AMGN, REGN, SNY: Bull Case for PCSK9’s; COGS a Major Advantage for SNY/REGN


We see peak US sales potential for PCSK9’s in the $5.5B to $8.5B range before outcomes data, and in the $9.6B to $15B range after outcomes data are available. By comparison, consensus expects combined 5th year global sales (our estimates are US-only) for the two products of just $4.2B

We suspect our US forecast calls for much higher patient volumes at much lower average net prices (we expect net US pricing of only $252 – $340 per month). Our conservative pricing estimate has much to do with formulary managers’ considerable leverage over the class: there will be no outcomes data at launch; the patient population can be finely segmented by risks and LDL-C’s, enabling restrictions; the PCSK9’s are likely to be on specialty tiers with higher co-pays; and, a large percentage (+/- 51%) of treatment candidates are on Medicare or Medicaid (where co-pay cards cannot be used, and average rebates run much higher)

Because the PCSK9’s are monoclonals their COGS will be relatively high, especially for chronic use products in our predicted net pricing range. Most patients on SNY/REGN’s alirocumab have reached their LDL-C goal on 75mg every 2 weeks (1,950mg annually); all patients on AMGN’s evolocumab require at least 140mg every 2 weeks (3,640mg annually) and those using the 420mg monthly dose will consume 5,460mg annually

At the lowest COGS we know of for a monoclonal (Erbitux, $0.30/mg), annual COGS for the lower alirocumab dose would be $576 and for the higher dose $1,161; annual COGS for the lower evolocumab dose would be $1,075 and for the higher dose $1,612. At our assumed net pricing, this would equal a COGS/sales ratio ranging from 14% to 38% for alirocumab, and from 26% to 53% for evolocumab

This affords SNY/REGN a distinct advantage. Because most patients will reach goal on the starter 75mg every 2 week regimen, SNY/REGN’s ‘workhorse’ dose is the one with the lower ($576 rough estimate) COGS. By comparison, AMGN’s starting dose – 140mg every 2 weeks – presumably has nearly twice the COGS ($1,075 rough estimate). SNY/REGN can sell their starting dose for $500/year ($42/month) less than AMGN’s, and still earn the same gross profits as AMGN

For our full research notes, please visit our published research site

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