SB, I think your nibble will work out well over time. I just wish I had your opportunity at 11 while mine was 32.:-(
Btw
Is this the IMNX thread or Amazon.com? LOL.
>Seattle Times business reporter
GREG GILBERT / THE SEATTLE TIMES
Immunex Scientists Ray Goodwin, left, and Craig Smith are credited with the development of Enbrel, a treatment for rheumatoid arthritis. It has become the fastest-selling biotech drug ever, with nearly $700 million in sales last year.
In the late 1970s, when Dr. Peter Mohai trained to be a rheumatologist, the gold standard for treating rheumatoid arthritis was just that - gold salts, injected into patients' muscles and used to slow the damage to their swollen, aching joints.
"Even at the time, no one really knew why they worked," said Mohai, now with Seattle's Minor & James Medicalclinic. "They took about three months to kick in, and response varied widely. You would have very good response, no response at all, or something in between, and you could almost divide it in thirds."
There's still gold in treating rheumatoid arthritis. This time, however, it's being raked in by pharmaceutical companies, which sold hundreds of millions of dollars worth of drugs last year to fight the disease or ease its symptoms.
Few companies have so successfully tapped that demand as Seattle-based Immunex.
Rheumatoid arthritis
• An autoimmune disease that causes swollen and painful joints; can lead to deterioration of joints if unchecked.
• Affects 2 million to 2.5 million Americans; women are two to three times more likely to develop it than men.
• Usually develops between ages 25 and 50, but can occur at any age.
Source: Merck Manual of Medical Information
Since Enbrel, Immunex's rheumatoid-arthritis drug, hit the market in November 1998, it has become the fastest-selling biotech drug ever, with nearly $700 million in sales last year Three years ago, Immunex posted a $15.7 million loss; last year, it had a $154.4 million profit, largely because of Enbrel.
If anything, Enbrel is too popular for its own good. The one plant in Germany that makes it is working at full capacity. New plants won't produce commercial quantities of the drug until mid-2002 at the earliest. People who want to start taking Enbrel now have to join a waiting list with more than 1,000 names.
That demand, analysts say, opens a window of opportunity for competitors, most of them far larger than Immunex.
U.S. sales of Enbrel's main rival, Johnson & Johnson's Remicade, more than tripled last year, to $222.4 million, after the Food and Drug Administration approved its use for rheumatoid arthritis. (Before the FDA's November 1999 decision, the drug had been approved only for Crohn's disease.)
"Given the capacity constraints for Immunex, Remicade certainly will gain share as they add new patients," said Caroline Copithorne, a stock analyst with Morgan Stanley.
Sales of anti-arthritis drugs are soaring, because of an aging population and new, more effective medications.
Data from IMS Health, a Pennsylvania research firm, show that overall sales rose 42.3 percent last year, to $6.44 billion. Credit Suisse First Boston estimates the overall potential market for rheumatoid-arthritis drugs specifically at about $3 billion.
Angling for their piece of that market are California-based Amgen, whose drug Anakinra is expected to win FDA approval this year; Knoll Pharmaceutical of New Jersey, whose D2E7 is at least a year away from approval; and New Jersey-based Pharmacia, which is helping to develop a drug called CDP 870.
With the footsteps of such big players thudding behind them, Immunex is racing to stay ahead. Besides building new manufacturing capacity, the company is researching new uses for Enbrel, such as treating chronic heart failure and psoriasis.
"There's a great advantage that one has in being the first into the marketplace, particularly when you're validating a completely new target," said Peggy Phillips, Immunex's chief operating officer.
When researchers talk about "validating a new target," they mean they've found a new way to attack a particular disease. That's why Enbrel made such a splash when it hit the market.
Rheumatoid arthritis is distinct from osteoarthritis, a more common ailment many people develop as they age. Osteoarthritis results from the gradual degeneration of the cartilage in joints; rheumatoid arthritis is an autoimmune disease, in which the body's immune systems turns against its own tissues.
Treatments to relieve the pain of rheumatoid arthritis work on some people and not others, can have serious side effects, and may stop working over time.
