Rituxan, a longtime blockbuster drug for Genentech (DNA) , is likely to contend with increased competition out of Denmark next year.
Rituxan is approved for non-Hodgkin's lymphoma (NHL) and rheumatoid arthritis, but is also used off label for a host of other indications. In fact, Rituxan combined with chemotherapy is one of the most common forms of treatment for chronic lymphocytic leukemia (CLL).
The drug is expected to generate more than $2 billion in sales in 2006 for marketing partners Genentech and
, with Genentech as majority partner.
Rituxan, a monoclonal antibody, targets the CD20 protein, which exists on the outside of B cells, the type of white blood cells that help fight infections. The antibody sticks to the protein, which alerts the body's immune system to kill the cell. If the immune system cannot destroy the cell, the antibody can bore a hole into the cell and kill it. Rituxan is a hybrid of both human and mouse antibodies.
The HuMax Factor
Danish drug company
has developed a humanized antibody called HuMax CD20. Recent studies have shown that HuMax appears to work better in CLL patients than Rituxan.
CLL patients have lower levels of CD20 on their cells than NHL patients do. While Rituxan is able to find the CD20 proteins on NHL patients' B cells, it has more difficulty finding them on the cells of CLL patients. HuMax does not have that problem.
Despite CLL patients having far fewer CD20 proteins on the cells, HuMax can still locate enough of them to signal the body's immune system to attack, which leads to the death of more cancerous B cells. Additionally, HuMax attaches to the protein closer to the cell, enabling it to more easily reach into the cell to kill it if the immune system doesn't do the job first.
HuMax is currently in phase III trials for the treatment of both CLL and NHL and phase II trials for rheumatoid arthritis. Its CLL trial targets patients who have not responded to Rituxan and chemotherapy. In other words, these are very sick people. The FDA has fast-tracked HuMax for CLL. Should the drug show efficacy on such a difficult patient set, it should very well be able to help others with CLL.
Of Mice, Men and Market Share
A HuMax approval in 2007 could take a large chunk of Rituxan's market share in CLL. It also may spark off-label uses in NHL and rheumatoid arthritis.
"I think a very high percentage of Rituxan's
sales has been off label," Genmab's CEO Dr. Lisa Drakeman says. "So if people start believing in CD20 therapy for a variety of diseases and we haven't finished the clinical studies to file for approval on all of those, it's possible that, at least in the United States, people would use these products off label, because we've seen that historical pattern."
Drakeman says the market opportunity could be worth as much as $7 billion a year and it's growing. "Rituxan essentially has the market to itself. We have an antibody that we hope has some advantages."
But Dr. Kip Benyunes, Genentech's group director of clinical hematology and oncology, is not yet convinced. He points out that while the HuMax data may be tantalizing, they measure only response rates. "Over the last 10 years, we've moved on beyond response rates to clinically important endpoints, which is progression-free survival in lymphoma." Benyunes stresses that Rituxan has been proven to improve survival three and five years out.
As you can imagine, injecting someone with mouse antibodies can cause some allergic reactions. HuMax doesn't appear to have the same issue because it is a fully human antibody, so the drug could be safer and have fewer side effects than Rituxan.
Again, Genentech's Benyunes emphasizes Rituxan's track record. One million patients have been treated with Rituxan over the past 10 years. "If you're a cancer patient and you have data that shows this could improve your survival and something else that says well, we don't know what the long-term effects are in survival, but it may slightly reduce the risk of side effects, you look at that differently," he said. "As a physician, I'm much more interested in a new agent that is going to improve survival." Benyunes added, "Unless the toxicity of a drug is really something I'm concerned about, I don't want to spend a lot of time trying to reduce adverse events."
Rituxan May Pave Way for HuMax
It's difficult to gauge just how an approval of HuMax will impact Rituxan revenue because Genentech doesn't break down sales between NHL and CLL. However, the current consensus estimate for Genmab's 2008 revenue is $425 million (with a high estimate of $700 million-plus), nearly all of that coming from HuMax.
One should assume that a nice chunk of HuMax's sales will come at the expense of Rituxan. It seems likely that Genentech could suffer a hit to its top line in 2008. But that kind of hit's not going to bankrupt the San Francisco-based drugmaker, which is expected to rake in nearly $13 billion in sales in 2008. If, however, phase III results turn out as positive as earlier trials, HuMax could eat into more of Rituxan's sales than most think.
And Genentech could even inadvertently help HuMax take its sales. Rituxan recently showed some positive phase II results for multiple sclerosis. Should MS become an off-label (or approved) use of Rituxan, HuMax certainly has the potential to steal some of those sales as well.
In order to take on Rituxan, Genmab is in active talks with potential partners for HuMax. The ideal collaborator is a large drug company with existing marketing and manufacturing capacity. Genmab has in the past partnered with
, which owns 56% of Genentech, for other earlier-stage products.
This is something to keep an eye on. Not only for the impact on Genentech but for the impact on the sector if humanized antibodies begin to gain traction -- as well as to see which Big Pharma name decides to get involved.
There are still a lot of things to like about Genentech, but the coming competition from HuMax is not one of them.
In keeping with TSC's editorial policy, Lichtenfeld doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships.
Marc Lichtenfeld was previously an analyst at Avalon Research Group and The Weiss Group and a trader at Carlin Equities. He holds NASD 86,87, 7 and 63 licenses. His prior journalism experience includes being a reporter/anchor for On24 in San Francisco and a managing editor of InvestorsObserver, a personal finance Web site. He is a graduate of the State University of New York at Albany. He appreciates your feedback;
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