UCB SA (UCB.BT) is shifting its business focus to immunology and
the central nervous system as the Belgian pharmaceutical company
seeks to offset patent expirations on blockbuster drugs like
allergy drug Zyrtec and epilepsy drug Keppra in the U.S.
Cimzia is one of three core products on which the company is
betting, together with Parkinson's patch Neupro and epilepsy
Vimpat. UCB's share price slumped Jan. 6 on the news the U.S. Food
and Drug Administration had asked for more information before
deciding whether to approve the drug as a treatment for rheumatoid
arthritis.
THE DRUG: UCB wants to sell Cimzia to treat Crohn's disease, a
painful inflammation of the bowel, and rheumatoid arthritis. The
drug has been approved by the U.S. Food and Drug Administration to
cure Crohn's disease in April 2008. It had been approved in
Switzerland in Dec. 2007, while it is still awaiting a green light
in Europe.
Rheumatoid arthritis, which causes chronic inflammation of the
joints, offers a much bigger market potential than Crohn's
disease.
Any slowdown on the drug's approval will have an impact on the
company's restructuring because it will delay income from a new,
key drug which should replace revenue from older products that lose
their patent exclusivity. "Any delay is going to widen this
earnings gap," said Degroof analyst Thibaud Rutsaert.
THE OPPORTUNITY: The Crohn's disease treatment is a $1 billion
market, while rheumatoid arthritis is estimated to be worth around
$4 billion in sales for drugs comparable with Cimzia. The US market
accounts for as much as 75% of that potential market.
UCB estimates that about five million people suffer from
rheumatoid arthritis worldwide, with up to 1% of the population in
industrialized countries being affected.
PERFORMANCE: Cimzia has been on sale for Crohn's disease in
Switzerland since January 2008, and in the U.S. since April. Sales
last year totaled EUR10 million, mainly driven by new patients in
the U.S.
Abbott Laboratories' (ABT) Humira is the closest competitor, on
which Cimzia has a price advantage, as UCB priced it 5% lower for
Crohn's disease in the U.S. The drug retails at about $1,300 for
one month's treatment.
WHAT UCB SAYS: Cimzia has the potential to become a blockbuster
drug, which means reaching sales around $1 billion per year. Given
that it is a drug for treating chronic diseases, Cimzia is expected
to have a "slow uptake" in sales.
The FDA's request for a new safety update isn't unusual for the
approval of such a complex drug. The process is on schedule, as UCB
submitted a request in Feb. 2008 and approval usually takes between
18 and 24 months.
WHAT ANALYSTS SAY: The FDA request will delay Cimzia's approval
for rheumatoid arthritis to late 2009 at least. Many analysts
expect eventual approval to come between 12 and 18 months after
UCB's filing.
WHAT'S NEXT: UCB will submit the requested additional
information to the FDA in the second quarter. Meanwhile sales for
Crohn's disease are expected to slowly increase in the U.S. In
Europe, UCB will await a response on rheumatoid arthritis, for
which indication it filed for approval in July, before resuming
discussions with authorities on Crohn's disease indication.
-By Alessandro Torello, Dow Jones Newswires; +32 2 741 14 88;
alessandro.torello@dowjones.com