In the 1980s, methotrexate replaced gold salts as the treatment of choice for moderate to severe rheumatoid arthritis. Originally developed as a chemotherapy drug, it was more reliable and easier to administer, Mohai said. Methotrexate can slow the disease's progression, he said, but the more severe the case, the less effective it is.
Other medicines - including the two best-selling arthritis drugs, Celebrex and Vioxx - can dull the pain but don't change the course of the disease.
Enbrel was the first drug to target tumor necrosis factor (TNF), a protein that helps regulate the immune system. People with rheumatoid arthritis have too much TNF in their joints; Enbrel is modeled on a natural protein that binds with TNF, bringing it down to more normal levels and interrupting the course of the disease.
Because patients improve quickly and dramatically on Enbrel, and can give themselves the twice-weekly injection, the drug was an immediate hit. Last year, Enbrel sales were $652.4 million, accounting for three-quarters of Immunex's total revenue.
"Enbrel has set a very high hurdle for any other drug that wants to compete in that market," said Andrew Heyward, an analyst with Ragen MacKenzie in Seattle.
If Immunex had sufficient manufacturing capacity, Heyward said, it could sell $900 million to $1 billion worth of Enbrel this year. But since the German plant is running at full capacity, sales are projected to top out at $750 million.
That means some $200 million in sales are waiting to be picked up, and right now the only other option is Johnson & Johnson's Remicade.
Like Enbrel, Remicade works to block excess TNF in the joints. It is a monoclonal antibody, a lab-made copy of a human antibody, that binds to TNF and produces results similar to Enbrel. It also lasts longer. The prices of the drugs are also comparable. A year's supply of Enbrel costs between $11,000 and $12,000; Remicade costs about $12,000 for the first year and $10,000 each year thereafter. But Remicade has some disadvantages. It's a combination of mouse and human antibodies, so patients need to take methotrexate to prevent their immune systems from rejecting Remicade. Patients also have to take the drug through an IV, which means they can't give it to themselves but must go to a medical clinic.
Joseph Scodari, president of the J&J subsidiary that developed Remicade, said rheumatoid-arthritis patients generally visit a doctor's office every eight weeks anyway, so the IV requirement fits their schedules. And, he said, most Enbrel patients take methotrexate as well (although Enbrel has been approved for solo use, making it an option for patients who either can't take methotrexate or for whom it's stopped working).
Medicare covers Remicade, because the drug's administration via IV is considered a medical procedure. Medicare will not pay for Enbrel because patients can give it to themselves.
The market has certainly welcomed Remicade. Worldwide sales, including overseas sales made by partner Schering-Plough, were more than $370 million last year, Scodari said.
"The supply problem (at Immunex) has been, in my opinion, a boon for Remicade," Mohai said. "If we have a patient who's at a point of needing one of those drugs, we'll probably put him on Remicade."
And if someone is doing well on Remicade, Heyward added, it will be hard to switch the patient to Enbrel later, when it's more plentiful.
According to IMS Health, Remicade's market share rose to 42 percent in January, compared with 33 percent in December. Enbrel sales fell by nearly half between December and January, according to IMS, and its share of the two-drug market fell from 67 percent to 58 percent. In January 2000, it had 79 percent of the market.
Meirav Chovav, an analyst for Credit Suisse First Boston, wrote in a recent report that some of the sharp decline probably resulted from people stocking up in anticipation of supply shortages.
"However," Chovav continued, "we also believe that Remicade is making significant progress in the RA market."
And, Scodari said, J&J won't be hit by the kind of supply constraints Immunex is experiencing. In the mid-1990s, the company more than doubled the capacity of the Dutch plant that makes Remicade and other drugs. That should suffice until a new plant in Malvern, Pa., comes online, which Scodari said should be in about a year.
Knoll, which recently was sold to Illinois-based Abbott Laboratories, is developing its own anti-TNF drug, known as D2E7. Like Remicade, it's a monoclonal antibody; unlike Remicade, D2E7 is fully human, which means it shouldn't trigger an immune response. D2E7 can be self-administered, like Enbrel, and likely would be taken only about once a week. D2E7 is now in Phase III clinical trials. Assuming those trials show it is safe and effective, Abbott Labs expects to file for FDA approval in mid-to-late 2002 and hopes to launch the drug in the fall of 2003. Moving to meet the expected demand, Abbott last year began expanding its plant in Worcester, Mass., to make commercial quantities of D2E7.
