Is Epidiolex a Blockbuster?
On June 25th, the FDA approved GW Pharmaceuticals’ Epidiolex (cannabidiol, or CBD) for the treatment of Lennox-Gastaut syndrome (LGS) and Dravet syndrome (DS), two rare and severe epilepsy syndromes. The next step is DEA scheduling—a decision that could take up to 90 days—but GW Pharma expects to launch Epidiolex in the United States by the end of the year. Some Wall Street analysts expect annual sales for Epidiolex to exceed $1 billion within the next five years; as of this writing, DRG’s forecast is more modest (but still respectable). In this post, we examine what it would take to reach sales of $1 billion and discuss factors that will influence Epidiolex’s commercial potential.
GW Pharma hasn’t released the list price for Epidiolex yet, but Wall Street analysts estimate the drug could cost $30,000/year in the United States. Using that price, and assuming 100% persistence and compliance (i.e., all patients take the drug as prescribed every day for the entire year), 33,334 patients would need to be treated with Epidiolex per year to achieve blockbuster sales in the U.S. market alone. According to the LGS Foundation, there are approximately 30,000 to 50,000 LGS patients in the United States.1 Data available from the Epilepsy Foundation, along with DRG epidemiology data and other secondary research, suggest that the prevalence of DS is less than 20% of LGS.2-4 For the sake of simplicity, let’s assume there are approximately 50,000 LGS and DS patients combined in the United States. With these assumptions, two-thirds of LGS and DS patients would need to be treated with Epidiolex to reach $1 billion in annual sales in the United States. Is this realistic?
- Pricing could fuel sales but constrain use: Based on our calculations, at $30,000/year, Epidiolex would be priced at a ~65% premium over Lundbeck’s Onfi but competitively with Eisai’s Banzel (2017 prices), both of which are also approved specifically for LGS. Epidiolex does carry the first-ever approval for DS in the United States, so such a price point may be justifiable with payers, but they will undoubtedly impose prescribing controls (e.g., step therapy); many U.S. KOLs report restrictions today on Onfi and Banzel can be burdensome. Stringent prescribing controls could put two-thirds market share and thus potential blockbuster sales out of reach.
- Epidiolex has a solid, but not overwhelming, clinical profile: KOLs interviewed in Q2 2018 do perceive Epidiolex’s clinical profile as favorable, but they unanimously agree that it is not the miracle drug that patients, caregivers, and news media believe it to be. KOLs perceive Epidiolex’s efficacy and tolerability to be no better than that of other antiepileptic drugs, based on cross-trial comparisons. Moreover, imperfect efficacy and safety/tolerability events will impact persistency, compliance, and ultimately revenue; 13-14% of patients withdrew from Phase III clinical trials in LGS and DS due to adverse events.5-6
- Expanded labelings could bolster sales, though the target populations are small: Clinical trials are ongoing for seizures associated with tuberous sclerosis complex, which would add approximately 25,000 U.S. patients, and the company is considering additional (as yet unspecified) orphan indications that would further expand the addressable pool.7
- Off-label use seems unlikely: S. KOLs interviewed by DRG acknowledge that patient/caregiver demand will be high, but they anticipate payers will limit prescribing outside of LGS and DS. Many note that the primary end points in Phase III trials measured efficacy against seizure types specific to LGS and DS, and question whether Epidiolex will be effective in other epilepsy syndromes.
- DEA scheduling will have a limited impact: Epidiolex’s approval clearly demonstrates that Schedule I is inappropriate, and the company’s Phase III program showed a low abuse potential. GW Pharma expects Epidiolex will be placed in Schedule IV or V, which we agree is reasonable; after all, AbbVie’s Marinol is Schedule III and contains synthesized THC, the psychoactive ingredient in cannabis. Ultimately, interviewed U.S. KOLs predict the decision will have limited impact on their prescribing, noting that many other epilepsy therapies (e.g., benzodiazepines, Fycompa) are scheduled at levels III-V.
- No competition from unapproved CBD formulations…: The cost of therapeutic doses of unapproved CBD oil would likely be far higher than the copay associated with Epidiolex; one U.S. KOL estimated his patients currently pay ~$600/month out of pocket. Moreover, unapproved CBD formulations vary widely in quality and consistency. At the FDA advisory committee meeting for Epidiolex in April 2018, caregivers emphasized the difficulty in obtaining products with consistent therapeutic effect, and a study published in 2017 reported that only 30% of CBD products sold online were accurately labeled.8 Worse yet, THC was detected in approximately 20% of CBD products, which, according to one U.S. KOL, can worsen some types of epileptic seizures.
- …but strong competition from Zogenix’s ZX-008: ZX-008 (low-dose fenfluramine) will soon be submitted for FDA approval and will likely launch in the United States next year. Compared with Epidiolex (cross-trial), the drug demonstrated outstanding Phase III efficacy in DS patients, prompting the FDA to grant it breakthrough designation. Phase III trials in LGS are ongoing, and interviewed KOLs are very enthusiastic about this drug. Further DRG perspective on ZX-008 can be found here; we view ZX-008 as a major threat to Epidiolex.
Ultimately, the factors involved in Epidiolex’s market success are complex and varied, but there is no guarantee it will achieve blockbuster status. Of course, one factor we haven’t discussed is the drug’s global launch; the EU5 alone would add approximately 40,000 LGS and DS patients to the addressable patient pool2-4, although Epidiolex will not command the same pricing levels as in the United States. In the end, there is tremendous unmet need for drugs to treat rare epilepsy syndromes, and Epidiolex’s official approval and novel mechanism of action represent a breakthrough in the treatment of LGS and DS. We expect the sales—blockbuster or not—will show it.
For more detail on Epidiolex and to see DRG’s complete ten-year annualized forecast for Epidiolex and other antiepileptic drugs, please see the Epilepsy Disease Landscape & Forecast content, available on the Insights Platform.
- LGS Foundation. About Lennox-Gastaut Syndrome. Available at http://www.lgsfoundation.org/aboutlgs. Accessed June 26, 2018.
- Epilepsy Foundation. Lennox-Gastaut Syndrome (LGS). Available at https://www.epilepsy.com/learn/types-epilepsy-syndromes/lennox-gastaut-syndrome-lgs. Accessed June 26, 2018.
- Epilepsy Foundation. Dravet Syndrome. Available at https://www.epilepsy.com/learn/types-epilepsy-syndromes/dravet-syndrome. Accessed June 26, 2018.
- Decision Resources Group. Epilepsy Epidemiology. Mature Markets Data. 2018.
- Devinsky O, et al. Trial of Cannabidiol for Drug-Resistant Seizures in the Dravet Syndrome. N Engl J Med. 2017;376(21):2011-2020.
- Thiele EA, et al. Cannabidiol in patients with seizures associated with Lennox-Gastaut syndrome (GWPCARE4): a randomized, double-blind, placebo-controlled phase 3 trial. Lancet. 2018;391(10125):1085-1096.
- GW Pharmaceuticals. Investor presentation. June 2018.
- Bonn-Miller MO, et al. Labeling accuracy of cannabidiol extracts sold online. Jama. 2017;318(17):1708-1709.