A Quick Review Of The Asthma Market

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Includes: AMGN, AZN, GSK, IMNPQ, INVA, MRK, NVS, PRGO, REGN, TEVA, XNCR
by: Declan Fallon
Summary

GlaxoSmithKline and Merck suffer falling market share.

Teva Pharmaceuticals makes inroads into asthma treatment.

Bright outlook for new treatments.

Asthma remains a major health concern, with the WHO estimating the number of people suffering from asthma at 235 million. In the U.S., the CDC reports asthma prevalence at 9% in children and 8% in adults (CDC 2012). Even social media trends identify a steady rise in asthma interest, as the line trend for "asthma attack" as reported by Google Trends shows. Whether this is a consequence of increased concern over the disease, or sufferers becoming more prone to attacks, asthma's impact on society has only increased with time.

Asthma Treatment

Asthma treatment generates sales running into billions a year. However, established names in asthma treatment have seen revenues come under increased pressure from generic manufacturers. The two best known names in Asthma treatment are GlaxoSmithKline (NYSE: GSK) and Merck (NYSE: MRK). GlaxoSmithKline, which manufactures Advair and Ventolin, had respiratory product sales of £6.2 billion in 2014. However, respiratory sales were down 10% on the prior year, while Advair sales alone were down by 27% in Q4. Singulair by Merck had sales of $1.1 billion for 2014, but down from sales of $5.5 billion in 2011 when the drug enjoyed patent protection. While Xopenex (levalbuterol) by Sunovion, acquired by Akorn Pharmaceuticals, is only expected to generate U.S. sales of less than $20 million in 2015 (down from $474 million in 2012), after it lost patent protection in 2010.

Next Phase for GlaxoSmithKline and Merck

While revenues from lead asthma treatments for GlaxoSmithKline and Merck are coming under pressure, these companies are not resting on their laurels.

GlaxoSmithKline appears to be the busier of the two companies. It's working with Theravance (NASDA: THRX) on Breo Ellipta, a once-daily treatment for asthma. The drug is currently approved for treatment of chronic obstructive pulmonary disease (COPD). However, it is under FDA review as a supplemental new drug application for asthma in the U.S. A final response is expected by April 30th. EU approval for Breo Ellipta was obtained in November 2013, and has generated sales of £15 million in Q4. Arnuity (fluticasone furoate) received U.S. approval for asthma treatment in August 2014. Arnuity was launched in January 2015, with sales figures to follow. While Anoro Ellipta, another once-daily treatment developed with Theravance, launched in Q2 of 2014 and had sales of £9 million in Q4.

Merck already has a supporting asthma treatment in the U.S. market, generating sales fast approaching $0.5 billion: Dulera, a combination medicine, had full year revenues of $460 million. These sales amounted to a 6.5% jump on the previous quarter. However, the company had little to add in recent earning calls as to its progress. Although rival, Theravance, views combination medicines, such as Dulera, as the lead sales prospect for asthma treatment going forward.

While once-daily treatments for asthma may make it easier for patients to manage the disease on a day-to-day basis, increased dosage frequency remains preferable for situations where asthma is severe or uncontrollable. A review paper on dosage preferences did report patients on the once-daily regime were less likely to perceive the need for the treatment: 'No symptom: no asthma,' an ironic consequence of the significantly better asthma control delivered by the once daily regime.

Competition

GlaxoSmithKline, Merck and Theravance are not the only names in asthma treatment development.

In their recent earnings call, Regeneron Pharmaceuticals' (NASDAQ: REGN) noted a Phase 2b study with its dupilumab. The study covered 776 adults, and reported a significant improvement (over baseline) in forced expiratory volume over 1 second (FEV1), and a significant reduction in severe asthma attacks. Regeneron Pharmaceuticals' dupilumab is looking to fill the treatment void for users suffering uncontrolled attacks, despite their existing use of conventional asthma treatments. The company anticipates a single Phase 3 trial will be sufficient to put forward a BLA submission, with this study due to start in the first half of 2015.

Teva Pharmaceuticals (NASDAQ: TEVA) acquired MicroDose Therapeutics in 2013 and its proprietary inhalation technology "Tidal Inhaler"; a device which allows asthma suffers inhale their medication while breathing normally. The company is targeting approval of ProAir MDPI for asthma in the U.S. this year, part of suite of seven drugs anticipated to generate $400 million in revenue. The company also settled last year with Perrigo Pharmaceuticals (NYSE: PRGO) in a patent challenge. The settlement will allow Perrigo Pharmaceuticals to sell a limited amount of its generic counterpart starting in December 2016. However, Teva Pharmaceuticals maintains various patents, protecting ProAir HFA through to 2028.

In addition to ProAir HFA, Teva Pharmaceuticals has QVAR (beclomethasone dipropionate), a prophylactic therapy, which the company states is the "fastest growing inhaled corticosteroid in the U.S." The drug competes against offerings from GlaxoSmithKile, AstraZeneca, Merck and Sunovion, and boasted global sales of $286 million for 2014. Last year's sales were a 13% drop in 2013, primarily the result of pricing variation, but it remained the second most popular inhaled corticosteroid in the U.S. Duoresp Spiromax was approved for treatment of asthma and COPD in adults in the EU, and was launched in the second half of 2014 in Germany, U.K., and Spain. The company is also looking to submit Reslizuma after a successful Phase 3 study identified a reduction in clinical asthma incidence versus a placebo.

Amgen Inc (NASDAQ: AMGN) has a couple of treatments in early development. The company is looking to start phase 2 trials to investigate if brodalumab (actually in a phase 3 trial as a psoriatic arthritis treatment), has efficacy against asthma. AMG 157, a monoclonal antibody and Thymic Stromal Lymphopoietin inhibitor, is in a phase 2 study, and is been developed with AstraZeneca (NYSE: AZN).

Other Players

A number of mid-, small- and micro-cap companies are also involved in asthma research, each with products at differing stages of the development process. A sample of these include:

Palatin Technologies' PL-3994, a natriuretic peptide receptor product with a completed Phase2a cardiovascular study, but nothing pertaining to impacts on asthma.

Immune Pharmaceuticals' (NASDAQ: IMNP) Bertilimumab, is an IgG4-type monoclonal antibody which blocks activity of exotaxin-1, a protein which plays a role in inflammation. Initial research has focused on Ulcerative Colitis and Crohn's disease, with Phase 2 trials ongoing. Although the company is also considering its use for the treatment of severe asthma.

Xencor Inx (NASDAQ: XNCR) had initiated a phase I trial for XmAB7195, an IgE production inhibitor. IgE is responsible for mediating allergic responses. Results have been promising, but tests have only been conducted on healthy individuals. Xencor see this treatment as a competitor to Novartis' (NYSE: NVS) Xolair. Xolair enjoyed sales of $777 million for 2014 (a 30% increase on the prior year). Xolair controls moderate to severe allergic asthma, particularly for cases which don't respond to hide doses of corticosterioids.

Outlook:

Certainly, there is no shortage of opportunity in the space, but the days of just a couple of companies controlling the market appear over. While it's unlikely any new product will see $5 billion+ in sales, there is reason for optimism that a number of companies could each have products bringing $1 billion in sales revenue. This may help future development of therapies, as each company follows its own research path.

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

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