- The second quarter is traditionally a strong sales period for biotechs. Leerink expects that trend to hold true as earnings read out in the coming weeks, yet a handful of recently launched products may bring some surprises.
- The investment bank highlighted five such products in a report Monday: Amgen and Novartis' Aimovig, Gilead's Biktarvy, Vertex's Symdeko, Alexion's Soliris and Biogen's Spinraza. While those last two drugs aren't new to the market, analysts noted that Soliris' label expansion from October and Spinraza's continued rollout outside the U.S. could prop up sales.
- "Any one of these products could meaningfully surprise and drive outperformance, provided sufficient revenue is incremental rather than cannibalizing other products," analysts wrote in the report.
Biotech stocks have generally done well over the last year. Shares of the S&P Biotech Index were trading at $100.64 apiece at market's open Monday, up nearly 27% from 12 months prior.
Notable, however, is that many of the large-cap companies aren't driving the growth. Celgene shares are down 18.5% since the beginning of January, while those in Regeneron Pharmaceuticals are down nearly 30%. And though Biogen stock rose about 20% in early July after data from an already failed trial showed some promise for one of the its experimental Alzheimer's drugs, shares were down about 10% year-to-date the week before.
Fortunately for those players, upcoming earnings could bring a little reprieve. In their report, Leerink analysts noted that U.S. specialty drug sales tend to see a significant uptick during the second quarter compared to the first — and that's unlikely to change in 2018.
But concerns do remain, as forecasts indicate that few large-cap biotechs will achieve year-over-year sales growth for the quarter and none will achieve year-over-year earnings per share growth.
"This trend should be expected for the more mature companies in the group, but is a signal that new launches from growth companies such as [Vertex, Regeneron and Alexion] are not delivering the profit impact that they were last year, or that the companies are still increasing operating expenses in line with, rather than slower than, top-line growth," Leerink wrote.
To that end, analysts have their eyes on several products that may be the difference between a good and bad quarter for their respective manufacturers.
One is Aimovig (erenumab), the first of a new class of migraine prevention treatments called calcitonin gene-related peptide (CGRP) receptor antagonists. Amgen and Novartis priced the drug at $6,900 for a year's supply — well below what Wall Street anticipated and almost in-line with Institute for Clinical and Economic Review's pricing standards.
But, as with any new kind of therapy, Aimovig faces barriers. ICER, for instance, released a report earlier this month wherein a panel of experts concluded it would be "reasonable" to enact prior authorization requirements for CGRP inhibitors as questions about their long-term safety and costs remain unresolved.
Amgen is set to report earnings on July 26. Investors will want to see that Aimovig is making headway with payers and can cover for looming declines as biosimilar competition threatens the Epogen (epoetin alfa) and Neupogen (filgrastim) franchises.
Another drug on the must-watch list is the HIV triplet Biktarvy (bictegravir, emtricitabine, and tenofovir alafenamide). Prescription data from IMS, now a part of Iqvia, show that the once-daily pill is gaining traction in the market, reinforcing consensus estimates of $131 million in second quarter sales.
Leerink pointed to Soliris (eculizumab) and Spinraza (nusinersen) as points of interest as well.
Soliris accounts for around 90% of Alexion's sales, and last year secured a third Food and Drug Administration approval in generalized myasthenia gravis. While Alexion remains focused on bringing its follow-on offering to market, Soliris' performance nonetheless remains vital to the biotech's bottom lines. IMS data signal the drug's volume increased 231% sequentially during the second quarter, according to Leerink.
Biogen, meanwhile, gets most of its revenue from multiple sclerosis treatments, but its spinal muscular atrophy drug Spinraza has become a key near-term growth driver.
"We note that the magnitude of beat or miss for [Biogen] is likely to be impacted by the quarterly performance of Spinraza. While our data indicate that US Spinraza will miss consensus by 8%, we note that the prediction for this drug in unreliable due to a poor capture in IMS and [outside U.S.] sales could still surprise to the upside," Leerink wrote.