Another Zolgensma delay is bad for Novartis in SMA but good for Biogen's Spinraza: analyst

Zolgensma
Novartis' gene therapy Zolgensma for SMA has gotten off to a strong start, but the company will need the FDA's approval of an intrathecal version in order to expand the market to older patients. (Novartis)

Novartis has been working hard to expand the market for Zolgensma, its gene therapy to treat spinal muscular atrophy (SMA), by seeking approval for a version of the product that could be delivered by intrathecal (IT) injection directly into the spine. But now it could be facing a roadblock at the FDA.

The company told investors earlier this week that it would meet with the FDA sometime this quarter to discuss what would be required for the agency to lift a clinical hold it placed on a phase 1/2 trial of Zolgensma IT last October. Depending on the scope of what’s required, the company won’t be able to file for approval until the second half of this year—or possibly next year.

That news prompted analysts at SVB Leerink to revise its predictions of when the first SMA patients would be able to receive Zolgensma IT. That will no longer happen in the first quarter of 2021, they said in a note to investors, but rather a full year later. And all the patients that might have chosen gene therapy to treat their SMA will migrate instead to Biogen’s blockbuster drug Spinraza.

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As a result, SVB Leerink now predicts Spinraza revenues will peak in 2022 at $2.4 billion, not $2.2 billion as they originally estimated. The firm lowered its estimates for Zolgensma sales to $1.03 billion from $1.65 billion in 2021. For 2022, they estimate Zolgensma will bring in $2.05 billion, not the $2.27 billion they hoped it would.

RELATED: Zolgensma safety scare hits Novartis again as FDA halts spinal injection trial

Zolgensma is currently approved as an infusion for children younger than two. Novartis has been testing the IT version in the hopes of getting an approval for SMA type 2 patients who are up to five years old, and analysts have high hopes for the potential of intrathecal delivery to expand the product’s market.

SVB Leerink, for one, predicted last year that 39% of Zolgensma’s $2.7 billion in predicted peak sales would come from the treatment of late-onset SMA in older patients.

But the FDA slapped a partial clinical hold on the Zolgensma IT trial last October, citing safety concerns from a preclinical trial. Some of the animals developed dorsal root ganglia mononuclear cell inflammation, Novartis reported, a problem that can cause sensory issues. The company has not seen the issue in people so far, the company said at the time.

To make matters worse, Novartis acknowledged that the safety issue had been discovered last March and mistakenly left out of an update the company provided to the FDA. The delay in reporting brought back bad memories of a similar incident that occurred with the original version of Zolgensma. In that case, the FDA alleged that some data from animal trials had been falsified in the approval package for Zolgensma and that Novartis didn’t inform the agency about the problem until after the drug was already approved.

Luckily for Novartis, the FDA decided earlier this week that it would not take enforcement action against the company after all. A multifaceted FDA review reassured the agency that Novartis had achieved an acceptable level of compliance and that Zolgensma is safe and effective.

RELATED: Novartis touts strong Zolgensma performance and an ambitious plan for China

That news followed two positive milestones for Zolgensma that Novartis reported last week. The company said that in a trial of the IT version of the product, nearly all patients between two and five who received one of the tested doses met the trial’s primary endpoint of a meaningful improvement in mobility. One patient was able to walk without assistance, the company said.

Novartis also reported interim data from a trial of the marketed version of Zolgensma in which patients received the gene therapy before showing symptoms. The company said eight out of 14 patients with two copies of the SMN2 gene could sit without assistance and four of them could walk. Novartis presented the findings from both trials virtually at the Muscular Dystrophy Association (MDA) annual conference, which was moved online due to COVID-19.

Now, the latest delay hitting Zolgensma IT threatens to put a crimp in the franchise’s impressive run so far. In the fourth quarter, Novartis surprised analysts by recording $186 million in Zolgensma sales—beating expectations of $177 million. That helped calm worries that the product’s $2.1 million list price would turn off insurers. Still, the company will need the FDA’s blessing on Zolgensma IT to expand the market to include older patients.

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