RBC just out - Biotech: Upcoming data for new oral Crohn's and UC drugs vs CELG/RCPT drug
Biotech: Upcoming data for new oral Crohn's and UC drugs vs CELG/RCPT drug
CELG, GLPG, BIIB, PFE, AZN/AMGN, others
September 10, 2015
RBC Capital Markets, LLC
Michael J. Yee (Analyst)
Post the CELG/RCPT deal and now BIIB/Mitsubishi deal, it's clear the oral inflammatory bowel disease (IBD) market including Crohn's and UC is a large and likely expanding $5B+ market where patients will get new options soon. CELG is poised to benefit given oral GED-0301 potential and now RCPT acquisition. BIIB acquired a similar molecule and will complete Phase II studies in Crohn's. We are net positive on the CELG-RCPT deal and believe CELG can afford the acquisition, needs to bring in products now to offset any Revlimid IP risk beyond 2023+, and yes there will be potential pending oral competition (see below) which we acknowledge is one of the key "bear thesis" issues on CELG and its recent perceived frothy use of capital these days. But CELG is ahead and competition is obviously expected in time in what we think is going to be a $5-10B potential market down the road.
3+ datasets for new orals we're waiting for over next 6-12 months (flagging for any headline risk to CELG and its recent RCPT acquisition):
1) GLPG has Crohn's Phase II data in Q4:15 (more in Q1:16) for their JAK1 inhibitor (filgotinib) partnered with ABBV. It's reasonable to think this could be positive given prior positive data in RA and prior promising data from PFE's JAK in IBD indications (but PFE has side effects that make it less competitive). We will be comparing the data to CELG's Phase III Crohn's asset GED-0301, which showed up to 67% remission vs pbo 21% at wk 12 (Phase II).
2) GLPG has UC Phase IIa data in Q1:16 for their own novel, oral GLPG1205 drug. GLPG1205 was previously partnered with Janssen (JNJ), but notably the partnership was dissolved in Dec '14 even after Phase I data was presented which probably isn't a good sign and there is minimal data here previously...(though GLPG/JNJ also terminated their other inflammation partnership for IPF). GLPG1205 is an oral inhibitor of GPR84, a proinflammatory G protein-coupled receptor. It is mainly expressed in peripheral blood leukocytes, bone marrow, and lung - literature suggests GPR84 mediates chemotaxis and the release of IL-12/IL-8/TNF, thus modulating immunoregulatory and neuroinflammatory responses. Phase I PK/PD data at UEG showed good safety and sustained inhibition of its target.
3) BIIB just in-licensed Phase II S1P drug MT-1303 from Mitsubishi and fully intends to develop it in IBD with data in 2016. A Phase II in Crohn's is finishing around mid-2016 and BIIB said they could go to Phase III and start a UC study. Notably, the Phase II MS study was quite positive and this data could be at the WCN conference on Nov 3rd, 2015 (abstract inside). Data suggests higher ARR benefits although similar MRI efficacy as RCPT in MS which may or may not be sufficient read-through to IBD indications (ARR is less reliable in small Phase II, cross-trial comparisons). Safety (CV adverse events) may not be as perfectly clean as RCPT realizing both are generally clean with no liver tox and both better than the hair on Gilenya. We think this deal is good for BIIB given no exposure to this market before the deal this week. CELG bulls question how this drug could be obtained for only $60M and royalties and why nobody else paid higher given what should be many interested parties.
Other players with data in 2016+: AZN/AMGN's AMG181 in Phase II for Crohn's; PFE's tofacitinib (oral JAK) in Phase III for UC - multiple studies reading out 2016, CELG's own Otezla and GED-0301 in Phase II for UC, ARNA's APD334 (another oral S1P) just entered Phase II for UC (covered by RBC analyst Simos Simeonidis), Lycera in Phase I for UC. *See charts inside for list of select drug candidates*
Post the CELG/RCPT deal and now BIIB/Mitsubishi deal, it's clear the oral inflammatory
bowel disease (IBD) market including Crohn's and UC is a large and likely expanding $5B+
market where patients will get new options soon. Current options include Humira and
Remicade but these have limited durability and there will be a growing opportunity where
upcoming oral drugs are likely to offer a new option for patients who fail those biologics
(injections/IV), or take share from injectables and offer a more convenient and in some
cases, equal or better efficacy value proposition. CELG is poised to benefit given oral GED-
0301 possibility and now RCPT acquisition over the next few years. BIIB acquired a similar
molecule and will complete Phase II studies in Crohn's. We are net positive on the CELG-RCPT
deal and believe CELG can afford the acquisition, needs to bring in products now to offset
any Revlimid IP risk beyond 2023+, and yes there will be potential pending oral competition
(see below) which we acknowledge is one of the key "bear thesis" issues on CELG and its
recent perceived frothy use of capital these days. But in our view, CELG is ahead and
competition is obviously expected in time in what we think is going to be a $5-10B potential
market down the road.
Inflammatory bowel disease (IBD) encompasses both ulcerative colitis (inflammation and
ulcers in large intestine, rectum) and Crohn’s disease (inflammation that can affect any
part of the gastrointestinal tract, including small intestine). Marked by severe diarrhea, pain
and weight loss, IBD is a debilitating chronic illness and can lead to life-threatening
complications. In the US alone, more than 1 million people suffer from IBD. While the exact
cause of IBD is unknown, it is likely driven by an unchecked intestinal immune response.
Thus, potential treatments for both Crohn’s and ulcerative colitis could work by restoring
natural mechanisms that keep our immune response in check