Amgen And Novartis Aimovig FDA Approval Gives First Mover Advantage, Will That Be Enough?

Recently, it was announced that Amgen (AMGN) and its partner Novartis (NVS) had received FDA approval for Aimovig for migraine prevention. This a huge first mover advantage in this arena, which should bode well on getting a good lead against competitors. This should be a good push in revenue for Amgen. That's why I believe that Amgen is a good buy.

FDA Approval

Aimovig was approved by the FDA for the preventive treatment of migraine in adults. This is a good approval, because many currently approved drugs treat the symptoms of migraines. This drug will act to help reduce the number of migraines that are suffered frequently. Amgen and Novartis both have a huge advantage here. They both have the first CGRP drug to be approved by the FDA which means they get a huge lead against competitors. The CGRP stands for Calcitonin gene-related peptide. Aimovig is a monoclonal antibody that is given to patients once a month as an injection. It does not prevent all the headaches that occur, but what it does is it prevents a lot of them from occurring often. There are three other competitors who also have CGRP drugs for the prevention of migraines. These pharmaceutical companies are Eli Lilly (LLY) with galcanezumab, Teva Pharmaceuticals (TEVA) with fremanezumab , and Alder Biopharmaceuticals (ALDR) with eptinezumab. Eli Lilly is not expecting its FDA decision until Q3 of 2018. Teva is expecting its FDA decision in June, however manufacturing issues will delay its launch until 2019. Alder Biopharmaceuticals is only expecting to file for FDA approval before the end of this year.

Aimovig Mechanism Of Action

Aimovig should start out of the gate strong, because of the amount of migraine days it was able to reduce in a clinical trial. A majority of the patients were able to experience 50% fewer monthly migraine days from baseline when compared to a placebo. I must point out that the first mover advantage isn't the only thing that's going to help Aimovig sell well. What else could cause Aimovig to potentially be the treatment of choice? Compared to the other three drugs it has a different treatment action, despite all of them targeting CGRP. Aimovig targets the CGRP receptors in the brain. However, the other three target the CGRP molecule itself. This means if a patient goes through the other 3 treatments I noted above, and don't respond they could try for Aimovig instead. That's the main point, Aimovig's unique ability to target the CGRP receptors themselves differentiates itself from the rest.

Pricing Win

One of the biggest obstacles for Aimovig would have been pricing. That's because a lot of analysts were expecting the drug to be priced between $8,000 to $10,000 per year. Express Scripts (ESRX) and other payers voiced their dissatisfaction for such a price. It appears as though Amgen and Novartis have listened to this criticism. That's because they priced Aimovig to be $6,900 per year. Considering that they both had a first mover advantage in the CGRP space, I feel that they could have priced it higher. However, I'm glad that they didn't. For starters, it would have caused a huge noise in terms of pricing in the pharma industry. The White House has voiced its opinion about drugs being priced too high. Secondly, payers would not have been happy either. What good is it to have an approved drug if it is not going to be backed by payers? That's an important question to ask, and one that Amgen knows all too well about. It is no secret that when Repatha came to market it had a rough time to gain traction in the market because of its higher pricing. Payers weren't willing to pay for a drug priced higher, especially when there were cheaper generic alternative statins. Amgen's Repatha was priced at $14,100 per year on launch. Since then Amgen was forced to include discounts and rebates to lower this price. I have to commend Amgen and Novartis here on getting ahead of this issue, because it will end up paying off in the long run. Sure, profit is going to be lower initially. The truth is though that payers backing the original price will likely make for a better commercial launch. How the pricing of Aimovig will affect sales remains to be seen. However, the downside is that not all patients with migraines will need to take such a drug. I believe that this drug will be very important for those patients who have failed three or more prior therapies. Analysts' expect that sales of Aimovig could obtain $1.2 billion by 2022. Amgen believes that it could obtain up to $81 million in sales for it this year alone.

Conclusion

Amgen and Novartis obtaining the first FDA approval for a CGRP migraine prevention drug is a good first mover advantage to have. However, I believe that Aimovig stands to sell well simply because of its unique mechanism of action compared to others. The risk will come into play as other competitors start to flood the market (should they receive FDA approval). At that point sales could slightly fall, however, I think that Aimovig will still have strong sales since it will be the first of its type to be in the market. Another risk that remains is that pharmacy benefit managers (PBMs) may need to be motivated pay for Aimovig. Amgen and Novartis have done a good job at pricing it lower which might help, but it remains to be seen if PBMs are willing to pay for the cost of this drug for patients. Still, the fact that Amgen and Novartis priced the drug much lower than payers' expectations is a huge positive. For that reason, I believe that Amgen is a good buy.

This article is published by Terry Chrisomalis, who runs the Biotech Analysis Central pharmaceutical investment research service on Seeking Alpha Marketplace. If you like what you read here and would like to subscribe to my Service, I'm currently offering a two-week free trial period for subscribers to take advantage of. My service offers deep dive analysis of many pharmaceutical companies throughout the biotech sector. Come see for yourself if my service is right for you.

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