

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Valeant's Siliq will go up against Humira, which regularly tops pharma's monthly list of TV ad spenders.

Yes, Valeant has a safety warning weighing down new psoriasis med Siliq as it prepares to enter the market. But it’s got another issue, too: the fact that it’s going up against some major spenders in the field.

When it launches, Siliq will take on fellow IL-17 meds Cosentyx from Novartis and Taltz from Eli Lilly, but it will also have to contend with the anti-TNF giants—AbbVie’s Humira included. As Wells Fargo analyst David Maris pointed out last month in a note to clients, the Illinois pharma spent $357 million on Humira advertising in 2015 alone.

It also regularly tops pharma’s TV ad spending list, shelling out $35 million in January, according to tracker iSpot.tv.

That could be a problem for a company in financial straits as dire as Valeant’s; the debt-laden company has been plagued by default concerns since last year, thanks to years of debt-fueled M&A dealmaking under former skipper J. Michael Pearson.

And while the company plans to keep its SG&A spending in 2017 between $2.6 billion and $2.7 billion, it’s got some other key priorities this year, too: It’s planning to relaunch flopped female libido drug Addyi, and it’s expanding its primary care sales force for lead med Xifaxan in the wake of canceled GI unit deal talks with Japan’s Takeda.

The financial concerns add to the safety burden Valeant is already facing with its psoriasis newcomer. The med comes along with a black-box warning on suicide risks and a substantial risk-managing program, under which physicians and pharmacies will have to be certified to prescribe and dispense the med and patients will have to sign informed consent agreements before taking it.

All things considered, “we believe Siliq is a sub-competitive drug in a competitive market that Valeant cannot afford to compete in,” Maris wrote following the product’s February FDA approval.

Valeant’s management, though, thinks Siliq can stand out from the crowd based on its clinical benefits. As CEO Joseph Papa told investors on the company’s Q4 conference call, Siliq—unlike its IL-17 peers—is a receptor-blocker, and “when you can actually block the receptor, you tend to get a better, a quicker response and also a response that is more durable.”

And some analysts agree. “Siliq offers differentiation on efficacy parameters relative to competitors,” Barclays’ Doug Tsao wrote to clients, noting that though Valeant is splitting profits down the middle with developer AstraZeneca, “the 90% profit margins and relatively concentrated prescriber base make Siliq an attractive opportunity even if Valeant can get 5% to 10% market share.”