Seeking Alpha

Will Ilumya Kill Valeant's Psoriasis Dreams?

|
Includes: JNJ, NVS, SMPQY
by: Shock Exchange
Summary

Sun Pharma's Ilumya received FDA approval to treat moderate-to-severe plaque psoriasis.

If it markets Ilumya on par with VRX's Siliq it could compensate for its late entrance to the psoriasis market.

It could also remove Siliq's price advantage and stymie its growth.

VRX needs to launch new drugs to compensate for LOE. Siliq might not be the answer.

Sell VRX.

Source: Dermatology Research News

Las month the FDA approved Sun Pharma's (OTCPK:SMPQY) Ilumya (tildrakizumab) for the treatment of moderate-to-severe plaque psoriasis:

India’s largest drug marker, Sun Pharmaceuticals Ltd Wednesday said the US Food and Drug Administration (FDA) has approved its drug ILUMYA (tildrakizumab) for the treatment of moderate-to-severe plaque psoriasis.

ILUMYA is administered at a dose of 100mg by subcutaneous injection. “With the approval of ILUMYA and our long-standing commitment in dermatology, we are focused on making a difference for people living with moderate-to-severe plaque psoriasis,” Abhay Gandhi, president and chief executive officer, North America, Sun Pharma said in a statement.

The price and launch date of the drug have yet to be determined. The psoriasis market is becoming overcrowded so it could be tough sledding for Ilumya early on. It could set up a battle with Valeant's Siliq for share in the moderate-to-severe segment of the market.

Siliq Could Be Stymied By Ilumya ...

Along with Johnson & Johnson's (JNJ) Tremfya, Ilumya is the second Interleukin-23 (IL-23) inhibitor approved for psoriasis. IL-23 has been linked to autoimmune inflammatory disorders such as colitis, gastritis, psoriasis and arthritis. Meanwhile, Siliq has an active ingredient (Brodalumab) that binds a protein that causes inflammation, inhibiting the inflammatory response that spurs the development of plaque psoriasis. Siliq is one of several IL-17 inhibitors to enter the U.S. market, including Taltz from Eli Lilly (LLY) and Cosentyx from Novartis (NVS).

The U.S. therapeutic psoriasis market was valued at over $11 billion in 2016 and was expected to growth by over 9% per year. Such growth could put the market size to over $20 billion by 2020. It has also attracted new entrants. In Q2 2017 Valeant's Siliq was approved to treat moderate-to-severe plaque psoriasis. Valeant estimates there are 7.5 million psoriasis sufferers in the U.S. and about 1.9 million (25%) are moderate-to-severe cases. The company identified Siliq as one of its "significant seven" new drugs capable of generating at least $1 billion in annualized peak sales.

In clinical trials for Siliq there were six suicides across all studies. The drug will come with a Boxed Warning pursuant to certain risks. Patients must also sign an agreement and be made aware of the need to seek medical attention should they experience feelings of depression, anxiety or suicidal thoughts. This Boxed Warning could potentially cause certain doctors not to prescribe Siliq or make patients reticent to take the drug.

Ilumya comes with a warning for infections, hypersensitivity and tuberculosis. Still, it could be considered much safer than Siliq. Siliq is expected to be priced at 3,500 per month - extremely low vis-a-vis competitors. Some experts surmised Valeant could start a price war. If Sun Pharma were to market Ilumya at the same price point as Siliq it could [i] remove Siliq's price advantage and [ii] help overcome its late arrival to the psoriasis market.

... And Overshadowed By Well-Heeled Competitors With Marketing Muscle

Chatter suggests Siliq's efficacy is superior to Stelera which is also produced by Johnson & Johnson. Stelera is more established; along with Consentyx it has been accumulating market share in the psoriasis segment. Both brands grew Q3 2017 revenue by double digits. Cosentyx continued its ascent by growing Q4 2017 revenue by 11%, while Stelera's revenue flattened.

JNJ's Tremfya generated Q4 revenue of $47 million; the drug was only launched a few months earlier. The success of Tremfya, Stelera and Cosentyx have made it difficult for Taltz, Celgene's (CELG) Otezla and Pfizer's (PFE) Xeljanz. Cosentyx and Taltz are IL-17 inhibitors like Siliq. It could be difficult for Siliq to outshine them on efficacy.

Secondly, each of the major players in psoriasis market have the marketing heft to create brand awareness for their drugs. Valeant, on the other hand, is financially strapped. Its revenue has been declining by double-digits and its $26 billion debt load is at junk levels. The company has beefed up its staff to sell Siliq, but it lacks marketing dollars of more well-heeled competitors. It will likely have to allocate marketing dollars among the significant seven. If Siliq does not sell well out the gates Valeant may have to focus more of its attention on other product launches.

Conclusion

Valeant needs to launch new products to combat LOE within Salix and its U.S. Diversified segments. Siliq has been touted as a potential catalyst. Wells Fargo's (WFC) David Maris questioned Siliq's competitiveness in the psoriasis space. Ilumya's arrival could make it even harder for Siliq to compete. VRX remains a sell.

Disclosure: I am/we are short VRX. 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.