FYI, some notes from the conference call.
The report showed a very solid First Quarter, Q1 99.
CEO Peter Johnson pointed out that the quarter produced no evidence of the demise of protease inhibitors that was predicted by some at Geneva. The PI class more than held its own during what is always a slow season, Viracept continues to make market share gain, and there is good reason to believe it will continue to do so, perhaps at an accelerated pace, in part "because of" - rather than "in spite" of the recent approval of Sustiva.
US Sales of Viracept were $107 million. The summer months are not robust in terms of pharmaceutical sales, and there was some moderation in the preceding months, which as reflected this quarter. It is still almost a 2% increase over the last quarter and a ~40% increase over year ago sales.
This quarter Viracept became the most frequently prescribed PI in the market place.
Agouron is very positive about future sales of Viracept. This is evident in the August data of the DDD audit which measures the flow of dollars from wholesalers to other classes of trades.
For August, which is the last month they have data for, Viracept had a 40% market share in terms of dollars, compared to Crixivan, #2 with 27.5%.
August sales were in the vicinity of $31 million dollars.
Even more encouraging is the MPA (sp?) audit data which measures prescriptions written for PIs in the US.
Retail and non-retail figures for the class of protease inhibitors exceeded 226,000 prescriptions and this was the highest total ever recorded for this class of products. According to the mpa data, not only was September a good month, the weekly October data looks very strong. For example, for the week of October 2nd, data reached all times highs for the PI class, and each individual PI reached new records.
~75,000 prescriptions were written for Viracept in September, the highest monthly total number ever written for Viracept.
Viracept was Number One in market share, for the second consecutive month.
Viracept's market share for September was 33.4%.
Viracept is now clearly the most widely prescribed protease inhibitor in the US and is clearly on its way to the same position worldwide.
Viracept is now approved in 37 countries and has been launched in 24 of those countries, with Italy, another major market, coming on this week. Agouron believes there are about 150,000 patients worldwide on Viracept, although the numbers are hard to estimate. Merck has estimated that about 170,000 patients worldwide are on Crixivan, so Agouron is closing the gap.
Roche recently informed Agouron that Viracept is now the leading PI in Germany, United Kingdom, Australia, & Switzerland and is only slightly behind Crixivan in France, which is the biggest HIV market in Europe.
Viracept was approved in Canada this quarter, and it is in the process of being launched. The sales impact will not be seen immediately because it has to go through the provincial formulary in each province. It is currently approved in British Columbia, and approval in the other two large provinces, Ontario and Quebec, will probably occur late in the second quarter.
So contrary to the news coming out of Geneva, the PI class is alive and well and the outlook for the PI class and Viracept for the balance of the year looks very positive.
Viracept's strong first line position is due to the product's potency, tolerability, and ease of use.
Viracept continues to be the most frequently used protease inhibitor in new patients. The majority of Viracept sales currently are for antiretroviral naïve patients. One of the most important factors for continued growth will be enhanced usage of Viracept in treatment experienced patients.
Right now 25% to 30% of patients are taking Viracept BID and they expect this to go to 50% by the end of the fiscal year. In terms of new patients, well over 50% are being started on BID. That will increase as news of the BID studies circulate.
The recent announcement by Merck of the failure of their BID studies for Crixivan as well as Abbots unfortunate problems in producing Ritonavir capsules will enhance Viracept sales throughout the year.
And based on order patterns they see from Roche, they are optimistic about Viracept growth in the rest of the world. Merck's marketing efforts are still as intensive as before, and there are no reports that they have shifted away from Crixivan
In spite of all positive news, Agouron is still sticking to their conservative estimate of $430-$440 million of US sales of Viracept, until they can see if there will be any fallout from "protease sparing" regimens and new drugs like Agenerase.
Driving the market will be more prescriptions from Sustiva's launch, and other new products, and also the use of Viracept in naïve and experienced patients.
One analyst commented on the very conservative estimates for flat revenues, in spite of all the positive factors. Agouron is
only projecting 4 times this quarters slow sales of $107 million, in their projections of $430 million to $440 million in US sales of Viracept for fiscal 99; even with anticipated growth and Merck's (lack of) BID news, the 3% price increase in viracept, the great BID data and other data at ICAAC, the Norvir slowdown etc etc.
He didn't see how they could be projecting a flat year.
He's right. We know they are very conservative. They say they want to see trends and they will be happy to revise expectations upwards if necessary.
License fees and royalties in Q1 99 have increased by 115% due to payments from Roche based on their increasing estimates of sales in their licensed territories.
License fees and royalties in fiscal 99 should be $30-35 million.
Viracept sales to Roche were just over 26 million for the quarter, a 30% increase from the immediately preceding quarter, and they estimate sales to Roche for fiscal 99 to exceed $100 million dollars.
Roche will begin to be responsible their world wide needs, starting at the end of the fiscal year 99 and Agouron will receive a manufacturing fee for Viracept manufactured by Roche.
Current quarter gross margins were 70%, compared to 69% in 4Q 98
Margins have increased in each of the last 6 quarters, and they expect gross margins to average 71% and to range as high as 73%.
