Short-term pain ahead of long-term legislative gains
Zubsolv sales of SEK417m were an 83% increase on the prior year against 7.8% growth in the overall buprenorphine/naloxone market. Disappointing sales in the first half of the year missed management and market expectations; although H2 saw a renewed impetus. Mitigating the impact of the loss of exclusive status at CVS Caremark restricted plans (previously 10-15% of prescriptions) from January presents a new challenge for the start of 2016, although longer term this should be more than offset by Orexo marketing initiatives and a potentially seismic shift in market dynamics. With this in mind we have revised our near-term forecasts downwards, now forecasting SEK578m of Zubsolv sales in 2016, rising to SEK957m in 2017.
US government action and changes to legislation represent a significant inflection point; expanding access to medical-assisted treatment by increasing the number of prescribers, over time narrowing the gap between the need for treatment and its availability. More clarity on timelines is expected in the coming months. In the meantime, competitive dynamics continue to evolve. Performance of the incumbent, Indivior’s Suboxone film, remains strong, BDSI’s Bunavail was a new market entrant in Q415, and six generic tablets are now on the market. Nevertheless, Zubsolv is maintaining its overall position and increasing market share particularly with new patients and in the largest and more profitable commercial segment. A 5% price rise effective from February coupled with a targeted sales effort and stronger marketing message should help drive sales particularly as Zubsolv’s reimbursement position improves at a number of commercial plans.
Longer-term Zubsolv sales will benefit from the US legislative change, and also further afield as the conclusion of partnering negotiations for ex-US rights, potentially by H216, paves the way for global expansion with international regulatory filings and launches.
Zubsolv performance to date
Zubsolv’s market share continues to increase, although the trajectory has slowed. It exited 2015 with a 6.4% market share by volume, flat on a Q315, which benefitted from stocking effects, but higher than the 5.6% volume share at end 2014 (Exhibits 1 and 2). Sales over the year were aided by currency and an improved gross:net sales ratio over the latter half, due to lower rebating and a changing payer mix. Short-term, the CVS Caremark loss is likely to impact the gross:net negatively.
Exhibit 1: Zubsolv tablet volumes (four-week average)
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Exhibit 2: Zubsolv market share (four-week average)
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Source: Wolters Kluwer, Bloomberg. Note: Gridlines separate quarters
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Source: Wolters Kluwer, Bloomberg. Note: Gridlines separate quarters
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Exhibit 1: Zubsolv tablet volumes (four-week average)
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Source: Wolters Kluwer, Bloomberg. Note: Gridlines separate quarters
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Exhibit 2: Zubsolv market share (four-week average)
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Source: Wolters Kluwer, Bloomberg. Note: Gridlines separate quarters
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Zubsolv continues to make gains in the commercial segment (market share now 9.7%); this is the largest and one of the more profitable segments, hence traction here is key. A summary of the dynamics in each of the three market sectors is shown in Exhibit 3. Share has remained stable in the public segment (with the highest rebates), and has been maintained in the highly profitable cash segment, helping to improve the gross:net sale ratio. Orexo remains most focused on the commercial segment, the largest of the market. Gains continued to be made in the absence of any new agreements, suggesting physician and patient acceptance in this key segment.
Exhibit 3: Overview of the main market segments
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Commercial |
Public |
Cash & vouchers |
Four-week average market share |
At end December 2014 |
7.3% |
4.3% |
5.3% |
At end June 2015 |
8.6% |
3.4% |
4.9% |
At end September 2015 |
9.3% |
3.5% |
5.3% |
At end December 2015 |
9.7% |
3.7% |
5.2% |
% of total market volume |
42% |
40% |
18% |
% of Zubsolv sales |
62% |
23% |
14% |
Rebating |
Low-medium |
High |
Low |
Swings and roundabouts for Zubsolv 2016 market share
Zubsolv sales and market share in 2016 and beyond will be affected by a number of important, albeit in the longer-term offsetting, factors. The negatives (loss of exclusive status at CVS Caremark) will outweigh the positives in H116, although longer-term Orexo should be in a better position as internal initiatives (including a 5% price rise and field force targeting) as well as prospective US legislative changes strengthen both Zubsolv’s competitive position and more broadly increase the demand and therefore the potential market for medical-assisted opioid dependence therapy.
