Johnson & Johnson's Blockbuster Candidate Simponi And Its Rivals

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In July the FDA approved Johnson & Johnson's (NYSE:JNJ) Simponi Aria for infusion in combination with methotrexate to treat moderately to severely active rheumatoid arthritis (NYSE:RA). In May subcutaneous Simponi was approved for ulcerative colitis.

J&J developed Simponi as a successor to its top-selling autoimmune therapy Remicade, which is also approved for ulcerative colitis and RA. Remicade is co-marketed with Merck (NYSE:MRK), and last year it brought in $6.1 billion.

Remicade, however, is approaching the end of its patent exclusivity. Even with a recent extension for a pediatric indication, its patent will expire in Europe in 2015. The U.S. patents will last until 2018.

Simponi

In 2012 Simponi earned J&J $607 million worldwide. With the two new approvals, it is well on its way to blockbuster status ($1 billion or more in sales per year).

The newly approved Simponi Aria dose regimen is 2 mg/kg given as an intravenous infusion at weeks 0 and 4, then every 8 weeks thereafter. The infusion is given over a 30-minute period, providing a short infusion time for patients.

Dr. Sergio Schwartzman at the Weill Cornell Medical College, who was not part of the trial but is a Janssen Biotech consultant, said:

"Phase 3 data showed that treatment with Simponi Aria plus methotrexate significantly improved signs and symptoms and physical function at week 24, and inhibited the progression of structural damage in patients with moderate to severe RA at week 24 and 52."

The approval is supported by the Phase 3 trial, called Go-further, which evaluated 592 patients diagnosed with moderate to severe RA, who had at least six tender and six swollen joints as baseline, had elevated C-reactive protein levels at screening and who had been receiving background methotrexate for at least three months.

Significant improvements in ACR 20 were observed as early as week 2, after a single Simponi Aria infusion, as 33 percent of patients achieved an ACR 20 response versus 12 percent of patients receiving placebo. (ACR criteria measures improvement in tender or swollen joint counts).

Radiographic progression of the hands and feet were assessed by the change from baseline in van der Heijde-Sharp (vdH-S) scores, an X-ray measure of joint destruction, including joint erosion and joint space narrowing in which higher scores indicate greater structural damage.

At week 24, patients receiving Simponi Aria plus methotrexate had a mean change in total vdH-S score of 0.03 from baseline, compared with a mean change of 1.09 in the placebo plus methotrexate group. At week 52, the mean change in total vdH-S score from baseline was 0.13 in Simponi Aria treated patients versus 1.20 in placebo patients who crossed over to Simponi Aria at either week 16 or 24.

Rivals

Approximately 1.3 million people in the United States are living with RA, a chronic, systemic inflammatory condition that is characterized by symptoms that include pain, stiffness and inflammation, and in some cases, joint destruction and disability.

Sales show that infusable anti-TNFs, like Simponi and Remicade, have remained the go-to drugs in the rheumatologists' tool set, despite injectable drugs like AbbVie's (NYSE:ABBV) Humira and the recent launch of oral alternatives like Pfizer's (NYSE:PFE) Xeljanz.

Pfizer's 5-mg, twice-daily Xeljanz is the big news in the sector, although its debut in the European Union was stayed by an April rejection.

So far, despite unmet need, physicians' allegiance for most patients remains in the anti-TNF camp. Pfizer is trying direct-to-consumer advertising campaigns to create momentum for the drug.

Doctors may be waiting for more data on Xeljanz's safety profile as the FDA has conditioned a REMS program (Risk Evaluation and Mitigation Strategy) due to the potential risks associated with the drug, including infections, tuberculosis, cancers and lymphoma. Several JAK-3s have been tested and could not get through the first few phases of clinical trials.

Pfizer is conducting an extensive post-marketing clinical program.

Some of the newer oral candidates offer the potential for more convenient dosing and a better safety profile than Xeljanz.

Incyte's (NASDAQ:INCY) baricitinib ((INCB28050)) which was licensed to Lilly (NYSE:LLY) is in Phase 3 trials; Galapagos NV's GLPG0634, a JAK1 inhibitor that AbbVie will market, is in Phase 2. Additionally, Vertex (NASDAQ:VRTX) has a JAK inhibitor in Phase 2b and 3 development in the US and Europe, dubbed VX509.

AstraZeneca (NYSE:AZN) and Rigel's (NASDAQ:RIGL) partnership of developing fostamatinib, a Phase 3 SYK inhibitor, fell apart as AZN has decided to quit and return the rights to the compound to Rigel.

Investors' summary

An analysts survey compiled by Bloomberg puts potential Simponi global sales target at $1.2 billion by 2016. Credit Suisse contends that the worldwide market for RA is $23 billion.

While anti-TNFs still hold significant equity with doctors, some analysts think that it could be a matter of time before orals begin to catch up.

Bernstein analyst Tim Anderson says that "oral RA therapies like Xeljanz might eventually cause a paradigm shift away from injectable products."

Pfizer got some help recently when Xeljanz was granted approval in Russia, Argentina, Kuwait, the United Arab Emirates and Switzerland -- the first European country to allow sales. As reported by the Associated Press, the drugmaker also said it "is asking advisers to European Union medical regulators to reconsider their recommendation in April not to approve the drug."

However, it will take time for clinicians to get comfortable, particularly given how satisfied they've been with the TNF class. "That's the group of products that everything gets measured against today," says Robert Bazemore, president, Janssen Biotech, which markets TNFs Remicade and Simponi in the US, along with biologic Stelara.

AbbVie and Amgen (NASDAQ:AMGN) have spent years building relationships with managed care providers to keep Humira and Enbrel on formularies. They've locked up managed care with aggressive discounts and volume-based rebates.

Asked whether the biologics maker worries about ceding ground to new oral competitors, a Janssen spokesperson says the firm wants to be able to give patients and doctors all treatment options.

Even Janssen sees the writing on the wall: it is developing its own oral RA therapies -- one a JAK inhibitor in partnership with Astellas, as well as an internal candidate. Janssen's Rob Bazemore says: "We've always considered that there may be a group of [patients] who would prefer oral therapies vs. intravenous products... but it has to be the right product."

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.