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Here's How Novartis Just Won Back The Edge In Ocular Therapy

Published 06/20/2017, 10:07 AM
Updated 07/09/2023, 06:32 AM

Over the past twelve months, much has been written about Novartis' (NYSE:NVS)'s struggles in the ocular disease space. The company was once considered the king of certain eye-related conditions, with its various portfolio assets dominating indications like age-related macular degeneration (AMD).

Recently, however, this dominance has been questioned.

Take the above mentioned AMD indication, for example. Novartis' blockbuster in this indication is called Lucentis, or ranibizumab. It first picked up approval in a wet AMD indication back in 2006 and has since gone on to expand into retinal vein occlusion type AMD, diabetic macular edema (DME) and myopic choroidal neovascularization. Just this year, this expanded further into all forms of diabetic retinopathy.


In 2016, Roche Holding (SIX:ROG) Ltd. (ADR) (OTCMKTS:RHHBY), which markets the drug in the US through its Genentech subsidiary, reported sales of $1.44 billion, down 10% on 2015 US sales. Internationally,

Novartis reported sales of $2 billion, down 11% year over year.

The reason for this decline is a drug called Eylea, which Bayer AG (DE:BAYGN) develops and now markets jointly with Regeneron Pharmaceuticals Inc (NASDAQ:REGN). This one was first approved for wet AMD in 2011 and has since picked up a 2014 approval in DME and a 2015 approval in diabetic retinopathy. The drug is hot on the coat tails of Lucentis, and has wrestled a decent portion of market share from the drug for one primary reason – dosing.

The drug need only be dosed once every eight weeks as opposed to the once every four weeks of Lucentis. It's also a little cheaper, but this is very much second to dosing in terms of commercialization success.

Why?

Because both drugs are intraocular injection administration. Nobody wants to have injections into their eyes more than necessary, and once over two months is far more attractive a proposition that once a month, assuming efficacy is comparable, which it is.

Of course, hasn’t just sat back and accepted its fate. The company has been hard at work on a drug called brolucizumab, which is a VEGF inhibitor just like Eylea and Lucentis. It works the same way as its competitor products and Novartis just wrapped up two phase III studies designed to demonstrate that this comparability in mechanism of action (MOA) translates to comparability in efficacy or bioequivalence. The data from both trials just hit press, and the company has managed to prove exactly what it set out to.

Right now, the numbers we have available to us are limited. Companies at Novartis' end of the space don't generally put out every bit of data as and when it's in-hand like a development stage biotechnology company might; instead preferring to save up the numbers for reporting at major conferences (in front of the people that are going to be prescribing the underlying asset).

What we know fro the limited information, however, is that across two phase III trials, named HARRIER and HAWK, Novartis' experimental asset recorded an average change in best-corrected visual acuity (BCVA) over 48 weeks (generally the primary endpoint of these sorts of AMD studies) at a comparable level to Eylea, and that safety profiles were consistent across the two assets.

The key point on this release, however, isn’t the comparable efficacy (although that's obviously important), it's that these patients experienced comparable efficacy through an injection every 12 weeks, as compared to every eight weeks for Eylea.

As mentioned, dosing frequency is all important here, and with the latest data, Novartis is playing Bayer at its own game. Chances are, then, that with this fresh asset, the company can wrestle back a fair portion of the market from Bayer and reassert its dominance in the ocular condition space.

This isn’t a near term thing. The drug will seek approval towards a target launch of 2019 and then expand into other indications across the subsequent few years. This means we're probably looking at the early 2020s before the drug reaches its peak potential and, by proxy, before Novartis can completely negate the negative impact Eylea has had on its sales revenues.

With that said, this is a big step forward for the company and one that markets are yet to really factor in the full impact of from a market capitalization perspective. On a long term position, therefore, and based on the future of its ocular therapy division, there may well be some value in an exposure to Novartis at current prices.

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