The CVS Caremark loss, a financial decision based on more aggressive rebating by competitors, is not the sole factor that we expect to depress sales in Q116. A trend has been apparent over the past four years whereby consistently lower volumes and value of bup/nal products have been prescribed in Q1 vs the preceding Q4. This is an artefact of stocking effects due to the insurance dynamic, whereby patients tend to have to pay more out of pocket early in the year while reimbursement admin is being processed whereas later in the year prescriptions are fully reimbursed. This is another reason behind our expectation of a stronger H2 in 2016 for Zubsolv.
By H216 the scale of the impact of CVS Caremark will be apparent, Orexo initiatives should begin to bear fruit and there may be more clarity on the scope of US government plans to increase access to treatment for opioid dependence and the timing for implementation.
Reimbursement update: CVS loss, other PBMs come on line
As previously flagged, the immediate impact of the CVS Caremark loss will depress Q116 numbers, although the precise impact longer term will depend on the individual formulary decisions of the 200+ insurers covered under this umbrella agreement and their speed of implementation. At the time of announcement in August 2015, Orexo estimated that these changes could affect 10-15% of Zubsolv gross sales, and data to end January suggest the loss was c11% vs Q4. However, to date, two large CVS Caremark accounts have confirmed their intention to keep Zubsolv reimbursed (FEHP in parity with Suboxone, and CDPHP as exclusive from March 2015).
Orexo’s various initiatives to mitigate this loss will take longer to play out. In particular, new PBM agreements (including framework agreements with Managed Medicaid) have the potential to offset losses resulting from the CVS change in the mid-to longer term. These umbrella agreements will offer Orexo access to a number of insurance plans, including with large insurance companies. Negotiation with these individual companies will take time and so these agreements will not result in an immediate Zubsolv uptick, but more likely a gradual increase in share. We would expect Orexo to announce the conclusion of negotiations/new wins with large players in future.
Seeking a competitive edge: Induction label, broadest doses
Since initial launch in September 2013, Orexo has continued to invest in label extensions (for induction therapy and maintenance) and new doses of Zubsolv to meet the spectrum of medical need and to seek a competitive edge. This strengthens the marketing message, but also enables Orexo to strengthen its IP around Zubsolv (a new patent was granted in 2015). The Zubsolv field force is now able to talk about whole treatment phase, from the start or induction of therapy through maintenance, to potential tapering off with lower doses. We believe that in the longer term this should have a positive impact on Zubsolv’s positioning and uptake in the market.
Approval of the induction label in August last year helps the sales force facilitate dialogue with physicians, providing a much simpler message; that Zubsolv can be used to initiate and maintain treatment. This is important as rather than trying to switch patients to Zubsolv after induction, de novo patients can now be initiated immediately on Zubsolv, removing some of the perceived complexity surrounding treatment by new physicians.
With five dose strengths available and an additional low dose filed with the FDA (approval expected Q416), Zubsolv has the broadest range of doses on the market (Exhibit 4). This could be a key differentiator over the competition. The variety of dose levels has compliance benefits as it enables intended once daily use as per the FDA label and also minimises diversion, while low doses help meet patient need for dose tapering to achieve abstinence or stabilisation on a lower dose.
Exhibit 4: Available dose levels across the bup/nal market
Zubsolv |
Suboxone film |
Bunavail |
Generics |
11.4mg |
- |
- |
- |
8.6mg |
12mg |
6.3mg |
- |
5.7mg |
8mg |
4.2mg |
8mg |
2.9mg |
4mg |
2.1mg |
- |
1.4mg |
2mg |
- |
2mg |
Undisclosed dose filed Q415 |
- |
- |
- |
Source: Orexo. Note: Ordered by buprenophine dose bioequivalence with Zubsolv
We note that stocking in of the more recently approved doses by wholesalers (as well as current rebate levels) will delay the full impact of a 5% price increase for Zubsolv, implemented in mid-January and coming into effect in February, that brings pricing back in line with Suboxone film. The benefit to Orexo of this price rise should begin to flow through later in 2016 once prescription demand catches up with stocking.
RESOLV data expected soon: Formalising the treatment paradigm?
Data from the RESOLV (Retrospective Evaluation of Zubsolv Outcomes – A Longitudinal View) study should also provide additional impetus to the marketing effort. This >1,000-pt registry study is now fully recruited and is expected to render first data towards the end of Q116. Study design is not typical as it does not have a defined primary or second endpoint; rather it has been designed to collect real world data on what the important factors are in determining clinical outcomes (ie treatment and psychosocial factors such as patient and prescriber characteristics, care settings, behavioural therapies). This data will be invaluable in providing additional insight to benefit both the sales process and physician education. It could also inform the characterisation of a clinical approach and creation of more formal guidelines to guide treatment practice with Zubsolv products.
