GSK withstands Advair generics thanks to new respiratory meds, Shingrix

GlaxoSmithKline GSK House in Brentford, UK
GKS's respiratory franchise holds its ground amid Advair generic attack, as its oncology business takes shape. (GlaxoSmithKline)

GlaxoSmithKline's been dreading generic Advair for years, but thanks to its newer respiratory meds and the fast-launching Shingrix vaccine, the company's top line is so far managing to hold its own.

Mylan launched Wixela Inhub, the first true Advair copycat, in February, and sales of the GSK behemoth plummeted a whopping 61% in the U.S. in the second quarter, to merely £105 million ($131 million). And the new generic put pricing pressure on all similar products, dealing a blow to the rest of GSK's respiratory franchise. Overall, sales of newer respiratory drugs—not counting established meds such as Advair and Ventolin—dropped 2% in the U.S. for the quarter.

Still, strong growth from triple-combo Trelegy and biologic Nucala helped push GSK's newer respiratory therapies up by 12% to £752 million. That, along with Shingrix's continued surge and aid from its HIV franchise pushed GSK sales up 5% at constant exchange rates to £7.8 billion.

Nucala racked up £195 million in the quarter, up 33% at unchanged currencies and 10% ahead of analysts’ consensus as quoted by Jefferies. In June, the FDA approved two new self-administered versions of Nucala—an autoinjector and a prefilled syringe—helping level the ground in its competition with AstraZeneca’s rival med Fasenra.

But the AZ drug, which already boasts a dosing frequency advantage over Nucala—once every eight weeks for Fasenra versus once every four weeks for Nucala—is not far behind. A few days ago, it received EMA backing for its own autoinjector option and is expecting an FDA decision soon this year.

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Trelegy, the three-in-one respiratory drug GSK hopes could be the next big thing, made £120 million in the quarter, also above the Street’s previous consensus. The drug could move into asthma soon after a phase 3 head-to-head trial against sister drug Breo Ellipta met its primary endpoint.

But while Trelegy did better at improving lung function, it failed to significantly top Breo at reducing symptom exacerbations, even though the trial turned up a numeric advantage. Still, GSK is preparing to file for FDA approval based on the data this year.

Growth from shingles vaccine Shingrix again wowed analysts, with £386 million in Q2 sales beat their estimates by 5%. With that, the shot could well exceed $1 billion next quarter—even though it just won FDA approval in late 2017.

Plus, in May, Shingrix won a go-ahead in China, where an estimated 3 million adults are affected by the painful condition each year. The payoff from that green light won't come till next year, though, because GSK's holding off on a launch until 2020. GSK is still working to ramp up production to meet demand elsewhere.

GSK has been under pressure to produce new blockbusters as Advair caves in to generic attack. The company's hoping its HIV franchise can amp up as a growth driver—or the franchise's new two-drug regimens, to be specific. But revenue from its Tivicay-based products came in flat, with only an £89 million contribution from two-drug therapies Juluca and Dovato.

RELATED: Can new Dovato data jump-start uptake of 2-drug HIV regimen? ViiV hopes s

The British drugmaker has been trying hard to shift the treatment paradigm from traditional three drugs to two drugs. But as ViiV Healthcare Chairman David Redfern said on a separate call with analysts, “it takes time to build momentum as physicians gain experience” with two-drug regimens, which he stresses will be where future growth will be coming from.

The company could see an uptick as it unveils more Dovato data showing the drug works as well as TAF-based three drugs—including Gilead’s fast-growing Biktarvy—at controlling HIV in virally suppressed patients.

“We remain fundamentally confident about the growth potential of this business,” CEO Emma Walmsley said of the HIV drugs during a Wednesday briefing with reporters.  

RELATED: GSK's Zejula racks up first-line maintenance win in ovarian cancer, even in non-BRCA patients

Another big hope lies in oncology after the company shelled out $5.1 billion to take in Tesaro, maker of PARP inhibitor Zejula. In Q2, the drug also fell short of estimates by 11% and turned in £57 million.

While it still lags far behind AZ and Merck’s rival med Lynparza, a major upside is on its way and could move Zejula into a much bigger market. In the phase 3 Prima trial, Zejula showed it could significantly stall ovarian cancer’s progression as a maintenance therapy in patients who responded to chemo—regardless of their biomarker status. Currently, only about 15% of patients with germline BRCA mutations are eligible for PARP inhibitors. But the trial showed Zejula worked even in those without the biomarker.

A filing for Zejula in that setting is among six GSK has planned in the rest of 2019, including Trelegy in asthma.

Meanwhile, its PD-1 inhibitor dostarlimab, acquired with Tesaro, its anti-BCMA antibody-drug conjugate and its TCR-T cell therapy NY-ESO are all either at the filing stage or in various mid- and late-stage clinical trials.