Contract revenues for F99 will range from $30-35 million
Royalty expense was 24% in Q1, compared to 18% in Q1, due to increasing margins and profitability
R&D costs have increased by 39% from the year ago quarter, due to increasing clinical development expenses associated with AG3340 cancer program, and higher staff levels
R&D costs have decreased by 39% from the Q4 98, due to accrual of $26 million of license fee expenses, in Q4 98.
SEC continues to review the proposal divisional stock, and the annual shareholder meeting has been moved to December 16th 98 to accommodate the review process and to conduct informational meetings to explain the stock proposal.
They hope to implement the new division, if approved, by the end of calendar 98 and if everything goes as planned, the Q2 99 will reflect the two separate divisions.
25% of R&D spending, excluding milestone payments, will be attributed to the companies oncology research.
SG&A for new oncology division will be $1 million. There are no revenues at present; if there are any collaborations or limited partners, revenues will be added.
The tax rate will be 15% for the entire year, regardless of whether or not there is an oncology division,
based on current estimates of pre-tax income and available credits and other deductions.
Capital expenses were $9-12 million, they have cash reserves of of $62 million, and an unused credit line of $20 million.
The company believes its current financial resources and anticipated sales of Viracept should be sufficient to support its needs for the fiscal year and further.
The company says it absolutely on track for an end of the year safety analysis for non small cell lung cancer, and will then proceed into the larger phase III part of the trial. An efficacy evaluation at that time is forbidden by the protocol.
The efficacy data is scheduled for the middle of next year.
So far accrual in non-small cell lung cancer and prostate cancers have been very good.
They are looking at expansion of 3340 to cover a broader spectrum of indications.
The price of Viracept was raised 4.6% at the beginning of October, although with discounts and rebates, it ends up being closer to the 3% range. It may add $9 million this fiscal year or calendar year, I forget which.
One analyst asked about lipodystrophy and the impact of resistance testing.
Agouron continues to see very few cases of lipodystrophy with Viracept.
At the Glascow meeting next month, there will be a poster presentation of their large BID study, out to 48 weeks: 286 patients were at 48 weeks and there were a total of 353 total patients. There were only 3 cases of lipodystrophy. Going out to 72 weeks there were two more patients. Pretty low numbers.
Resistance testing will have a positive impact on therapeutic treatment, but it is much too early to say at this point if it will have a financial impact.
Sustiva prescription numbers are under-whelming, in the first three weeks after approval.
1100 prescriptions for September, but it is still too early to tell, even though they are half of what Viracept prescriptions were for same time period.
Their comments on Agenerase (-imo, they sounded under-whelmed.)
They have always said the product will find its place, but they believe for any product to have a significant impact, it would need to be a once-a-day regimen which it is not.
It does not have a better side effect profile, it has a worse side effect profile.
It has a higher pill burden, 8 large pills twice a day.
Also substantial clinical experience says a lot in this market place and by the time Amprenavir gets approved, Viracept will have been on the market for close to two years.
They say maybe it will be helpful for salvage therapy.
They have only seen 16 week data, comparing AMP+ AZT+3TC to ZT+3TC. They would like to see data comparing Amp to Crix, which they are doing. . They would like to see larger studies, further out.
They were surprised at the large number of dropouts due to side effects, in the study presented at ICAAC.
As far as Norvir , about 65% of prescriptions were for liquid; and 35% for capsules, which many have already run out of.
They think the increase in Norvir prescriptions may be due to patients being given small amounts of liquid to try first, to see if they can tolerate it. Then if they can, they are given another prescription.
Plus there were more prescriptions written for all the capsules they could get hold of - hoarding - as Elise Wang said in one of her reports. In the short term, they do not expect a decrease in Norvir, but it is early to see the problem will increase Viracept sales.
AG1766, their new Protease inhibitor -they are working on toxicology studies and it will be in clinical trials by the middle of next year.
AG1549, a NNRTI, they are restarting PhaseI/II that Shinogi started and stopped, and will be starting and initiating new Phase II studies to determine appropriate doses, by the middle of next year
They may have some preclinical resistance data at the Human retro meeting coming up.
They are aggressively pursuing Remune; their own study, of the effect of Remune on patients receiving Viracept plus two nrtis and to see the effects on viral load.
The DSMB will take an interim look at the large Spanish trial of Remune, a blinded analysis, early next year,
but it won't be public.
An evaluation of the clinical endpoints by the DSMB will be done early next year, and since we don't know the outcome, we don't know whether or not the study will conclude on schedule.
Dual protease inhibitors.
Great deal of work on nfv/saq. It seems to be a good combination. There will be presentations by Roche at meetings.
The combination of Viracept and Crixivan has taken on new significance now, and the only BID studies that Crix is involved with for BID. They are working with Merck on BID studies of Crix and Viracept.
About 15-18% of patients are on dual PI therapy now and expectations are that it will be up to 30% in a year.
Most dual PI use is PI experienced patients but this may change.
If I left out info or made errors, and I'm sure I did, I'm sorry. I don't have a secretary :-)
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