Spreading the message: A targeted marketing effort
New states and regional players have begun reimbursing Zubsolv, leading to geographic shifts in coverage. Zubsolv is now also doing well in the north-eastern US as well as continuing to capture market share in central and southern states where it has historically had a strong position. The field force continues to be preferentially deployed in regions where the reimbursement position is favourable, with a focus is on the higher profit segments (commercial and cash). Zubsov has shown several months of week-on-week growth in the cash and commercial market segments, where physician choice is the main driver of prescriptions and there is less rebating.
Nevertheless, Orexo also needs to improve its position in the public segment by securing larger agreements. It currently has access to c 40% of patients in this segment. While rebating levels will be higher (depressing the gross:net) this segment is associated, albeit not exclusively, with key opinion leaders/high prescribing physicians and significant volume. Prescription volume can have a significant financial impact on a number of fronts: higher volumes would flow through into lower COGS and better wholesaler terms, and also provide an advantage in reimbursement negotiations, particularly for exclusive agreements where price and volume are both parts of the equation.
A key priority for Orexo in 2016 is to grow market share. Active promotion has been successful in driving Zubsolv sales, and there has been a trend towards taking greater market share when the market is growing (ie a disproportionate percentage of new patients are being prescribed Zubsolv). Consequently, Orexo is preparing to invest more heavily into promotion once there is movement on a federal level.
Partnership potential for Zubsolv and OX51
Significant progress in partnering discussions for ex-US rights to Zubsolv and for pain programme OX51 during 2015, mean that the first deal is in sight. Orexo’s negotiations are at a late-stage and it expects to secure a contract in H116 for an international ex-US commercialisation partner.
Zubsolv ex-US market size and dynamics attractive to larger players
Opioid addiction is a developed country problem, with growth driven by liberal prescription of opioids for pain relief and increased illegal opioid abuse. Like the US, only a small proportion of dependent individuals are diagnosed internationally, with even a smaller proportion treated; however, the potential patient pool is c 5x larger and international markets lag the US in terms of development. Hence there is opportunity to develop and grow the market for medical-assisted treatment for opioid dependence, and this is attracting the attention of larger players. The fragmented nature of the European market means that Orexo’s ideal partner would have a broad reach and resources to take a leadership role with Zubsolv in this.
Zubsolv regulatory pathway clearer: Potential to file in Europe this year
Orexo has completed its assessments of regulatory requirements and IP landscapes of various territories in Europe and the rest of the world, and has agreed the final development programme agreed with regulatory authorities in Sweden, the UK and Germany. In Europe, additional PK bioequivalence studies are needed since Suboxone tablets in this region differ from those that had been marketed in the US; these studies are underway and due to complete in H2. Furthermore, given Suboxone tablet data exclusivity until 2016 this would be the earliest timing for Zubsolv submission in Europe, with approval possible one year later. Launch would be contingent on completion of reimbursement decisions, which have varied timelines in different EU member states.
OX51: Narrowing the focus given broad potential
Partnership discussions for OX51, a sublingual tablet formulation of short-acting IV analgesic alfentanil, are at an earlier stage, although there is an open dialogue with several interested parties. Further due diligence is required to assess the right indication for Phase III development as potential applications are wide ranging, and this will inform the profile of the optimal partner. In tandem, Orexo has completed manufacturing scale up for Phase III so is well prepared.
Alfentanil has a broad spectrum of potential use and is suited to providing rapid short-term pain relief for short procedures (eg prostate biopsies, relocation of fractures, minor surgery, obstetrics/gynaecology), minimising the need for general or local anaesthesia. Prostate biopsies would be the least risk regulatory pathway to pursue given existing positive Phase II data in this indication; however, this would limit the market potential. To maximise commercial potential, the focus is now on defining what the optimal Phase III programme would look like (in terms of design, geographic reach and indication), and what data will need to be collected to facilitate favourable reimbursement.
Wider early-stage pipeline opportunities remain under wraps
Orexo has also made modest investment into establishing technical proof of principle in a number of early-stage drug delivery projects in addiction medicine. These are presently undisclosed and little is known about their nature as Orexo is working to secure the necessary IP with patent filings. However, we expect that more information will be forthcoming from late summer onwards.