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Bristol-Myers Squibb (NYSE:BMY)'s new experimental drug for rheumatoid arthritis (RA) caused excitement at a conference in October. It appears that the drug clazakizumab is as effective as AbbVie (NYSE:ABBV)'s blockbuster Humira. The results were presented at the American College Of Rheumatology meeting in San Diego.

RA sufferers have a variety of disease modifying drugs available to them. Humira, Johnson & Johnson (NYSE:JNJ)'s Remicade and Amgen (NASDAQ:AMGN)'s Enbrel, which Pfizer (NYSE:PFE) shares, are injections; Pfizer's Xeljanz is a pill.

But as it stands, less than 30 percent of RA patients experience sustained remission as defined by the American College of Rheumatology criteria. There is a need for new therapies that can provide more patients with deep and sustainable remission.

Clazakizumab appears to be a welcome addition in this context.

Abbvie's Humira was the number one selling medicine in the world in 2012 with sales of $9.26 billion. In the first 9 months of this year sales were $7.62 billion, a 16 percent increase over the same period last year.

Any new drug that shows efficacy comparable to Humira's will draw an immediate attention.

2b study

Clazakizumab's 2b trial was done on a large scale.

418 patients were enrolled and treated in 115 sites throughout North and South America, Europe and Asia. The drug was dosed to different groups of patients from 25 to 200 milligram in monotherapy and in combination with generic MTX (methotrexate) and compared to MTX alone. MTX is a commonly used drug in RA that decreases the pain and swelling of arthritis.

Humira in combination with MTX was set up as a separate reference arm.

Bristol-Myers' combination reduced RA symptoms by 20 percent in about 78 percent of patients, which is a lot better than the 39.3 percent for MTX alone and roughly equal to the 76.3 percent of patients who benefited from Humira coupled with MTX.

Rates of low disease activity and remission with clazakizumab plus MTX, at the end of weeks 12 and 24, as measured by standard criterias such as DAS28, CRP, CDAI and SDAI, were numerically superior for clazakizumab compared to Humira.

Dr. Pushkal Garg, Bristol's vice president of clinical development for immunoscience told reporters that clazakizumab, by avoiding publicity, has sort of sneaked in under the radar. The data from a Phase 2a study, presented in Europe two years ago was from the intravenous version of the drug. The injected version, used in the current 2b trial, will be used in the Phase 3 study that the company is planning now.

Clazakizumab is an anti-IL-6 monoclonal antibody, working to block a pro-inflammatory cytokine and halt the effects of RA.

Market

About 1.5 million people in the U.S. have RA, nearly three times as many women than men. In women, RA commonly begins between the ages of 30 and 60, in men it often starts later in life.

RA affects between 0.5 to 1 percent of the adult population worldwide. In China, Japan and Taiwan RA affects about 0.3 percent of the population, the number of sufferers is 4 million, 380,000 and 69,000 people, respectively.

Work disability among people with RA is significantly higher than in the general population. Research shows that two-thirds of people with RA lose an average of 39 working days each year. In the U.S. the average annual medical cost associated with RA is $5,720 per patient.

RA is a systemic, chronic, autoimmune disease characterized by inflammation in the lining of joints, causing joint damage with chronic pain, stiffness, swelling and fatigue. There is no cure for the illness.

Remission

Clazakizumab's biggest advantage may be getting a larger portion of patients into remission from the disease than competing drugs.

Clazakizumab plus MTX posted 23.3 percent remission in patients compared to Humira plus MTX, where the rate was 8.5 percent.

Alder

Bristol-Myers has in-licensed clazakizumab from Alder Biopharmaceuticals, a Bothell, WA based company in 2009.

Alder was paid $85 million upfront and promised up to $764 million in development milestones along with $200 million in sales goals and royalties.

Bristol-Myers Squibb has now exclusive worldwide rights to develop and commercialize clazakizumab for all indications other than cancer under the agreement.

Competition

Actemra: Aside from the behemoth Humira, clazakizumab would face stiff competition from Roche's (OTCQX:RHHBY) Actemra, which is the only currently marketed antibody targeting the IL-6 pathway. Actemra has generated $898 million in sales last year.

Bristol tested Actemra in a laboratory study. In vitro assays various functions were induced to compare the potencies of clazakizumab to Actemra.

The study looked at inhibiting signaling, proliferation, activation, antibody production and secretion of acute phase protein. In the tests clazakizumab proved to be 3 to 120 times more potent than Actemra in blocking these IL-6-induced cell functions.

Ablynx: AbbVie itself has made a move: it paid up to $840 million to Ablynx, a Belgian company to license its IL-6 therapy called ALX-0061. The drug is now in Phase 2 trials.

ALX-0061 is an innovative, anti-inflammatory "nanobody", taking the smaller, simplified structures of camel and llama antibodies and repurposing them for work in humans.

Nanobodies are designed to latch on to their target better, offering a lower toxicity with high affinity. Due to their much smaller size, (about one-tenth of the currently used antibodies) they can also act more like a small molecule than a large one, in the process of inhibiting enzymes.

Investors' summary

Abbvie: Humira, an injectable treatment for rheumatoid arthritis, psoriasis, Crohn's disease and other conditions, is the world's top-selling prescription drug. Sales have risen steadily since it was introduced in 2002.

Global sales soared 19.1 percent to $2.77 billion in the third quarter, outpacing 16 percent growth in the previous quarter.

Humira accounts now for almost 60 percent of Abbvie's sales, representing the company's growing reliance on a product that will lose U.S. patent protection in late 2016.

Morgan Stanley analyst David Risinger predicts that Humira's annual sales will jump another 30 percent, to $13 billion, by 2016, following the sales pattern set by Pfizer's Lipitor which peaked just before losing patent protection in late 2011.

Bristol-Myers Squibb is focusing lately on cancer immunotherapy, but this new drug could help it to become a contender in the multi-billion-dollar RA market. Bristol could certainly use any new income source to compensate for the loss of Plavix sales to generics and for the slow launch of Eliquis.

In the third quarter Bristol's worldwide sales were $4.1 billion.

Strong improvement in sales were shown by Yervoy, Onglyza and Orencia. Yervoy's sales grew 33 percent, Onglyza 19 percent, Sprycel 20 percent, Orencia 22 percent and Baraclude grew 9 percent. Yervoy' sales for the first 9 months were $700 million, up 41 percent from a year ago. At the end of September the company's cash and cash equivalents were $6.3 billion, with a net debt position of $867 million.

Guidance is confirmed for the 2013 non-GAAP earnings per share in the range of $1.70 to $1.78. Analysts estimate, as compiled by Bloomberg from 20 sources, that earnings per share in 2014 will reach $1.94. The share price in the past 52 weeks ranged from $30.64 to $53.68, trending sharply upward since summer.

One possible reason for the positive trend in the share price is that Bristol-Myers's sales have been returning to growth after patent expirations shrank revenue in the past five quarters.

New products, led by the company's cancer and hepatitis C drugs are emerging and the hope is that expansion into new disease segments, such as RA, may boost sales even further.

Source: Bristol-Myers Vs. Abbvie In Potential Humira Rivalry