With patent expiration looming for AbbVie's (NYSE:ABBV) mega blockbuster autoimmune drug Humira, ensuring a full pipeline of promising replacements is vital to maintaining sales momentum. As a result, the company is embracing collaboration to control costs, diversify risk, and lock up future competitors.
As part of that mission, AbbVie inked a licensing deal in late September with Ablynx, a Belgian biotech company with an experimental rheumatoid arthritis and lupus treatment.
Using llamas to battle autoimmune disease
AbbVie paid $175 million up front to license Ablynx's ALX-0061 and agreed to pay $665 million more in milestone payments if the drug succeeds in remaining phase 2 and future phase 3 trials.
The drug -- developed using Ablynx's nanobody technology to reengineer llama antibodies -- is designed to more accurately target and deliver payloads. That combination could reduce side effects like infection, reducing or eliminating common concerns for TNF inhibitor treatments like Humira. ALX-0061 may also have an advantage of reducing the risk that patients will develop a resistance to the drug, reducing the need for second-line treatments.
Data released by Ablynx in February suggests that ALX-0061 delivers on its promise.
In a 37-person phase 2a trial of patients with moderate to severe cases of rheumatoid arthritis, the drug was well tolerated during the 24-week treatment period. In some cases, positive effects were seen as early as the first dose. And the majority of patients saw their condition improve throughout the treatment period. Importantly, there weren't any serious infections, nor were there any serious cases of reduced white blood cell count, and there wasn't any sign of immunogenicity.
Saving Humira's franchise
AbbVie is particularly pressured to hold on to its Humira franchise. The drug generated more than $9 billion in sales last year -- up 19% from 2011 -- and over $4 billion in sales last quarter, representing more than half of AbbVie's total sales.
In the U.S., sales of Humira reached $1.34 billion in Q2, up 10% year-over-year, making it the third biggest selling drug in the U.S. in the quarter.
Those sales come despite stiff competition
AbbVie competes with other TNF inhibitors such as Amgen's Enbrel, which has been on the market since 1998 and enjoys patent protection through 2028. Enbrel's $20,000 a year price tag produced sales of $1.1 billion for Amgen in the second quarter, up 6.7% from last year.
Humira also competes against Johnson & Johnson's (NYSE:JNJ) TNF inhibitor Remicade, which was approved by the FDA in 1998. Remicade generated U.S. sales of $995 million in the second quarter, up 2.76% from a year ago.
Another RA treatment co-marketed in the U.S. by Biogen and Genentech is Rituxan. That drug had second-quarter sales of $826 million, up 4% from a year ago. Rituxan is approved for use in patients who fail to respond to TNF inhibitors like Humira.
Humira may not only battle those high-profile drugs, but may face-off against their potential generic biosimilars, too.
Hospira (UNKNOWN:HSP.DL) and Celltrion Healthcare received approval to market their Remicade biosimilars in June. Those biosimilars will be sold at a 30% discount to Remicade once J&J loses patent protection in many EU markets in February 2015. Biosimilar competition for Remicade in the U.S. won't come until 2018, when patents expire here.
And, biosimilars are also in the works for Biogen's Rituxan, too. If those biosimilars prove equally effective, they could steal away hundreds of millions in sales from AbbVie, Amgen, J&J, and Biogen.
Other competitive threats
Pfizer's (NYSE:PFE) oral Xeljanz is part of a new class of rheumatoid arthritis treatments that inhibit the JAK receptor. That drug got FDA approval last November; however, the drug comes with a black box warning. The EMA refused to approve Xeljanz, citing significant safety concerns related to infection. As a result, the competitive threat to AbbVie's franchise by Xeljanz is limited, as analysts have cut peak sales forecasts for Xeljanz in half to $1.6 billion by 2016. In Q2, sales of the drug were just $22 million.
Since winning approval in 2005, Bristol-Myers Squibb's Orencie competes for patients who have failed on TNF inhibitors like Humira. The drug produced sales of $350 million in the second quarter, up 9.6% from a year ago, and faces patent expiration in 2017 in the EU and 2019 in the U.S.
AbbVie may also find itself fighting for share with Celgene's (NASDAQ:CELG) apremilast, an oral treatment that Celgene hopes will serve as a pre-biologics alternative for psoriatic arthritis patients. Following solid trial results -- which showed 50% of patients who failed on DMARDs or Biologics saw improvement -- Celgene filed for both U.S. and EU approval this year. More importantly, the drug may offer a better safety profile. However, given that the drug failed in trials as a treatment for rheumatoid arthritis, the threat to Humira may be limited to $300 million to $500 million a year.
The final Foolish take
Humira isn't without risks. It prevents the immune system's TNF receptors from activating, which reduces inflammation but also puts patients at risk for infection. Humira is also injected under the skin every two weeks, which is less than ideal. As a result, ALX-0061's potential for less infection risk and monthly to bi-monthly dosing is attractive.
Given the tough competition representing billions in sales across Humira's competitors, a better drug in ALX-0061 could win significant market share if ever commercialized. But, like with all trials, there's always the risk that ALX-0061 stumbles in phase 3 trials when it will be used in far more patients.
For now, AbbVie's market share remains intact. However, AbbVie will need to see drugs like ALX-0061 succeed if it hopes to replace some, if not all, its Humira's sales -- that's a tall order.