Get ready for a wave of new blockbuster drugs in 2018.
At least nine new drugs are expected to launch this year that have the potential for sales to top $1 billion by 2022, according to market research firm EvaluatePharma. Gilead Sciences (GILD 1.06%), Novo Nordisk (NVO -0.86%), Incyte (INCY -0.53%), AbbVie (ABBV 0.76%), and Celgene (CELG) stand to make plenty of money from five of those drugs, assuming everything goes smoothly with the regulatory approval process. Here's which drugs should be the biggest of all -- and how you can profit from the companies that make them.
Gilead Sciences' bictegravir/F/TAF combination stands at the top of the list of highly anticipated drug launches of 2018. The big biotech expects a decision from the FDA for its new HIV drug by Feb. 12. EvaluatePharma projects bictegravir/F/TAF could generate sales topping $5 billion by 2022.
The drug should be the latest in a string of blockbuster HIV drugs developed by Gilead. However, the company's CEO, John Milligan, thinks that it will be its best ever. Milligan stated in November that the bictegravir/F/TAF combo will become "the most important product out there" in the HIV market. It's no wonder that the biotech has referred to the drug as its "Mount Everest."
2. Semaglutide (Ozempic)
Novo Nordisk's semaglutide could be the second-biggest launch of the year. The Danish drugmaker won FDA approval for the type 2 diabetes drug on Dec. 5. Novo Nordisk expects to launch semaglutide under the brand name Ozempic in the first quarter of 2018. EvaluatePharma thinks Ozempic could haul in more than $2.7 billion in annual sales by 2022.
Ozempic is a longer-acting version of Novo Nordisk's enormously successful diabetes drug, Victoza. But while Victoza must be taken once daily, Ozempic only has to be taken once per week. This convenience, combined with excellent efficacy in reducing blood sugar levels and helping patients lose weight, should make Ozempic a big winner for Novo Nordisk.
Incyte's epacadostat is probably the most eagerly anticipated cancer immunotherapy to watch this year. EvaluatePharma projects 2022 sales of close to $2 billion. However, Incyte probably won't make a lot of money from its promising IDO inhibitor in 2018.
Results from a late-stage study of epacadostat in combination with Merck's Keytruda as a first-line treatment of metastatic melanoma are expected in the first half of the year. To launch before the end of 2018, Incyte and Merck would need three things to happen: (1) achieving positive results in the late-stage study, (2) filing for regulatory approval almost immediately afterward, and (3) gaining priority review from the FDA for a decision within six months instead of the standard 10 months. All three prerequisites could be checked off successfully, but even if they are, Incyte will only see a short period for sales of epacadostat this year.
AbbVie already claims a tremendously successful cancer drug with Imbruvica. The company hopes to add another to its lineup this year with Rova-T (rovalpituzumab tesirine), which EvaluatePharma thinks will make over $1.4 billion by 2022. AbbVie has even higher hopes for the drug, estimating that Rova-T could eventually hit peak sales of $5 billion.
But will AbbVie launch Rova-T this year? Maybe. The company should announce results from its pivotal study evaluating the drug as a third-line treatment of small cell lung cancer in the second quarter. Assuming all goes well, AbbVie expects to launch Rova-T either in late 2018 or early 2019.
Celgene plans to expand into a new indication -- multiple sclerosis (MS) -- with ozanimod. It could be a lucrative addition: EvaluatePharma expects the drug will generate revenue close to $1.3 billion by 2022. Celgene planned to file for U.S. regulatory approval by the end of 2017 (although there hasn't been an official announcement of the submission), with a European filing coming in the first half of this year.
Ozanimod could carve out a niche in the MS market as an oral medication with solid efficacy and a good overall safety profile. Celgene also hopes the drug will prove to be successful in treating ulcerative colitis and Crohn's disease. If ozanimod eventually wins approval for all three indications, it could become Celgene's next megablockbuster in a few years.
How you can make money, too
It's no big secret how investors can profit from the launches of new drugs: Just buy the stocks of the drugmakers before the launches. However, how much money you can make varies significantly.
AbbVie and Novo Nordisk both saw their stock prices soar more than 50% in 2017. However, Gilead and Incyte only had low single-digit percentage gains last year, while Celgene stock fell nearly 10%. Successful launches of new drugs would arguably have more impact for the lower performers from last year.
But you also need to consider the impact of the new drugs for each company. EvaluatePharma's projection of $1.4 billion in sales for Rova-T by 2022 amounts to only 5% of AbbVie's estimated total 20217 revenue. That's not enough to move the needle much. On the other hand, a successful launch of epacadostat could be huge for Incyte.
Which are the best bets? I like AbbVie, but Rova-T isn't the main reason to buy the stock. Incyte's future hinges in large part on how well epacadostat performs in combination with Keytruda in treating melanoma. Positive results would likely light a fire beneath the stock, but there is definitely a risk that things won't turn out that well.
In my view, Gilead Sciences and Celgene are the best alternatives for investors to play the expected new drug launches this year. I think Gilead Sciences is a bargain. A solid launch of the bictegravir/F/TAF combo could be quite helpful for the stock, especially if Gilead's hepatitis C franchise sales are smoother as John Milligan predicted in November. Celgene had a lot of bad news in the last few months of 2017. I think that approval and a successful rollout of ozanimod should give the stock a nice boost.