Gilead Sciences ($GILD) knows how to sell antiviral drugs. Its multibillion-dollar HIV business boasts some of the biggest launches in recent history. And its newly minted hepatitis C drug Sovaldi? The wildly successful treatment is expected to hit $10 billion this year, its first on the market--and thanks to that, Gilead is forecasting 2014 sales roughly double its 2013 results.
Now, Gilead faces a different sort of challenge. Armed with a brand-new FDA approval for its blood cancer drug Zydelig (idelalisib), Gilead will take on the oncology market. That won't be easy.
Zydelig is a first-in-class PI3k inhibitor, and it has some impressive data to trot out for physicians: Adding the drug to Roche's ($RHHBY) Rituxan, a standard chronic lymphocytic leukemia treatment, held off cancer growth twice as long as Rituxan alone: 10.7 months compared with 5.5 months. Zydelig's overall response rate came in at 81%, way ahead of Rituxan's 13%. Many recent--and very successful--cancer launches delivered far less.
Plus, the FDA's green light doesn't just cover relapsed CLL, but two types of non-Hodgkin's lymphoma, in patients who've already used at least two other therapies. Coming out of the gate with three indications gives Gilead more selling points and a bigger market. EvaluatePharma estimates put Zydelig sales at $1.2 billion by 2020. Other analysts predict a higher and faster growth curve: $1.5 billion by 2017.
But Zydelig faces formidable competition. Johnson & Johnson's ($JNJ) Imbruvica (ibrutinib), approved last November for mantle cell lymphoma and in February for CLL, has already staked a claim in the leukemia and lymphoma market. That's Zydelig's head-to-head competition. More of that could be coming, with AbbVie's ($ABBV) ABT-199, another Rituxan add-on, skipping toward approval.
Plus, cancer docs are a different breed from infectious disease specialists, hepatologists and others who treat HIV and hep C. According to ZS Associates research, oncologists are the the toughest for reps to reach. A sizable number of oncology practices bar sales reps completely. Those cancer docs who do see salespeople are more likely to require appointments to visit than any other specialists.
And then there's Zydelig's black box. The FDA is requiring a boxed warning on the new drug, to highlight some serious risks, including potentially fatal liver problems. The warning will also mention colitis, lung inflammation and severe diarrhea. Imbruvica doesn't have a black box, and that "might mute some of the initial launch" for Zydelig, RBC Capital Markets analyst Michael Yee wrote to investors. Yee figures that Gilead will end up capturing 10% to 20% of the market.
Gilead seems to recognize the challenge. It has priced Zydelig slightly lower than Imbruvica and another competitor, at $7,200 compared with $8,200, Bernstein analyst Geoffrey Porges said in an investor note.
Porges figures that the lower price reflects the fact that Zydelig will be used as part of a combo regimen, with Rituxan or another med--and that would push the total cost of therapy up to $12,000 per month. This contrasts with Gilead's typical premium pricing on its HIV and hep C meds--both of which are used as part of a cocktail. At the lower price, Porges predicts $1.5 billion in Zydelig sales by 2017.
- read the Gilead release
- see the FDA statement
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