I have just published an initiation of coverage report on Savient in which I recommended buying the stock as well as a second and third report that provided additional information. This fourth report also provides supportive information. It summarizes the phase III clinical trial data and the assumptions underlying my sales model for Krystexxa.
The most interesting part of this note from my viewpoint is the section that shows the assumptions giving rise to my sales model for Krystexxa. From comments made on my earlier reports, I think that some readers will think my estimates are too aggressive, others who think they are too conservative and others who think that I just don’t know what I am talking about. I respect each point of view and I am not trying to convert anyone to my thinking. I just wanted to make clear how I came to my estimate that Krystexxa can reach U.S. sales of $160 million in 2015 and European sales of $49 million in the same year.
Phase III Clinical Trial Data
Two phase III pivotal, placebo-controlled registration trials were conducted for Krystexxa. The average patient enrolled was in their mid-50s and had suffered from gout for 15 years. In order to enter the trial, they had to have a baseline blood level of 8.0 mg/dl of uric acid, to have had three or more gout flares over the prior 18 months, to have one or more tophi and to be suffering from joint damage. Allopurinol was contraindicated in 82% of these patients.
The primary endpoint of the trial was to lower uric acid levels in the blood to <6.0 mg/dl for ≥ 80% of the time when uric acid was measured during the third month and then again in the sixth month of the trial. Krystexxa easily met this endpoint with a highly statistically significant p value of <0.001. On the important secondary endpoint of elimination at least one tophi, the p value was again an impressive 0.005. Clearly Krystexxa works very well relative to placebo.
In the final product label, physicians are urged to discontinue therapy if Krystexxa does not lower uric acid. This suggests that only patients who respond to the drug will continue of therapy. In looking at the two phase III trials, 20 of 43 patients in one trial were deemed responders when given two doses per month; this is the approved dosage schedule. In the second phase III trial, 16 of 42 were deemed responders when given two doses per month. This suggests that 36 of 85 patients treated (42%) may respond to the drug and remain on therapy.
The safety profile of Krystexxa is not benign. Over the six month trial, 26% of patients on Krystexxa discontinued therapy as compared to 9% of placebo patients. Nearly 80% of patients experienced a gout flare (this is common to all gout treatments) and 33% reported infusion reactions of which 11% were severe. Anaphylaxis was reported to have occurred in four of 169 patients (2.4%) treated with Krystexxa. There was a troubling imbalance of serious cardiovascular events with eight patients on Krystexxa and only one on placebo. However, the FDA, consultants and members of the advisory committee did not conclude that Krystexxa led to an elevated cardiovascular risk.
The Approval of Krystexxa
The FDA approved Krystexxa in September of 2010 as an 8mg IV infusion given every two weeks. The label requires pre-medication with antihistamines as prophylaxis against infusion reactions. There is a black box warning about anaphylaxis that also states that the infusion must also be given in a setting in which there is competent medical care to treat anaphylaxis if it should occur.
Some experts feel that the four patients who were judged to have incurred anaphylaxis really only suffered severe infusion reactions and that this is an overly cautious stance by the FDA. The black box also advises physicians to monitor uric acid levels before infusions and if the level is above 6.0 mg/dl on two consecutive infusions that the drug should be stopped. A REMS program and a 500 patient, twelve month post-market study was also required.
Krystexxa Sales Model; 2011-2015
I have put together a model for projecting sales of Krystexxa using the following assumptions which are consistent with the analysis of this report:
Savient estimates the number of refractory gout patients at 120,000 and the FDA estimates 50,000. I am using an estimate of 50,000.
I am estimating modestly building penetration rates of this 50,000 patient universe that starts at 0.4% in 2011 (260 patients) and builds to 12.0% in 2015 (7,019 patients). I am assuming that the difficult infusion schedule and troubling side effects will limit penetration of the severe gout market to a modest level.
I assume that 58% of patients started on Krystexxa drop therapy after two months because their uric acid levels do not drop and that during this time they receive four infusions.
I assume that 42% of patients do respond to the drug and remain on therapy for nine months, receiving 18 infusions. In the phase III and a follow-up safety study, patients remained on the drug for six to eighteen months.
I assume that each infusion is priced at $2,300 and does not increase.
I estimate that the European market is the same size as the U.S. market and follows the same sales trajectory. However, the launch in the EU is assumed to start in 2013.
The results are shown below:
|Worldwide Revenue Model for Krystexxa|
|Number of patients with refractory gout||50,000||52,000||54,080||56,243||58,493|
|% who are prescribed Kyrstexxa||0.5%||2.0%||4.0%||8.0%||12.0%|
|Number of new patients who are prescribed Krystexxa||260||1,040||2,163||4,499||7,019|
|% who don't respond to Kyrstexxa||58.0%||58.0%||58.0%||58.0%||58.0%|
|Non-responders who stop therapy at two months||151||603||1,255||2,610||4,071|
|Patients who remain on therapy for nine months||109||437||909||1,890||2,948|
|Number of infusions of non-responders||603||2,413||5,019||10,439||16,284|
|Number of infusions for responders||1,966||7,862||16,354||34,016||53,065|
|Price of each infusion||$2,300||$2,300||$2,300||$2,300||$2,300|
|U.S. revenues (millions)||$5.9||$23.6||$49.2||$102.2||$159.5|
|European revenues (millions)||$0.0||$0.0||$5.9||$23.6||$49.2|
|Worldwide revenues (millions)||$5.9||$23.6||$55.1||$125.9||$208.7|