J&J Not Sweating Remicade Biosimilar Approval
This article was originally published in The Pink Sheet Daily
Executive Summary
The company remains comfortable with the growth outlook for pharmaceuticals despite FDA approval of a rival biosimilar to its blockbuster Remicade, the firm said during its first quarter conference call.
Johnson & Johnson does not expect a biosimilar rival to its blockbuster tumor necrosis factor inhibitor Remicade (infliximab) will launch in the US this year despite the FDA approval of Celltrion Inc.’s Inflectra (infliximab-dyyb) April 5.
“We don’t expect biosimilar competition in 2016,” Chief Financial Officer Dominic Caruso said during the company’s first quarter sales and earnings call April 19. “We have several patents that we intend to defend.”
Caruso pointed to Remicade’s patent No. 6,284,471, which expires in September 2018, and another patent that extends to 2027 as support for keeping a biosimilar off the market for now. But the enforceability of the patent expiring in 2018 is uncertain after the Patent and Trademark Office found the patent to be invalid in a reexamination proceeding. The decision is on appeal before the PTO’s Patent, Trial and Appeal Board (PTAB).
Celltrion’s partner on the US launch of Inflectra, Pfizer Inc., has said it is preparing to launch the biosimilar this year, though acknowledged it could be delayed (Also see "Pfizer's Biosimilar Launch: Three Possible Dates For Inflectra" - Pink Sheet, 11 Apr, 2016.). Inflectra is only the second biosimilar approved by FDA (Also see "Biosimilar Template Revisited: Inflectra Approval Binds And Separates From Remicade" - Pink Sheet, 5 Apr, 2016.)
Remicade is J&J’s top-selling drug; it generated $1.78bn worldwide in the first quarter of 2016. Remicade generated $1.21bn in the US, up 14.8% during the quarter. Biosimilar versions of Remicade have already launched in Europe, where the drug is marketed by Merck & Co. Inc.
Despite the threat to its top revenue generator, Caruso said J&J is “comfortable” with the company’s growth outlook for the pharmaceutical segment regardless of the launch timeline of Inflectra.
“Overall, the immunology franchise of Johnson & Johnson is very strong because it’s not just about Remicade,” he said.
The franchise also includes Simponi (golimumab) and Stelara (ustekinumab), which generated $390m and $735m in the first quarter, respectively. J&J expects to launch new drugs in immunology too: the anti-IL-23 antibody guselkumab for psoriasis and the anti-IL-6 antibody sirukumab for rheumatoid arthritis.
Caruso said J&J does not expect significant pricing pressure for new innovative medicines in immunology even if a biosimilar anti-TNF reaches the market.
“Innovative products that have a significant impact on unmet medical need – in this case it would be those patients that are not otherwise responding to, for example, TNF therapy, our view is that … the products will still continue to be valued,” he said.
J&J’s Pharmaceutical unit had a strong first quarter, with worldwide sales up 5.9% to $8.19bn, driven by growth in immunology, the SGLT-inhibitor Invokana/Invokamet (canagliflozin) for type 2 diabetes, the oral anticoagulant Xarelto (rivaroxaban), as well as by strong launches in oncology with Imbruvica (ibrutinib) for certain B-cell malignancies and Darzalex (daratumumab) for multiple myeloma.
Darzalex, which was approved by FDA in November, contributed over 2% to US pharmaceutical growth, Caruso said, though the company did not break out sales. Darzalex is a first-in-class anti-CD38 monoclonal antibody; it was approved as a monotherapy in heavily treated patients following at least three lines of therapy (Also see "Multiple Myeloma Market Snapshot: New Drugs And Big Changes" - Pink Sheet, 4 Jan, 2016.).
Imbruvica generated $261m worldwide in the first quarter, up from $116m in the year-ago quarter. Imbruvica, partnered with AbbVie Inc., secured a new indication from FDA in March for first-line use in patients with chronic lymphocytic leukemia. It is approved for several other indications, with the initial approval in 2013 for mantle cell lymphoma. J&J and AbbVie share global profits on sales of Imbruvica.
One question on the minds of investors is how J&J plans to use its large cash balance, which stands at roughly $17bn in net cash. Analysts questioned the company’s lack of deal-making, given the large balance. The company already initiated a $10bn share buyback program to return cash to shareholders (Also see "J&J: Large-Scale M&A Still On The Table Despite $10bn Share Buyback" - Pink Sheet, 13 Oct, 2015.).
Caruso commented that the company is very active on the deal-making front but also disciplined.
“We do see opportunities, but we want to do the right deal at the right time with the right party at the right valuation, and we’re comfortable waiting for that to take place,” he said.