Epcoritamab, a cancer drug co-developed by AbbVie (ABBV -4.58%) and Genmab (GMAB 2.51%), was recently given the green light by the Food and Drug Administration to be used as a treatment for adults with relapsed or refractory (R/R) diffuse large B-cell lymphoma (DLBCL).
What could this news mean for patients diagnosed with R/R DLBCL? And how much of a lift in sales could it provide to the pharmaceutical companies? Let's drill down into the efficacy of epcoritamab (marketed as Epkinly) and this specific lymphoma market to find out.
A powerful treatment for a significant medical need
Of all blood cancers, lymphoma is the most common. The disease impacts lymphocytes, which are a type of white blood cell that protects the body from bacteria and viruses. Lymphoma generally happens when lymphocytes mutate, which leads to a cell replicating more rapidly than a normal lymphocyte.
While symptoms vary from patient to patient, lymphoma is often accompanied by swelling of the lymph nodes, fevers, and a lack of energy. That is why some patients initially believe they have a cold or flu that is persisting. DLBCL is the most common type of non-Hodgkin's lymphoma, accounting for around 30,000 cases in the U.S. in 2022.
The most prominent first-line treatment for patients with DLBCL is an antibody sold by Roche and Regeneron called Rituxan combined with chemotherapy. But as is the case with any treatment regimen, not all patients experience optimal outcomes from it. Approximately 40% of patients either don't get results on the treatment (e.g., a refractory case) or they relapse -- a worsening of health after an initial improvement.
The good news is that more therapies like Epkinly are making their way to the market. In its phase 1/2 clinical trial, the drug had an overall response rate of 61%. That means a significant majority of patients achieved at least some improvement in their conditions, including 38% who showed no signs of cancer after treatment. Considering that most patients (82%) enrolled in the clinical trial had no response to their prior treatment, these results are potentially game-changing.
Image source: Getty Images.
Multibillion-dollar annual sales potential
Due to Epkinly's tremendous efficacy, analysts at SVB Securities think that the drug could reach peak annual sales of $3 billion in the U.S. Given that tens of thousands of patients could benefit from treatment with Epkinly, this doesn't seem to be an unreasonable projection.
For Genmab, up to $1.5 billion in additional annual revenue would be a major shot in the arm. Analysts expect $2.3 billion in total sales from the company in 2023. And even for a larger company like AbbVie, which is forecast to have $52.7 billion in total revenue in 2023, Epkinly sales at that level would move the needle.
Investors should consider both AbbVie and Genmab
With Genmab poised to deliver 27% annualized earnings growth over the next five years, the stock looks to be a buy. This is especially the case since its forward price-to-earnings (P/E) ratio is merely 3, which is well below the drug manufacturing industry's average of about 13.
As far as AbbVie stock is concerned, it could be a no-brainer buy for income investors. This is because the Dividend King's yield at its current share prices is an S&P 500 index-tripling 4.5%, and trades at a forward P/E ratio of just 12.
