Bristol-Myers Squibb shakes up a major biotech battlefield
Unlike their smaller peers, pharmaceutical giants do not always get a share price increase after obtaining FDA approval. Bristol-Myers Squibb (BMY) He certainly did.
The $150 billion drug development company enjoyed 6% after announcing FDA approval of one of its closely watched assets. Deucravacitinib, now Sotyktu, has received the regulatory green light to begin treatment for individuals with plaque psoriasis. Although there is no shortage of treatments for the autoimmune disorder that results in scaly patches on the skin, none of them offer the same combination of relief and efficacy as Sotyktu.
The approval led investors to reassess the competitive landscape for the next generation of autoimmune therapies, which has had disastrous consequences for DICE Therapeutics. (Dice) and Ventyx Biosciences (VTYX) .
Investors take two in TYK2
Sotyktu is the first drug in an emerging treatment class to receive FDA approval. The drug compound, known as a TYK2 inhibitor, interferes with some cellular communication processes involved in inflammation and immunity. Autoimmune disorders such as plaque psoriasis are caused by the immune system incorrectly attacking a patient's cells.
Although it was the first next-generation candidate drug to receive regulatory approval, it likely won't be the last. In fact, there is hardly enough space in the competitive landscape when public and private companies are counted.
The emerging biotech battlefield of autoimmune drugs perfectly illustrates a handful of important concepts for investors.
safety first: Pharmaceutical products must have an acceptable safety profile. Clinical trials completed to date have demonstrated a relatively clean safety record for Sotyktu, although inhibiting TYK2 may have long-term consequences. We'll touch on that below.
Deliver results: Pharmaceutical products must demonstrate effectiveness in the task at hand. In plaque psoriasis, efficacy is defined as helping to clear scaly patches of skin associated with the disease. It is measured using the Psoriasis Area and Severity Index (PASI), and generally requires a 75% reduction on the scale.
Molecular Objectives: Pharmaceutical products can target any number of molecular targets. Common targets in autoimmune diseases are TNF-alpha, interleukin-17 (IL-17), TYK2 and PDE4. However, the target chosen affects other important metrics, such as safety, efficacy, and suitability.
Administration path: Pharmaceutical products can be given by injection, intravenous injection, oral pills, etc. This is one of the primary drivers of patient comfort.
Dosing frequency: Medication products may be given at different intervals, such as twice daily, daily, or every several weeks. This is usually dictated by the route of administration and is important for patient comfort.
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Patient comfort is always important, but it takes center stage in autoimmune disorders. Keep in mind that injectable medications do the best in treating psoriasis—which isn't even close—but many patients still prefer inferior oral pills.
Cosentix from Novartis (NVS) It is an injectable drug once a month that inhibits IL-17. After 12 weeks of treatment, approximately 77% to 90% of individuals achieve relief with the PASI-75 standard.
Humira from AbbVie (ABBV) It is a biweekly injected medication that inhibits TNF-alpha. After 16 weeks of treatment, approximately 71% to 80% of individuals achieve relief with the PASI-75 standard.
Otezla from Amgen (AMGN) It is a twice-daily oral medication that inhibits PDE4. After 16 weeks of treatment, approximately 33% of individuals achieve relief with PASI-75.
Obviously, Otezla isn't as efficient as the Cosentyx or Humira, but it still generated more than $2 billion in revenue for the whole of 2021. Patient comfort is the deciding factor.
Now consider the latest Bristol Myers Squibb hack. Sotyktu is a once-daily oral tablet that blocks TYK2. After 16 weeks of treatment, approximately 53% to 58% of individuals achieved relief with the PASI-75 standard. Responses deepened at week 24.
This explains why Wall Street expected Sotyktu to easily become a popular drug product, especially if it gained regulatory approvals in additional autoimmune disorders. But investors should know that there are competitors.
It was put to the harsh criticism
Ventyx Biosciences is developing a TYK2 inhibitor that appears to be more selective than Sotyktu. The candidate drug, VTX958, was designed to avoid interactions with other proteins closely related to TYK2. This could provide an advantage given that inhibition of those other proteins, called JAKs, is associated with high health risks such as the development of cancers.
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Sotyktu only tickles the JAK1 protein. However, although TYK2 has a different name, it technically belongs to the JAK family of proteins. It is sometimes referred to as "JAK4".
The FDA recently forced all JAK inhibitor products to include a warning on their label displaying these potential safety risks. The FDA has placed a general warning for a JAK inhibitor on the Sotyktu label. It is unclear whether VTX958, which is only in the initial phase of clinical development, will be able to avoid the same fate if approved. However, shares of Ventyx Biosciences are up more than 60% this week.
It is important to emphasize that clinical studies of Sotyktu in plaque psoriasis have not demonstrated worrisome safety signals associated with other JAK inhibitors. The studies followed patients for up to one year. These risks can only be measured after long-term use.
Meanwhile, shares of DICE Therapeutics took a hit after Sotyktu's approval. Biotechnology is developing oral candidate drugs that target molecular targets that would normally only be reached by injectable therapies.
The main candidate drug, DC-806, targets IL-17 – the same efficacy-leading Cosentyx target. This approach could be valuable if safety concerns dampen enthusiasm for TYK2 inhibitors. However, the initial compounds that are developed should be taken twice daily. This is the same as Otezla, but now it is less convenient than Sotyktu.
DICE Therapeutics intends to develop once-daily drug candidates that target IL-17 and possibly TNF-alpha, but they are relatively far from clinical trials. Despite the stock fallout this week, the development approach remains valuable. Investors are more cautious until preliminary clinical data is revealed later this year.
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There are many unanswered questions on the biotechnology battlefield of autoimmune diseases. Will TYK2 live up to the hype in real use? Can more selective drug candidates demonstrate safety or efficacy benefits? Should investors focus on other molecular targets entirely? Bristol Myers Squibb clinched a major win this week, but the dust has yet to settle in the broader competitive landscape.
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