Alexion expands its reach in ultra-rare disease
Emerging as the leader in ultra-rare diseases treatments, Alexion has been a huge success story, bringing breakthroughs to disabling and fatal conditions. But this success brings pressure from investors who want sustained growth, and resistance to very high prices from payers.
New therapies will help Alexion rapidly expand over the next few years, and confirm its place as a leader in treating ultra-rare diseases.
Alexion has made its name by developing Soliris (eculizumab), first launched in 2007, and is on track to earn $2.5 billion this year through treating two life-threatening and ultra-rare disorders: paroxysmal nocturnal haemoglobinuria (PNH) and atypical hemolytic uremic syndrome (aHUS).
This has been achieved thanks to a very high price: Soliris costs in excess of $400,000 per patient per year in the US, making it one of the world's most expensive drugs.
For investors, the question is of course this: can Alexion keep up this rapid revenue and earnings growth?
On 1 September, the company answered them with the European approval of not one but two new ultra-rare disease drugs, Kanuma (sebelipase alpha) and Strensiq (asfotaste alpha).
Both of these conditions are defined as ultra-rare diseases, as they affect fewer than 20 patients per one million in the general population.
Kanuma and Strensiq are both long-term enzyme replacement therapies (ERT), and represent a huge breakthrough for people with the life-threatening conditions.
"Trials of both drugs have shown that they can transform the life expectancy of patients, and cut severe complications and disability"
Trials of both drugs have shown that they can transform the life expectancy of patients, and cut severe complications and disability. In each case, this is thanks to them replacing the single enzyme which is missing because of genetic mutations.
Kanuma targets LAL-D, a chronic metabolic disease which worsens over time and affects infants, children and adults, causing multi-organ failure and premature death. The absence of lysosomal acid lipase in the body leads to a long-term build-up of cholesteryl esters and triglycerides in the liver, blood vessel walls and other tissues.
Dr Vassili Valayannopoulos, investigator in the Kanuma pivotal studies, Hopital Necker-Enfants Malades and IMAGINE Institute, Paris said: "In clinical studies, 67 per cent of infants treated with Kanuma survived beyond 12 months of age, whereas without treatment, these patients would have faced a near-certain fatal outcome."
The drug was also shown to reduce markers of liver injury and lipid accumulation, which can lead to the serious and life-threatening complications.
Similarly, Strensiq (asfotaste alpha) treats paediatric-onset hypophosphatasia (HPP), which causes defective bone mineralisation that can lead to deformity of bones and other abnormalities in the skeleton, as well as wider complications, such as profound muscle weakness, seizures and pain. More than 70 per cent of infants with HPP die before they are five years old, usually because of respiratory failure.
Dr Christine Hofmann, of the Children's Hospital, University of Würzburg, Paediatric Rheumatology and Osteology Section, Würzburg, Germany, commented: "I am very pleased that patients with paediatric-onset HPP in Europe now have an approved treatment that addresses the underlying cause of their genetic, lifelong metabolic disease by replacing tissue non-specific alkaline phosphatase."
This double approval is itself a very rare feat, made even more special by the fact that both drugs are predicted to achieve blockbuster status, with analysts predicting peak annual sales of around $1.5 billion for Kanuma and around $1 billion for Strensiq.
Pricing negotiations
In order to reach these kinds of revenues, both drugs will have to carry very high prices: Alexion's business model relies on charging ultra-high prices to treat these ultra-rare diseases.
Both drugs have been given FDA Breakthrough Therapy Designation status, but Europe has approved them ahead of the US. This puts Alexion in the unusual, and difficult, situation of seeking reimbursement from European payers first, where price pressure is much greater.
Alexion says it plans to make both drugs available to patients in Germany in October, and has begun talks on pricing and reimbursement with authorities in all the major European nations.
However, high prices are become an increasingly controversial issue in the US, Europe and around the world – even for 'breakthrough' drugs – which means Alexion, like other firms, will come under pressure to lower its prices.
True, Alexion has a number of factors in its favour: these drugs treat severe and life-threatening conditions and the new treatments represent hugely improved and greatly lengthened lives, compared to, say, cancer, where new drugs often add only a few months of extra life.
Furthermore, there are currently no alternative treatments, and patients must keep taking the drug for life, providing the firm with a longer-lasting revenue stream than, say, new curative drugs for hepatitis C.
The most expensive drugs in the world
For a long time, Alexion's Soliris was considered to be the most expensive drug in the world. However, this title was taken by a new gene therapy, Glybera, which gained European approval in 2014.
The drug costs around €1.1 million ($1.4 million), but has run into serious problems in gaining reimbursement in Germany.
In May, Germany's health technology assessment body the Federal Joint Committee ruled that Glybera's value was "classified as non-quantifiable", saying that the data the company submitted was insufficient for a cost-effectiveness decision.
UniQure and its marketing partner Chiesi point out that Glybera is given once, and studies show it is effective for six years. UniQure's chief executive Jorn Aldag told Bloomberg in May that this translates into $170,000 per year, less than the cost of orphan drugs such as Soliris, at more than $400,000.
Nevertheless, Glybera is still not earning any revenues in Europe, and has yet to secure US approval. UniQure and Chiesi's predicament demonstrates that developing an ultra-rare disease drug is not a licence to print money. The strength of the clinical data and experience in dealing with regulators and payers is crucial too, and this is something which Alexion has shown itself adept at with Soliris.
Tough negotiations ahead
However Alexion is no stranger to disagreements with payers over price. A controversy about the high price of Soliris in Belgium hit the headlines last year, with a deal eventually being struck between the government and the firm.
However the row has led directly to Belgium and the Netherlands announcing that they are to join forces to assess and purchase rare disease drugs together.
Belgium's health minister was explicit in saying the move would help it negotiate lower prices with companies, and shows the growing pressure on Europe's cash-strapped health systems.
Meanwhile in Canada, a dispute over the pricing of Soliris has also flared up, the Wall Street Journal's Pharmalot column reporting in February that Canada's government has launched an inquiry into Alexion's 'excessive' pricing.
Finally, Alexion had to endure a prolonged, and much delayed, review of Soliris in the UK, with the National Institute for Health and Care Excellence (NICE) finally approving long-term funding for the drug in January this year. Much of this delay was down to arguments over the drug's cost, which NICE estimated to be £327,000 per patient per year, although confidential discounts will have reduced this price substantially.
NICE's Highly Specialised Treatment assessment is now better established, however, so Alexion may hope for a speedier review of its new drugs. Kanuma is already on NICE's work programme, although no deadline for a decision has yet been released.
Thanks to its experience with Soliris, Alexion should be better prepared for tough negotiations, but much of it will come down to the price it demands in Europe, which it has not made public yet.
US delay
Under most circumstances, the US market sets the pace in terms of approval and launch, but Kanuma's regulatory approval in the US has been delayed.
In response to a request from the FDA, Alexion recently submitted additional Chemistry, Manufacturing and Controls (CMC) information. The US regulator says the timing of this submission means it has extended the Prescription Drug User Fee Act (PDUFA) date to allow more time for review of the new information.
The FDA has not asked for additional clinical data, however, which means Kanuma looks on track to gain approval by the end of 2015, with that for Strensiq expected shortly after.
Alexion looks set to consolidate its leadership in the ultra-rare disease market, thanks to its breakthrough science in products like Kanuma and Strensiq. But uncertainty over prices, as well as just how many more patients can be identified, diagnosed and treated across these ultra-rare diseases, remain major risk factors for the company.
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Andrew McConaghie is pharmaphorum's Managing Editor, Feature Media.
Andrew can be contacted via: andrew@pharmaphorum.com
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