Novartis' $9.7 billion buyout of The Medicines Company is a bet that the biotech's one asset, an experimental cholesterol-lowering injection called inclisiran, will be a bigger hit with patients and doctors than its would-be competitors.
Like inclisiran, both Amgen's Repatha and Sanofi and Regeneron's Praluent target a protein called PCSK9. Neither has cracked the $1 billion sales mark after four years on the market, widely underperforming what were once sky-high sales expectations.
Yet in order for the Medicines Co. pricetag to be profitable for Novartis, Evercore ISI analyst Umer Raffat estimates inclisiran will need to reach $2 billion in annual sales.
This makes inclisiran a "major execution story," Raffat wrote in a note to clients Sunday following news that the deal was about to be signed. The following are three things Novartis will need to get to $2 billion:
Get the price right
Repatha and Praluent launched with annual costs of above $14,000 a year, only to have payers reject that price for all but the most treatment-resistant patients, those with very elevated low-density lipoprotein, or "bad cholesterol."
Several price cuts, to around $5,400 a year, along with bigger rebates and value-based deals centered on outcomes have happened since. Some of the biggest drops happened after cardiovascular outcomes trials showed the addition of the two PSCK9-blocking agents didn't offer much benefit in preventing death and complications over statin-based combinations. An advantage that inclisiran may have is lower manufacturing costs, which could play into a pricing strategy.
Capitalize on its sales force
Novartis' sales representatives are already in cardiologists' offices selling the heart failure drug Entresto, so the pharma will not be building from scratch. What they will be able to offer, compared to the established PCSK9-blocking agents, is a competitive LDL-lowering profile and a longer dosing duration for inclisiran — just twice a year to once a month or more often.
Inclisiran also is intended to be injected by physicians, which will give cardiologists some comfort that patients are adhering to the treatment plan. Poor compliance is a major problem with Repatha and Praluent, according to Raffat. In addition, because inclisiran is administered by doctors, it will be covered by the medical benefit in many health plans, which means it could be subject to less payer pressure than a drug filled at a pharmacy, Bernstein analyst Ronny Gal wrote in a Nov. 25 note.
Win the data game
The cardiovascular outcomes trials FOURIER for Repatha and ODYSSEY Outcomes for Praluent were disappointments for the drug's commercial outlooks, making it difficult for those two monoclonal antibodies to justify much of a premium price over LDL-lowering drugs like statins or ezetimibe. Inclisiran has completed its major Phase 3 program called Orion for submission to the Food and Drug Administration by year-end, but its five-year cardiovascular outcomes trial Orion-4 won't read out until 2024.
In its investor presentation today, Novartis argued that the LDL-lowering potency of inclisiran should yield around a 30% relative risk reduction of heart-related complications and deaths in Orion-4. However, FOURIER and ODYSSEY Outcomes were believed to be able to get reductions of a similar scale, and only managed to generate a 15% reduction.
Raffat wrote that Orion-4 investigators have given their trial a better chance of success in two ways. The first is enrolling patients with LDL levels above 100 milligrams per deciliter of blood, compared with 70 for FOURIER and ODYSSEY Outcomes. The second is planning four-year follow-up, where the benefit of Repatha has shown itself to be more clear in analysis of Fourier patients.
With these challenges, "the price tag paid by [Novartis] looks very rich," Gal wrote. "It is presumably well aware of the challenges of the PCSK9 market and it does have some advantages."
"That said, the entire PCSK9 market is annualizing at $921M with two tough competitors," he added. "Payers are very much on top of the class and it will be a fantastic class for payers to use to prove to their clients that they know how to manage across pharmacy and medical benefits."
In announcing the deal, Novartis predicted inclisiran could become "one of the largest products by sales in the Novartis portfolio," a tall task for any drug sold by one of the world's largest pharmaceutical companies. Whether it lives up to that billing will depend on how well Novartis can back up its money.