On July 6, 2009, Shire plc (SHPGY) announced that it has filed a treatment protocol for velaglucerase alfa, the company’s enzyme replacement therapy that is being developed for the treatment of Gaucher Disease. The company submitted the protocol at the U.S. FDA’s request.
The FDA is looking for alternative treatment options for Gaucher Disease in order to make up for the potential shortage in supply that could take place due to manufacturing issues being faced by Genzyme (GENZ). Genzyme markets Cerezyme, the leading treatment for Gaucher Disease.Genzyme halted production in June 2009 due to the detection of a virus at the manufacturing facility.Supply shortage could occur from August 2009.
Another company, Protalix BioTherapeutics (PLX), has been approached by the FDA with a similar request for its phase III Gaucher disease candidate, prGCD.
Gaucher Disease is an inherited genetic condition which is estimated to affect less than 10,000 people worldwide. According to the National Gaucher Foundation, 2500 Americans suffer from Gaucher disease.
A response to Shire’s treatment protocol should be out by late July. If approved, physicians will be allowed to use velaglucerase ahead of its commercial availability.
We view this news as a positive for Shire. The FDA’s request for a treatment protocol for Shire’s candidate indicates that the agency could be comfortable with the use of velaglucerase as a therapy for Gaucher Disease.Moreover, the temporary availability of the product would give physicians the opportunity to become familiar with the product prior to its commercial launch.
However, we note that some physicians could be hesitant in switching patients to a therapy which is still under clinical development. Velaglucerase is currently in three phase III studies including a head-to-head study with Cerezyme. The NDA filing for the candidate is scheduled to take place in the second half of 2009, potentially followed by commercial launch in 2010.
We maintain our Hold rating on Shire with a price target of $45 per ADR. While the loss of exclusivity of Adderall XR will lead to a decline in revenues in 2009, we believe Vyvanse will continue posting strong sales growth due to its strong differentiating characteristics.
Beyond 2010 we expect top-and-bottom-line growth to again materialize as stronger sales from Vyvanse, Elaprase, Lialda and newer products make up for the lost Adderall XR revenues.
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