New Player In The $18B Market For Arthritis Drugs?

Although Roche Holdings AG (RHHBY) derives more than 60% of global annual sales from its oncology franchise – think the multi-billion biologics Rituxan, Herceptin, and Avastin – the Swiss-based drug manufacturer markets a novel immunomodulatory treatment that could soon emerge as a bigger player in a rheumatoid arthritis (RA) market long dominated by such global giants as AbbVie’s (ABBV) Humira and Johnson & Johnson’s (JNJ) Remicade, tumor necrosis factor inhibitors (TNF) that generated more than $18 billion in combined sales last year.

RHHBY Revenue (Annual) Chart

RHHBY Revenue (Annual) data by YCharts

Unlike the TNF-inhibitors, which attempt to block multiple cell-signaling proteins (cytokines) involved in the inflammatory process, Roche’s Actemra is a humanized monoclonal antibody (tocilizumab) engineered to block inflammatory activity by competitively binding to the Interleukin-6 (IL-6) receptor. Actemra’s more selective inhibition should theoretically lead to a lower incidental risk of immunosuppressive adverse events – such as tuberculosis, endemic mycoses, and intracellular bacterial infections – which though rare, have occurred with anti-TNF biologics.

Unfortunately, the development of Actemra has been replete with its own developmental setbacks. In 2009, 15 reported deaths and 221 cases of serious side-effects were reported in 4,915 Japanese RA patients receiving intravenous treatment from April 2006 through February 2009. Actemra did, however, receive European and U.S. regulatory approval in 2009 and 2010 for moderate-to-severe RA and systemic juvenile idiopathic arthritis (a severe form of RA in children).

In addition, although increased production of IL-6 is found in psoriasis patients and those suffering from psoriatic arthritis, mixed clinical efficacy in these disease states has limited Actemra’s role with dermatologists. Too bad, as forecasted total prescription sales in each respective market (in the U.S., Japan and Europe) is expected to grow from $4.1 billion and $1.5 billion in 2010 to nearly $8.2 billion and $1.9 billion by 2020, according to analytics firm Decision Resources.

Notwithstanding safety concerns and narrow therapeutic labeling, Actmera has still managed to show respectable sequential growth: January – September 2013 sales grew 33% to 763 million Swiss francs ($826.9 million), likely due to study results presented last year showing Actemra was more effective than Humira as monotherapy in reducing common disease-activity endpoints of RA (e.g. reduction in tenderness and swollen joints) in those sufferers who couldn’t take methotrexate, the standard-of-care in most newly-diagnosed patients.

Recent events suggest that estimated peak annual sales of $1.1 billion in 2017 could prove conservative, too.

Last month, the company gained FDA approval for a new subcutaneous dosing of Actemra for use in adult patients living with moderate-to-severely active RA. The new pre-filled syringe injection formulation offers a compelling advantage over one blockbuster TNF inhibitor still requiring intravenous monthly infusions – Remicade (infliximab).

If Roche finds success in convincing regulators and then rheumatologists to recommend use of Actemra for early RA, market share could move beyond refractory TNF-inhibitor cases to biologically-naïve patients – and peak annual sales of this IL-6 antibody could more than double to an estimated $2.6 billion.

David J. Phillips, a contributing editor at YCharts, is a former equity analyst. His journalism has appeared in Bloomberg BusinessWeek, Forbes, and Kiplinger's Personal Finance. From 2008 to 2011, David was a reporter for CBS News Interactive. He can be reached at editor@ycharts.com. Read the RIABiz profile of YCharts. You can also request a demonstration of YCharts Platinum.

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