ML's take:
PIER Disappoints; Still Positive on Lucentis
Genentech released competitive data to Macugen from the PIER study, which
evaluated Lucentis’ ability to treat age-related macular degeneration (AMD) using
quarterly as opposed to monthly dosing. The efficacy did not appear to be as
robust as with monthly dosing, thus quarterly Lucentis dosing may not be ideal.
But, in practice, we believe patients will be treated when physicians deem it
necessary based on retinal scans not based on fixed dosing schedules. Thus,
despite disappointing PIER data, we continue to believe that Lucentis will
dominate the market due to its strong efficacy and Macugen is still unlikely to
become a major growth driver. As a result, we still expect the eye business to be
divested and the company put up for sale.
Vision gains lost with 3-month dosing of Lucentis
The PIER study looked at Lucentis dosed once monthly for the first 3 months and
then quarterly for the remainder of the year. The drug improved vision on
average by month 3. But, vision gains were lost by month 12, suggesting that
once every three month dosing is less beneficial than monthly dosing, although
Lucentis was still very effective.
PIER data not relevant to Lucentis’ market share
In clinical practice, we believe retinal specialists are most likely to tailor Lucentis
dosing to individual patient needs, which will be determined by retinal scans.
Thus, we do not view the PIER data as overly relevant to determining Lucentis’
ultimate market share. We believe Lucentis’ clear efficacy advantage relative to
Macugen will allow the drug to dominate the AMD market.
Macugen not a growth driver, still likely to be divested
Thus, our view that Macugen is unlikely to become a major growth driver for OSI
remains unchanged. The company has stated that Macugen needs to provide
meaningful profitability or the eye business will be divested, sold to Pfizer, or shut
down. For our part, we continue to believe the company will be put up for sale.
We estimate a fair value of $33 - $44 depending on peak US Tarceva sales ($400
MM - $600 MM). |
