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business newsIs Shire the Next Genzyme, Minus the Headaches?
Shire Pharmaceuticals continues to benefit from setbacks at the competition and has a promising pipeline to follow.
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The specialty pharmaceutical company gave updates on Monday on the manufacturing status of the Fabry disease treatment, Fabrazyme, and the Gaucher’s drug, Cerezyme. The company announced earlier this year that shipments of the drugs might be delayed due to manufacturing problems that developed in 2009. Genzyme was issued a consent decree by the FDA after it was discovered that a power outage and water-system problems had caused viral contamination and bits of stainless steel to affect the manufacturing of its products at one of its major plants.
Genzyme has tried to stay upbeat about the issues, but the problems seem to have no end in sight. The company said Monday that Cerezyme would continue to be shipped at current levels -- about 50% of capacity -- through July. Yet, patient infusion schedules and shortages will continue to be affected in certain regions.
As for Fabrazyme, supplies will stay at the same levels -- approximately 30% of capacity -- for at least the next three months, with supplies being especially tight during July and August.
“We continue to work to improve productivity associated with the introduction of the Fabrazyme working cell bank and overall output from the manufacturing process. Although we have made significant progress we have not reached the targeted levels of productivity and output,” said Genzyme in a statement. (link to statement: http://supplyupdate.genzyme.com/weblog/2010/06/fabrazyme-agalsidase-beta-supply-update-june-2010.html )
Genzyme’s statements have not instilled confidence in analysts or investors. Citi analyst Yaron Weber recently wrote, “We are more concerned about the lack of visibility into the future supply of Fabrazyme as yields from the new working cell bank are not satisfactory and remain at 30%. Management did not provide any new info today on whether FDA approved this new cell bank and this will be communicated soon as part of its Q2 results presumably. This is leading us to believe that there may yet be more challenges with this line, and not expect a pick up until 2011.”
Both of these drugs are the leading products in their markets and treat small patient populations of 10,000 people worldwide or less.
While all of this continues to plague the company, investors and patients have been looking elsewhere -- specifically, Shire Pharmaceuticals (SHPGY). Jim Malloy of Caris & Co. thinks Shire could be the next Genzyme, presumably without the complications. “The Shire pipeline is one of the best in the business,” he adds. (Shire currently has promising treatments for the immune-system disorder, hereditary angiodema, and for the digestive disease, diverticulitis, in late-stage trials.)
Shire’s Fabry disease drug, Replagal, has been supplied to US patients since last December due to the manufacturing shortage of Fabrazyme, despite having not garnered approval for the drug from the FDA. The drug was given a fast-track designation and Shire has submitted a rolling Biologics License Application. This means that the treatment can be made available to patients earlier and the FDA can review pieces of the application as they become available. Shire is expected to release further data on the drug later this year.
Sales of Replagal have overtaken Fabrazyme in Europe and continue to win market share in the US as well, according to Shire’s second-quarter results. Sales of the drug increased 69% year-over-year and Replagal now has 60% of the European market under its belt.
Aside from Replagal, Shire has been benefiting from the Cerezyme setback as well. Shire's treatment for Gaucher’s disease, Vpriv, was approved by the FDA in February and was recently given a favorable opinion by an advisory committee in Europe. The European Medicines Agency isn't required to follow the opinion of this committee, but often does.
Cerezyme costs about $200,000 to $300,000 per patient every year, but Vpriv is priced 15% lower than this. UBS analyst Martin Wales is forecasting sales of $150 million for Vpriv over the next two years.
“We believe that a delay in resuming full supply of Cerezyme will lead to increased market share for to Shire’s Vpriv. We expect competition in the Gaucher disease market, where the patient population is not very large, to intensify further later this year with the potential approval of Protalix BioTherapeutics’ (PLX) Uplyso,” said a report from Zacks Equity Research.
Protalix develops the Gaucher’s disease treatment with partner Pfizer (PFE). Protalix completed the late-stage studies on its Gaucher’s disease drug, Uplyso, in September and the FDA asked for further information on the drug in February. The company has yet to announce when the FDA will make a final decision on approval, but most investors and analysts believe it will be some time in the late fall.
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