Years before Benlysta’s approval as the first new lupus treatment in more than 50 years, GlaxoSmithKline (NYSE:GSK) signed a development and commercialization agreement with Human Genome Sciences (NASDAQ:HGSI) in which the two companies would share equally in the costs of developing a new drug and any net proceeds that come from a commercialized product.
That 2006 agreement was preceded by a collaboration between the companies dating back to the 1990s. Back then, there was no way of knowing that the biologic compounds that HGS discovered would become the first lupus drug candidate in decades to advance into a phase III clinical trial. Benlysta, which was approved by the Food and Drug Administration on Wednesday, is now touted as the next blockbuster drug with analysts projecting annual sales ranging from $3 billion to $7 billion. GSK will get half of that under the agreement with Rockville, Maryland-based HGS.
Half of a blockbuster drug is still a substantial chunk of change. One thing’s for sure, though, it will be a very different kind of blockbuster for London-based GSK, which has its U.S. headquarters in Research Triangle Park, North Carolina.
Consider GSK’s blockbuster drug Advair, approved by the FDA in 2000 to treat asthma and chronic obstructive pulmonary disease (COPD). The market was eager for a new asthma treatment and within five years, Advair’s annual sales grew to $5.6 billion on 21.1 million prescriptions in the United States, according to IMS Health.
The market is also eager for a new lupus treatment. Aspirin was approved to treat lupus in 1948. Plaquenil, an anti-malarial and anti-rheumatic drug, was approved as a lupus treatment in 1955. The Lupus Foundation of America estimates that 1.5 million Americans suffer from some form of lupus. Worldwide, that figure grows to 5 million. The autoimmune disease, in which the body attacks its own tissues causing inflammation and pain throughout, disproportionately affects women. It is also more prevalent among African Americans.
Although African Americans are more more likely to be diagnosed with lupus, they are also less likely to benefit from Benlysta. Clinical trials found that African American patients and patients of African heritage did not appear to respond to the drug. The FDA instructed HGS and GSK to conduct more studies to find out why. But those clinical trial findings so far further limit the pool of patients who could benefit from the new drug.
Advair became a blockbuster because GSK could sell a lot of the product to the millions who have asthma or COPD. It became a blockbuster because it was a drug that could be sold to many.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
Benlysta will become a blockbuster as a drug sold to the few. The drug will be sold to the targeted group of patients who will benefit from it. Those patients will pay a premium for it. On a conference call discussing the FDA approval of Benlysta, HGS Chief Commerical Officer Barry Labinger said the annual cost for the drug would be $35,000, which he noted is in line with other biological drugs. For example, some multiple sclerosis patients face annual costs of $40,000 for their drugs, he said.
Keeping Advair in mind, if every patient paid full price for the Benlysta drug, GSK and HGS would be treating just 200,000 patients each year to reach a $7 billion annual revenue stream.
The two companies say they don’t want cost to be a barrier to a drug that could help lupus patients. Labinger said that the company would have programs to help patients least able to afford Benlysta.
“Our goal is to prevent affordability from getting in the way of access to Benylsta as much as possible for appropriate patients,” he said.
HGS and GSK are both quickly ramping up their Benlysta sales teams. The companies still await European approval for Benlysta, which could come later this year. HGS has set up a headquarters in Switzerland, as well as commercialization teams in Germany, France and Spain. In the rest of Europe, the company will rely on GSK’s sales force.
Benlysta is expected to be available in the United States by the end of March. The company’s sales push for Benlysta will be far and wide even if it’s impact will be felt by a relatively narrow piece of the overall lupus population.
So that’s the picture of the new blockbuster drug: expensive products targeting ever more specific segments of the patient population. And as GSK and other pharmaceutical companies continue working on biologics, expect more of this to come.
The Wall Street Journal pointed out the GSK pipeline for Benlysta-style wins is thick thanks to its long-ago HGS partnership. Darapladib, a cardiovascular drug that blocks a protein that contributes to plaque buildup in the arteries, may be able to cut the risk of heart attacks and strokes. Another, albiglutide, is an injectable drug that maintains blood-sugar levels.
“This business development activity which the pharmaceutical industry has been doing now for 20 years, 25 years, is a long-term game,” Ad Rawcliffe, Glaxo’s head of worldwide business development, told The Journal on Thursday. “And you need to have long-term commitment.”
