Innovative treatments have transformed HIV from a death sentence to a manageable condition for at least 20 million people taking them today. Unfortunately, around 25,000 Americans have infections that resist everything available.
For this underserved group, the FDA recently approved a new drug that breaks a lot of conventions. For starters, Trogarzo isn't from Gilead Sciences, Inc. (GILD 0.81%) or GlaxoSmithKline plc (GSK 1.08%). In fact, it's the first new biologic drug Americans will buy from a Chinese facility that bears an FDA stamp of approval.
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Trogarzo is also the first new HIV treatment to attack the virus from a different angle in at least a decade. Although this drug might not be a major threat to industry leaders on its own, investors will want to keep their eyes open for the collaborators' next moves.
Threat assessment
Trogarzo treatment will require a trip to a healthcare provider every other week to receive an intravenous infusion. Gilead's Biktarvy and Glaxo's Juluca are easy-to-swallow pills intended for patients with infections still considered treatable. With this in mind, the threat to either of these big drugmakers barely registers.
That doesn't mean Trogarzo isn't a big deal for patients with resistant HIV infections. In trials leading to its approval, 83% of patients given the new treatment showed huge decreases in viral load at 13 days, and 43% were considered "virally suppressed" at 25 weeks. Remember, these were infections that didn't respond to anything available when the patients started treatment.
The drug formerly known as ibalizumab is the first antibody from TaiMed Biologics to reach commercialization. The Taiwanese company has enlisted Quebec's Theratechnologies Inc. (NASDAQOTH: THERF) to market the drug in the U.S., EU, and Canada. A small yet highly motivated patient population gives it nine-figure peak sales potential.
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On your marks
For biopharma stock owners, the most important thing about Trograzo will be where it's made. TaiMed outsourced manufacturing of its drug to WuXi AppTec, a privately held company that runs the first FDA-approved biologics factory in China to manufacture a commercial product.
The rapid ascent of WuXi AppTec, and China's biopharma sector in general, are going to shake up a global prescription drug market expected to reach $1 trillion in just a few years. China recently surpassed Japan as the second largest market for prescription medicines, but it's still one-fourth the size of the U.S. market. The China Food and Drug Administration (CFDA), China's equivalent of the FDA, has rolled back rules that were holding the sector back.
Selling drugs owned by another company, and perhaps manufactured by a third, is standard practice for Western biopharmaceutical companies. Until recently, the Chinese government had regulatory roadblocks in place that made such collaborations nearly impossible, even when all companies were headquartered on the mainland. For example, the Trogarzo that Wuxi manufactures in China would be illegal to sell on the Chinese mainland under the old rules.
The CFDA has also changed its stance on foreign data. In the past, clinical trial programs that had already succeeded globally needed to be repeated on the Chinese mainland. As a result, nearly two-thirds of new drugs the FDA approved between 2001 and 2016, still aren't available.
How to ride the trend
Years from now we'll probably look back at 2018 as the year China's biopharma industry woke up. Although you can't buy shares of any companies involved with Trogarzo on a major U.S. exchange, BeiGene Ltd.'s (BGNE -1.49%) ADRs do.
The Beijing company recently signed a major pact with Celgene (CELG) that will allow it to market the U.S. biotech's cancer drugs throughout China. Celgene earned a CFDA approval for Revlimid that makes it available for newly diagnosed multiple myeloma patients just a few weeks ago. This indication helped global sales of the drug reach $8.2 billion last year.
The ability to sell Celgene's drugs isn't the only reason BeiGene stock is soaring lately. It also boasts a deep pipeline of experimental new cancer therapies in late-stage development. Get ready for a flurry of activity from this red-hot biotech, and its peers.
