Jazz’s Vyxeos rollout hit a wall in Q3. What’s the holdup?

Jazz’ Vyxeos treats acute myeloid leukemia, a rapidly changing area in cancer. (National Cancer Institute)

Jazz Pharmaceuticals has a couple of new selling points—and a bigger supporting salesforce—for its leukemia drug Vyxeos, so why did sales fall so far short of expectations in the third quarter? Because it’s facing some new barriers to access, too.

The combination chemo drug, approved to treat acute myeloid leukemia (AML), brought in just $21 million, almost $10 million short of some analyst estimates and a decline from second-quarter total. And that’s despite strong backing in the National Comprehensive Cancer Network’s influential guidelines, plus trial data that actually shows the combo works better than its two components given alone.

Still, the drug’s growth didn’t measure up. The company and analysts alike cut their expectations for this year, and though Jazz maintained that the slowdown wouldn’t hit long-term sales, some pharma watchers weren’t convinced.

As a drug used in hospitals, Vyxeos faces particular challenges, including disease-code reimbursements that incentivize lower-cost treatments. Facilities “thus tend to be cautious on using expensive products,” Bernstein analyst Ronny Gal wrote in a note after earnings were announced. “Indeed, per Jazz, restricting use in hospitals led to a decline in absolute revenue and is the reason sales are down.”

Commercial chief Michael Miller offered some details on that during Jazz’s earnings call. “A number of institutions” have rolled out barriers to Vyxeos restricting the drug to “very much on-label use.” And that means patients have to be over the age of 60—outpatient only, which keeps costs down—and patients on their way to transplants, which are expensive.

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“Those are examples of the kind of restrictions that are being put in place that I think were a bit of a surprise to us,” Miller said when asked why third-quarter sales fell short of earlier projections. “[W]e all got off to a very good start in the year and then these were raised.”

Now, Jazz expects Vyxeos sales to amount to $95 million to $110 million in 2018, down from $115 million to $135 million. Leerink analysts cut expectations for 2019 by $41 million and brought down 2023 estimates to $438 million from $469 million.

Gal is more pessimistic; his projection for 2023 sales amounts to $273 million.

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To jump-start sales, Jazz has amped up the size of its hematology and oncology sales team, aiming to blitz hospitals and doctors with its Vyxeos case, CEO Bruce Cozaad said during the call.

“Our plan includes significant account-by-account education and outreach to ensure that leukemia treaters understand, one, the superiority of Vyxeos to standard chemotherapy and secondary AML patients as fully supported by AML key opinion leaders and the only category 1 recommendation in the NCCN AML guidelines; two, the full breadth of the appropriate patient population for Vyxeos; and three, importantly, how to use Vyxeos for optimal outcomes,” he said.

One new development could offer a boost, too, executives and analysts said: A new add-on payment code that will give providers an extra margin on reimbursement. That approval just came through Oct. 1.

Nonetheless, it’ll take time for Jazz to turn things around, Leerink’s Ami Fada wrote in Wednesday’s note. And as Wells Fargo analyst David Maris wrote, “more physician education may be required for longer than originally anticipated in order to maximize that opportunity.”