- Hikma Pharmaceuticals plc won't bring a generic version of GlaxoSmithKline plc's top-selling drug Advair to market by year's end, after the Food and Drug Administration decided to uphold its rejection of the copycat pending further data.
- The regulatory agency is requiring Hikma to conduct an additional clinical endpoint study for its drug to satisfy concerns laid out in a complete response letter (CRL) issued last May. Planning of a new study is already complete, according to a Monday statement, and Hikma anticipates patient enrollment will begin soon. The company said it will submit a response with the new data "as early as possible" in 2019.
- The rejection offers GSK a much-needed reprieve. In February, the big pharma estimated that if generic Advair comes to the U.S., its 2018 adjusted earnings per share (EPS) growth would be flat at best, and could fall as much as 3% under constant exchange rate. Without such competition, GSK expects EPS growth of 4% to 7%.
GSK has a lot to lose should Advair (fluticasone propionate/salmeterol) generics clear the FDA. Even though pricing pressures and volume decline are already eating away at the blockbuster respiratory drug's revenue, it still remains GSK's number one product — accounting for roughly a fifth of the company's £17.2 billion ($21.3 billion) worth of pharmaceuticals sales last year.
The British pharma has found reprieve, however, in the fact that Advair is inherently difficult to copy.
Advair comes as a powder to be used with an associated inhaler, meaning drugmakers looking to replicate it need approval for both a drug and a device. Mylan NV, Novartis AG and Hikma have all struck out in that regard. Teva Pharmaceutical Ltd. actually secured an FDA OK last January for its generic Advair, AirDuo RespiClick, but regulators determined the products weren't substitutable, softening the blow to GSK's original franchise.
The setbacks for Hikma's Advair copycat have been ongoing. In May 2017, the company received a CRL for the product classified as "Major". While it worked out most of the agency's concerns, the two parties disagreed on the need for an additional clinical endpoint study, resulting in Hikma filing a dispute resolution.
With Monday's announcement, it appears Hikma will have to conduct such an investigation if it wants any chance at bringing its candidate to market.
"In our recent downgrade note . . . we had been surprised [Hikma] took on the FDA with its dispute on its clinical endpoint study as, in our view, this was always going to be a challenging situation; in our research we had not found a single example when a dispute resolution outcome had gone in the company’s favour," Jefferies analyst James Vane-Tempest wrote in a March 12 note.
"Given another setback this week, we view it vital that Hikma can communicate a progressive turnaround strategy and provide visibility of mid-term levers with expectations that leave limited scope for disappointments," he added. "Although we believe most of the buy and sellside had removed [generic] Advair from models, in our view there was still anticipation of a possible positive outcome embedded in Hikma’s multiple."
The rejection pushed Hikma's shares, which trade on the London Stock Exchange, down about 2% Monday morning. GSK, conversely, saw its shares increase less than 1%.