After Humira: AbbVie's Upa Vs. Gilead's Filgo
Feb. 8, 2019 12:47 PM ET|12 comments | About: AbbVie Inc. (ABBV), GILD
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Summary
AbbVie and Gilead are jockeying to recover revenues from their respective fading stars, Humira in the case of AbbVie, Sovaldi/Harvoni/Epclusa in the case of Gilead.
Back in 2012, AbbVie's predecessor Abbott signed up a deal to access Galapagos' filgotinib (filgo) as a potential successor to Humira; AbbVie dropped the deal three years later in 2015.
Within months Gilead scooped up the filgo foundling which it now features as a prominent part of its late stage pipeline.
Upa and filgo are in a class of therapies known as JAK inhibitors, of which two are already FDA approved; upa and filgo need to do better than they.
From time to time highly successful biotechs find themselves scrapping for big bucks in one another's wheelhouses. No two biotechs illustrate this more clearly than Gilead (GILD) and AbbVie (ABBV). Each has highly profitable franchises that have drawn substantial competition. AbbVie's entry is Humira (adalimumab), the therapy that has ranked as the world's top revenue generator for many years.
Gilead's therapy, Harvoni (ledipasvir/sofosbuvir) in treatment of HCV, was the number two in 2015. It has since struggled, dropping all the way to 17th in 2018 partly because of competition from AbbVie's Mavyret. It is looking as if Gilead will be set up in future years to return the favor.
Gilead's filgotinib (herein, by parity of shorthand, shortened to filgo) is looking to be a credible competitor to AbbVie's upadacitinib (commonly referenced as "upa"). AbbVie has submitted an NDA for upa for RA. This posting will describe the potential timing and significance of upa/filgo competition for both AbbVie and Gilead.
AbbVie and Gilead are jockeying to recover revenues from their respective fading stars, Humira in the case of AbbVie, Sovaldi/Harvoni/Epclusa in the case of Gilead.
Winning is wonderful until it stops. In the world of drug development Gilead and AbbVie are again two prime examples of this phenomenon. Gilead is something of a special case post-2015 as its wild Sovaldi/Harvoni/Epclusa ride in treatment of HCV has tapered off so quickly.
The Sovaldi/Harvoni/Epclusa therapy carried the seed of its own destruction by curing its customers. AbbVie contributed to Gilead's pain by competing so effectively on price and efficacy with its Mavyret therapy which is giving Gilead a strong run for its money on such HCV business as remains. Not only is Mavyret taking precious share of the HCV market, it is also squeezing margins.
The slides below from Gilead's Q4, 2018 earnings CC slide deck illustrate the point. First, Slide 22 below shows Gilead's long term HCV decline in terms of patient starts:
GileadSlide 21 below shows how competition, (primarily AbbVie's Mavyret), exacerbates the decrement to revenue from this dynamic:
Gilead
AbbVie's Humira is approved for RA and 12 other indications. Humira, sadly for patients but providentially for AbbVie, does not suffer from a cure curse. Humira offers substantial relief to some patients, including remissions, however it does not cure its patients who must continue on therapy.
AbbVie has been growing Humira sales for over a decade. The following graphic from Statista illustrates this growth from 2011-2017:
Humira revenue growth 2011-2018Biosimilars are lining up in Europe to stunt this ongoing growth with the US market expected to be in play in 2023. AbbVie's challenges are different from Gilead's. Gilead and AbbVie combined are squeezing the HCV market so tightly that there is not any huge incentive for new entrants in the market. The market for Humira however remains highly lucrative, albeit Humira is starting to surrender share to newcomers.
Back in 2012, AbbVie's predecessor Abbott signed up a deal to access Galapagos' filgo as a potential successor to Humira; AbbVie dropped the deal three years later in 2015.
Humira's anticipated revenue declines are the reason AbbVie got drummed out of Abbott, (ABT) a decision reached back in 2011. Job One for AbbVie since its beginning has been to figure a way to build up its revenues to replace Humira's anticipated losses to biosimilars.
In a move calculated to start this process, Abbott cozied up to filgo's holder Galapagos (GLPG) in 2012 with a fat collaboration deal for $150 million down plus milestones and potential tiered double digit royalties. Galapagos describes filgotinib (filgo) as follows on its web site:
Filgotinib is a highly selective JAK1 inhibitor, discovered and developed by Galapagos using its target and drug discovery technology platform. In more than 1,600 patient years of rheumatoid arthritis (RA) and Crohn's disease clinical study experience, filgotinib has shown a rapid onset of action, potentially best-in-class efficacy and favorable findings on safety and tolerability. From a regulatory perspective, filgotinib is an investigational agent and its safety and efficacy have not been established.
Then several years on, in 2015, AbbVie dropped filgo in favor of focusing on development of its own JAK1 selective inhibitor, ABT-494 ((upa)). So far AbbVie's upa bet has been proceeding nicely. Last year it scored data from its RA clinical trials and assembled an NDA and EMA which it filed in December 2018.
Upa is a molecule developed by Abbott/AbbVie; as such its revenues will be free of the milestones and ongoing licensing costs inherent in its deal with Galapagos. Beginning in 2019, or later in 2020 if minor delays intercede, AbbVie plans to have upa in its stable for RA with additional indications ramping up on a regular basis. AbbVie's dream scenario is for upa to gradually take over and ultimately surpass Humira in RA and other immunological indications.
Within months Gilead scooped up the filgo foundling which it now features as a prominent part of its late stage pipeline.
In December 2015, after AbbVie dumped filgo, Gilead, with its own pipeline issues, rushed in to grab hold of filgo. Its deal terms with Galapagos were a good bit tougher than had been AbbVie's given the fact that filgo was further advanced in its clinical data. Gilead paid $725 million (license fee of $300 million, and an equity investment in Galapagos of $425 million) compared to AbbVie's $150 million. Gilead's deal also involved greater milestones along with stinging royalties that start at 20%.
In return, Gilead received rights to develop and commercialize filgo for inflammatory diseases. Gilead is responsible for manufacturing, marketing and sales. Galapagos will pitch in with 20% of development costs.
The Gilead/Galapagos filgo deal has been moving right along on a positive track. A September 2018 data release from a phase 3 filgo trial goosed stock in both Galapgos and Gilead. At the time there was speculation that filgo might be first to market.
Now that AbbVie has already filed for upa's FDA and EMA approvals that no longer seems to be the case. In Gilead's recent Q4, 2018 earnings CC it issued the following slide indicating that Gilead still has data to to come before it can peg filgo's exact path forward: