AbbVie's Psoriasis Drug Approved For Japan, But The Main Event Is Yet To Come

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About: AbbVie Inc. (ABBV), Includes: JNJ, LLY, MNTA, MYL, PFE
by: Terry Chrisomalis
Summary

AbbVie obtained Japanese approval of SKYRIZI to treat patients with psoriasis.

Additional regulatory approvals for SKYRIZI are expected to take shape in the coming months for both the U.S. and European territories.

Obtaining approval for SKYRIZI in the U.S. and European territories will be important because they are much larger markets than Japan and because Humira is facing biosimilar competition in 2023.

AbbVie has a major advantage, in that SKYRIZI beat out Humira in one  study and Stelara and placebo for psoriasis in another two studies.

AbbVie (ABBV) was able to obtain its first approval for SKYRIZI (risankizumab) in Japan for treating patients with psoriasis. This is good news, but the market opportunity in Japan is not better than that of the United States or Europe. It won't be long for potential U.S. approval at all, because the FDA is expected to make its decision by the 1st half of 2019. In addition, there is potential for European approval in the coming months as well. That would give AbbVie investors a better outlook for the future of the company. SKYRIZI (also known as Risankizumab) has a lot more potential beyond psoriasis, because it is being explored in many other large market opportunities.

Japanese Approval

The Japanese Ministry of Health, Labour and Welfare (MHLW) approved SKYRIZI to treat patients with psoriasis based on highly positive results from several phase 2 and phase 3 studies. This includes both studies dealing with safety of the drug, and then some dealing with efficacy. Psoriasis is a chronic skin condition that occurs because of an overactive immune system. When it takes place, patients have the formation of scales along with itchy/dry skin. SKYRIZI was given the green light in Japan for marketing because of four studies, in particular. These studies are known as IMMhance, IMMvent, ultIMMA-1, and ultIMMa-2. All of them achieved all co-primary and secondary endpoints. In essence, the biologic achieved a higher response over placebo and comparators in terms of Psoriasis Area and Severity Index (PASI) 90 and Static Physicians Global Assessment (sPGA) 0/1.

Expanded Market Opportunity

That's the good news, however, the market opportunity for Japan is not going to be groundbreaking at all. Analysts at Global Data, estimate that SKYRIZI in Japan for Psoriasis could generate $27 million by 2027. That's not anywhere near blockbuster status. In my opinion, I believe that this Japanese approval of SKYRIZI should be viewed as a stepping stone to the other two larger markets. These other markets are the United States and Europe. Investors won't have to wait long for potential approval of the biologic in the United States. That's because the FDA is expected to make its decision on approval for the product within the next few weeks. Specifically, the PDUFA date is set for April 25, 2019. That's just one potential approval in the near term. There is another one for the same indication expected from the European Union several months from now in 2019. That's because back on February of 2019, the CHMP granted a positive opinion for SKYRIZI in patients with psoriasis.

Competitors

SKYRIZI, which targets IL-23, is set to enter a highly competitive landscape for psoriasis. However, here is the good news. Humira continues to dominate for this indication, despite many other biologics being approved in the market. For instance, Johnson & Johnson (JNJ) has Stelara approved to treat psoriasis as well, and it targets IL-23 and IL-12. It even has a second drug known as Tremfya, which is an IL-23 drug. Even Eli Lilly (LLY) has its own drug targeting this population known as Taltz, which is an IL-17 inhibitor. Humira still has a pretty good hold in the psoriasis space. The problem is that even though Humira still has a few years for revenue, biosimilars are expected to start being sold in 2023. AbbVie has done a good job to fend off competitors by establishing deals on when they could start selling a Humira biosimilar. Such deals with companies include: Pfizer (PFE), Samsung Bioepis, Mylan (MYL), Momenta (MNTA) and several others pharmaceutical companies. As you can see, Humira is facing an onslaught of biosimilars. This is where SKYRIZI can come into play for AbbVie. That's because three separate head to head studies established that SKYRIZI was superior in psoriasis clearance compared to Humira and Johnson & Johnson's Stelara. Specifically, ultimma-1 and ultimma-2 studies pitted SKYRIZI against Stelara and placebo. The 3rd head to head study was IMMvent, which pitted SKYRIZI against Humira. That means SKYRIZI has a good shot at taking over as a potential market leader for psoriasis, even if Humira biosimilars start to trickle in throughout 2023.

Conclusion

The Japanese approval of SKYRIZI won't move the needle much in terms of revenue, but it does show that the product has the safety and efficacy necessary for approval. There are even several other approvals for the biologic on the way. These are potential approvals for SKYRIZI in psoriasis for the U.S. market expected on April 25, 2019, and for the European Union expected a few months from now in 2019. The first risk is the approvals themselves. There is no guarantee that AbbVie will receive regulatory approvals for either of these territories. In that case, such approvals could be delayed for a long period of time. Based on the positive safety and efficacy data, I believe AbbVie has a good chance at gaining approval for both territories. The second risk involves competition in the psoriasis space. AbbVie has a huge advantage based on its three separate head to head studies noted above. Still, it won't be easy to enter the market so late in the game and immediately snuff out competition. In my opinion, AbbVie has done a good job of protecting Humira for several more years. The approval of SKYRIZI only serves to help fight against the impending biosimilar onslaught for Humira in 2023.

Disclosure: I/we 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.