Johnson & Johnson's Pioneering Zytiga And Its Competitors

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In its first full year on the market, in 2012, Johnson & Johnson's prostate cancer medicine Zytiga generated $961 million in revenues which make it a "near blockbuster". (A drug is considered blockbuster above $1 billion in sales).

Zytiga is the most successful oral oncology drug launch in history. It is now approved in 65 countries and helped a huge number of men everywhere.

The drug inhibits production of androgen, which fuels prostate cancer growth, via inhibiting the CYP17 enzyme complex present in three entities: the testicles, the adrenals and the tumor itself.

In a recent trial of 1088 patients with metastatic prostate cancer, Zytiga has shown an increase in radiographic progression-free survival and a delay of clinical decline in patients.

This trial provided the basis for Zytiga's extended approval for patients who had no prior chemotherapy. The original approval was limited to patients who had chemotherapy like docetaxel before.

Patients who were given Zytiga together with prednisone, had a median survival 35.3 months compared to 30.1 months in the control group.

Prostate cancer

Metastatic castration-resistant prostate cancer means that the cancer has spread beyond the prostate to other parts of the body. The testicles produce around 90 percent of a man's testosterone. Testosterone fuels the production of the prostate gland cells and the prostate cancer tumor. The removal of testosterone from the body will temporarily stop or slow the growth of the cancer. Men with prostate cancer are treated with agents that block the production of testosterone.

Prior to 2010, few options were available for metastatic castrate-resistant prostate cancer patients. The main treatment was the chemo docetaxel.

Since then, four drugs were approved by the FDA, the first one was Dendreon's (NASDAQ:DNDN) Provenge in 2010.

In second- and third line treatment three agents have been approved for patients who have received docetaxel previously: Sanofi's (NYSE:SNY) Jevtana in 2010, Johnson & Johnson/Janssen's (NYSE:JNJ) Zytiga in 2011, and more recently, Medivation (NASDAQ:MDVN)/Astellas Pharma's Xtandi in 2012. Jevtana is injected, Zytiga and Xtandi are pills.

Prostate cancer is the second most common cause of cancer death in men in the US. Approximately one in every six American men will be diagnosed with the disease during his lifetime and approximately 29,000 men die annually from the disease in the US. Typical treatments aimed at eradicating the tumor, like surgery or radiation, are unsuccessful in 30% of men.

Many men are treated with drugs like Lupron that, in effect, induce a chemical castration, suppressing production of testosterone. But the cancers can eventually become resistant to castration therapy.


Zytiga has one main competitor and several potential ones.

Xtandi from Medivation/Astellas Pharma, launched in 2012, is competing hard against Zytiga.

Insurance claims data shows that the rejection rate for Xtandi has fallen from around 50 percent at the time of its launch to approximately 25 percent in December.

Over the two month period spanning October to December 2012, the average monthly patient co-pay fell from around $300 to $150, positioning Xtandi on a par with Zytiga.

Current consensus forecasts indicate 2017 global revenues of $3.9 billion and $1.7 billion for Xtandi and Zytiga, respectively.

At the recent ASCO GU conference in Orlando, Florida, one abstract compared Xtandi to Zytiga using results from the Affirm and COU-AA-301 Phase 3 trials in post-chemotherapy patients. While comparative statistical analysis indicates that there is no difference in overall survival, Xtandi was statistically superior to Zytiga in radiographic progression-free survival, time to PSA (prostate specific antigen count) progression and PSA response. If this were published in a peer reviewed journal it would probably accelerate market share gain for Xtandi.

Xtandi costs about $7,450 per month, compared with $5,500 per month for Zytiga. Both drugs are cheaper than injectable Jevtana, which costs about $8,300 for three weeks of therapy and less than $93,000 for three infusions of Dendreon's Provenge.

Price comparison is not easy or fair, because doctors may adjust treatment terms to the patient's needs.


Aragon is a potential competitor.

Aragon Pharmaceuticals, a private company, has won a patent judgement against Medivation in December. Medivation will probably fight back, but the win lends credibility to Aragon.

Aragon's lead asset is ARN-509, a novel second generation anti-androgen that treats castration resistant prostate cancer patients where first generation anti-androgens failed. It is in Phase 2 trial currently.

The "son of Medivation" compound comes from the same research as Medivation's Xtandi: from UCLA's Charles Sawyers and Michael Jung.

The UC Regents had originally licensed the rights to Medivation to the molecules out of which Xtandi was created.

But a few years later the UCLA researchers developed the new molecules A51 and A52 which the university patented but did not disclose their existence to Medivation. Instead in 2009 licensed them to venture capital funded Aragon in San Diego.

When Medivation found out about the patents in 2011, it sued Aragon and the UC Regents, who promptly countersued.

Recent court decision approved Aragon's right to the compounds, and the drug itself appears promising.

Dr. Matthew Smith of Harvard Medical School presented results of an early clinical trial (Phase 1/2) at the ASCO GU conference. At 12 and 24 weeks, 91 percent of patients had a greater than 50 percent PSA decline from baseline and Dr Smith thinks the data justifies further development.


There are several other second generation androgen receptor antagonists in development.

One of those, private Tokai Pharmaceuticals's drug, galeterone, comes from the research of Angela Brodie and Vincent Njar at the University of Maryland. Brodie is best known for her work with aromatase inhibitors, which are now commonly used for the treatment of breast cancer.

The pill should have at least two important advantages over Zytiga, says CEO Martin Williams. The Tokai drug (similarly to Xtandi) doesn't need to be taken in combination with prednisone, a common immune suppressor that has significant side effects, and it doesn't need to be taken on an empty stomach.

Investor's summary

Johnson & Johnson's 2012 sales were $67.2 billion, up 3.4% from the previous year, and earnings per share was $5.10. Much of the growth came from international markets, where sales jumped by 7.9% to $12.4 billion.

On the negative side the consumer health unit's ongoing supply and manufacturing problems let sales slide, a repeat of the drop last year. Doxil supply problems took the cancer drug's numbers down again. And legal challenges continue to weigh on the company's results.

Also, J&J's drug division suffered from the generic competition to its antibiotic Levaquin.

But those blows were outclassed by Zytiga's growth to $961 million for the year, along with sales increases for the arthritis drug Simponi (up 48 percent, to $607 million) and psoriasis drug Stelara (up 38.9 percent, to $1.025 billion). The company also had strong numbers in the blood thinner Xarelto, which J&J markets in the U.S., and the HIV drug Prezista.

Although Johnson & Johnson's fourth quarter and full-year 2012 earnings surpassed expectations, 2013 guidance was disappointing for analysts. Johnson & Johnson expects 2013 earnings in the range of $5.35 - $5.45 per share.

The stock price ranged from $61.71 to $77.02 in the past 52 weeks.

Zytiga is a clear winner in the race for Johnson & Johnson, but competitors are ready for the challenge.

This battle of drugs is going to be intense and will be joined by numerous new candidates, and besides business success it also has a significant humanitarian aspect: finding a drug that will slow down or eliminate a horrible disease.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.