Nicholas Martinez and Cody Powers co-wrote this blog post with Ben Hohn.
The stakes are high when preparing to launch a new drug, but for a biopharmaceutical company staring down its first-ever oncology launch, the stakes are even higher. Drug launches in the oncology space have grown increasingly competitive and occur more frequently than in any other therapeutic category. And of the 202 novel drugs approved by the FDA from 2011 to 2016, five were oncology drugs launched in the U.S. by publicly traded newcomers—so-called “first launches.”
In late June, I gave a presentation at the 2017 BIO International Convention in San Diego in which I presented data on novel emerging pharmaceutical first launches and facilitated a panel discussion with several emerging biopharmaceutical executives on the topic of first launch. Here, I’ll focus specifically on a subset of five oncology companies launching their first novel drugs since 2011: Ariad Pharmaceuticals, Exelixis, Incyte Corp., Pharmacyclics and Seattle Genetics. While the sample size of five publicly traded, first-launch oncology companies is small, each of these companies increased its value substantially—as measured by its market cap or exit value if acquired—following its commercialization efforts. Their stories serve as relevant analogues for development-stage oncology companies contemplating their own first launch. Here are five observations about these first launches:
- These companies set up for a strong launch with products that addressed significant unmet needs. All five oncology first-launch assets were orphan products with fast-track designations, and Exelixis’s cabozantinib and Pharmacyclics’s ibrutinib also earned breakthrough designations. Exelixis launched with a niche “fast-path-to-market” indication in metastatic medullary thyroid cancer, and it took approximately two years—until follow-on indications reached the market—for revenue to exceed SG&A spending.
- They partnered and co-promoted their products globally. Exelixis, Pharmacyclics, Seattle Genetics and Incyte created partnerships for their first-launch products when launching in Europe. Pharmacyclics also launched in the U.S. with a 50/50 co-promotion with its European partner Janssen. Ariad initially launched in Europe but subsequently sold its European business to Incyte. (Incyte had previously partnered with Novartis for its first EU product launch.)
- They made investments to support their product launch strategy. One year prior to launch, SG&A spending ranged from a low of $32 million for Exelixis to a high of $71 million for Pharmacyclics. There isn’t a one-size-fits-all model for launch spend as optimal spend will vary by product, company, indication, market and competition.
- They prepared the field to educate key stakeholders. The number of sales reps at launch—often the largest single driver of costs—varied: Ariad (60), Exelixis (5), Incyte (60), Pharmacyclics (125) and Seattle Genetics (60). Pharmacyclics co-promoted Imbruvica at launch with Janssen, and the number of reps is the total for both companies, with each fielding about half of the total according to ZS research and analysis.
- They used their first launch as a precursor to enable future successes. All five of these companies utilized their first launch to prepare for additional future indications and follow-on products.
ARTICLE: Always Be Launching
Measuring Success and Determining Value Post-Launch
These five companies efforts’ were well worth it: AbbVie’s acquisition of Pharmacyclics for $22 billion reflected an increase of approximately $13 billion over Pharmacyclics’s market cap at launch. Exelixis’s market cap today of approximately $7.25 billion represents an increase of approximately $6.35 billion, a staggering percentage increase. Incyte’s market cap is approximately $28 billion, though some analysts attribute approximately half of its value to its late-stage pipeline IDO inhibitor.
As a “portfolio in a product,” AbbVie/Janssen’s (formerly Pharmacyclics) Imbruvica has the highest 2022 sales estimate of the group: nearly $4.1 billion, according to Evaluate Pharma. Incyte’s Jakafi has the highest current annual revenue. Ariad’s post-launch adverse events serve as a reminder that approval and launch doesn’t always fully “de-risk” an asset, yet Ariad exited with a $5.2 billion transaction.
The experience of these five oncology first-launch companies support the case for emerging pharmaceutical executive teams and boards to consider launching in the U.S.—with or without a partner—to create or realize additional value. For all of these companies, transitioning to the commercial stage was a significant undertaking that required substantial investment. All five companies didn’t see the launch as the end of the story but rather as an enabler of future value, which paves the way for subsequent new indications or product launches.