Pharmacia and Celltech recently announced plans to co-develop yet another anti-TNF drug, code-named CDP 870. Although that drug is in an earlier stage of development, analysts at Credit Suisse First Boston expect it to launch in the second half of 2003.
Before either of those drugs reaches the market, Amgen is likely to win approval for its rheumatoid-arthritis drug, Anakinra. Unlike the anti-TNF drugs, Anakinra works by blocking interleukin-1, another chemical involved in the inflammation response. The FDA is reviewing Amgen's application for Anakinra; Amgen spokeswoman Rebecca Hamm said the company expects to hear before the end of this year.
But Copithorne, the Morgan Stanley analyst, expects Anakinra to be a niche product, mainly for people who don't respond to Enbrel or Remicade. "It is a daily injection, so it's less convenient, and from what the data's shown, it doesn't appear that patients experience the same kind of rapid improvement in their pain and swelling" as with the anti-TNF drugs, she said.
Immunex's supply problems should ease by the middle of 2002, when the company expects to bring on line its Rhode Island plant - bought last year from American Home Products, which owns a big stake in Immunex. That plant alone will double the manufacturing capacity for Enbrel.
American Home also plans to build a plant in Ireland that will make Enbrel, though it isn't likely to come online for more than three years.
By that time, Immunex's Phillips said, the company hopes the potential market for Enbrel will have grown even more than the supply.
The drug was first approved only to treat people with moderate to severe rheumatoid arthritis who weren't responding to other medications. Since then, the FDA has said Enbrel can be a first-choice therapy for all moderate to severe cases, as well as for a form of the disease that strikes children.
Immunex is also researching Enbrel's potential for treating other diseases. The company reported last week that it was effective against psoriatic arthritis, and plans to file an application with the FDA for that new use by midyear. Psoriatic arthritis, a complication of psoriasis, affects about 250,000 Americans.
However, the company last week also ended two large-scale trials of Enbrel as a treatment for congestive heart failure, on the recommendation of an independent monitoring board. The board said data from the studies showed that Enbrel was unlikely to meet its effectiveness target.
Getting Enbrel approved for congestive heart failure would represent a vast expansion of Enbrel's potential market. Right now, Phillips said, Enbrel is approved for about half of the 2 million-plus Americans with rheumatoid arthritis. By contrast, she said, some 6 million Americans have chronic heart disease; up to 2 million of them were potential Enbrel users.
Investors reacted swiftly to the news, as well as disappointing study results for Immunex's asthma drug, Nuvance. Immunex shares plunged as low as $9.75 in after-hours trading Thursday, after closing at $18.88. On Friday, the stock closed at $11.63, down $7.25, or 38 percent, from the close of the regular Thursday session.
Immunex said it would decide whether to pursue the congestive heart-failure line of research after analyzing data from the discontinued studies.
Neither is Johnson & Johnson resting on Remicade's success. The drug is being studied as a treatment for psoriasis, ulcerative colitis and as a chronic therapy for Crohn's. Scodari said it has potential for treating diseases from asthma to heart failure, and for preventing rejection of bone-marrow transplants; he called it "a pipeline in a product."
Analysts are divided over the long-term implications of the supply squeeze for Immunex. When Chovav, the Credit Suisse analyst, began covering Immunex last month and rated its stock a "hold," she expressed concern that Enbrel's market position in rheumatoid arthritis could erode before the drug was approved for any new diseases.
But Morgan Stanley's Copithorne, who rates Immunex "outperform," was more optimistic.
"Enbrel's best advantage lies in being first to market, in the vast amount of data that Immunex has accumulated on the product, and the fact that they'll be well ahead in the additional indications and the long-term progression data," she said. "In terms of long-term consequences competitively, I don't think (the supply crunch) will be that significant." |
