Mylan finally crosses the finish line with long-awaited generic of GlaxoSmithKline's Advair

As Leerink Partners analyst Ami Fadia put it in a note to clients Wednesday afternoon, Godot is finally here. And that Godot is generic Advair.

After a slew of rejections and delays, the FDA approved the first copycat of the GlaxoSmithKline respiratory blockbuster, and it was Mylan’s version—dubbed Wixela Inhub—that crossed the finish line.

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While Mylan had promised recently that an approval was near, investors had their doubts given the company’s “inability to call approval timing,” RBC Capital Markets analyst Randall Stanicky wrote in a note to clients. Regulators had already struck down the candidate twice, first snubbing it in March of 2017 and then again last summer.

But they seemed pleased Wednesday, sending Mylan’s shares up by more than 7% at market close.

Still, the generic Advair opportunity isn’t what it once was, Evercore ISI’s Umer Raffat wrote in his own note to clients. He predicted the knockoff could generate close to $250 million in 2019, while Fadia modeled an even lower $170 million in 2019 sales.

“We know GSK has been aggressively discounting in this market,” he wrote, pointing out that when Mylan launches, many contracts could be locked in. “I've heard feedback from payors that GSK has worked very hard to lock in >80% of Part D plans using B4G (brand for generic) contracts for 2019 at least.  Part D represents ~40% of market,” Raffat said.

In an interview earlier this month, David Redfern, GSK’s chief strategy officer, called the room under the curve for generic Advair “very, very limited.”

But the OK does more than pad Mylan’s top line, Raffat noted. “Many investors had looked at this approval as a gauge for ‘management credibility,’” he said, adding that the green light “gets an overhang out of the way and really allows the Street to focus on the true long-term drivers: biosimilar Neulasta, Herceptin and Lantus.”

Plus, Novartis—which has also been thwarted to this point in an attempt to bring a generic to market—Wednesday morning said that it now expects its own copy in 2020 rather than 2019, giving Mylan a “greater runway for a large opportunity,” Stanicky said. The FDA has also turned away partners Hikma and Vectura, last year requesting an additional clinical endpoint study.

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Meanwhile, for GSK—whose investors fretted for years about what a generic would do to sales—“it’s almost become a non-issue” thanks to discounting, Redfern said earlier in the month.

“It’s not even a story for investors anymore. The whole story has moved on,” he said, noting that the British drugmaker had already factored a generic entry into its guidance and outlook.

“I think Advair in the U.S. is about £1.2 billion, give or take,” he said, “and it was about £3.5 billion at it’s peak. So you can only lose it once.”