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Generic threat looms to J&J’s blockbuster Zytiga in US

Impact could also be felt by Pfizer

Zytiga

A US appeals court has turned down an appeal by Johnson & Johnson to block generic sales of its prostate cancer therapy Zytiga, freeing rival drugmakers to launch generics if they choose.

Those launches would be at risk of J&J seeking redress if it eventually wins the ongoing patent infringement litigation, but the announcement nevertheless sparked a sizeable drop in its share price.

J&J is trying to overturn a lower court ruling that one of its patents (No. 8,822,438) for Zytiga (abiraterone acetate) is invalid, and sought a preliminary injunction while that case is considered by the Court of Appeals for the Federal Circuit, which is expected to deliver a verdict in January.

Upon hearing that the injunction had been denied, J&J said it would immediately seek emergency relief form the Supreme Court to try to overrule the decision and block any generic launches.

The importance of Zytiga to J&J at the moment can’t really be overstated: its  quarterly sales are nearly $1bn – well over half from the US – and growing at a healthy 45% lick. That means an earlier-than-expected generic launch in the US could cost the company hundreds of millions of dollars in lost sales.

Zytiga’s growth has been gathering pace since it was approved for use as a first-line treatment alongside prednisone for metastatic castration-resistant prostate cancer (mCRPC) based on the results of the LATITUDE trial.

In a recent Securities & Exchange Commission (SEC) filing, the company said that if a temporary injunction was lifted ahead of the appeals verdict “the company expects that a generic version of Zytiga will enter the market and will result in a significant decline in sales.”

Generic drugmakers that have already won approval for generic Zytiga from the FDA include Mylan, Teva and Hikma Pharma and – with the injunction denied – there is nothing to stop them from launching, although none have yet indicated they will do so.

J&J’s head of pharma Jennifer Taubert insisted recently that while Zytiga remains an important product for the company “we’re absolutely not dependent on it,” pointing to third-quarter growth of 6.6% even if the product was removed from the revenue mix entirely.

J&J has been trying to expand its prostate cancer franchise with the launch of Erleada (apalutamide) non-metastatic CRPC. Erleada is one of 10 new drugs that J&J thinks could eventually make sales of more than $1bn a year.

J&J isn’t the only company that would be affected by an early generic Zytiga launch. Pfizer’s rival CRPC therapy Xtandi (enzalutamide) could also come under pressure form the entry of low-cost competitors.

BTG impacted

Meanwhile, declining Zytiga sales would also impact BTG, which gets a royalty stream from the product that accounted for 28% of its first half revenues, according to analyst Andy Smith at Edison. News of the denied injunction came the day after Boston Scientific unveiled a £3.3bn acquisition offer for BTG, although he said he does not think this will disrupt the takeover deal.

“The risk to the whole transaction is probably small, although perhaps not negligible in light of there being no break-up fee,” said Smith in a research note.

“A renegotiation on the price of the transaction would probably require a new agreement and, with Boston already having secured funding for the acquisition, we view such a move as unlikely.”

Article by
Phil Taylor

23rd November 2018

From: Marketing

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