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HPV Vaccine Report
February 08, 2006
Human Papillomavirus (HPV) is the most common sexually transmitted disease, infecting an estimated 70% of sexually active women at least once during their lifetime. In the United Sates alone it is estimated that 20 million people are currently infected with HPV and approximately 5.5 million new people will become infected this year. Persistent infection of HPV can lead to cervical cancer.
Cervical cancer is the second most common cancer in women worldwide. An estimated 500,000 new cases of cervical cancer are diagnosed annually and the disease accounts for 270,000 annual worldwide deaths. The majority of cases of cervical cancer are found in developing countries due to the lack of early screening and detection however, despite adequate screening, an estimated 35,000 women still die from cervical cancer in the U.S. and Europe each year.
Two vaccines are currently in late-stage development for the prevention of cervical cancer: Gardasil (Merck) and Cervarix (GlaxoSmithKline). Both vaccines protect against types 16 and 18 HPV that cause approximately 70% of all cervical cancers. Gardasil also protects against types 6 and 11 HPV that cause 90% of all genital warts. The race to be first to bring the vaccine to market (and perhaps dominate the market) is in Gardasil’s favor with Merck having filed for both U.S. and E.U. approval in December 2005. GSK is still preparing to file for European approval in 2006, and it remains in doubt whether they will file for U.S. approval this year.
Both Cervarix and Gardasil have demonstrated impressive efficacy with both providing protection against persistent HPV infection. Both vaccines have also shown that they can provide 100% protection from developing precancerous lesions 2 years after vaccination, although data from Gardasil’s phase III study is far more robust than that seen with Cervarix thus far. Accordingly, we believe Gardasil is positioned to dominate the HPV prevention market. Gardasil provides protection against cervical cancer and genital warts, it has demonstrated robust outcomes data and it is likely to become the first HPV vaccine to enter the market.
BACKGROUND
Human Papillomavirus (HPV)
Human Papillomavirus (HPV) has become the most common sexually transmitted disease in the world with over 70% of people of reproductive age having been infected with the virus at least once. The highest rates of HPV infections are found in adults between 18 and 28 years of age. There is currently no cure for HPV infections, but the majority of people (70%) infected with HPV are able to clear the virus within a year of infection and the infection usually goes away unnoticed. In people that are unable to clear the virus, infection can persist and potentially lead to cancer.
There are over 100 different types of HPV, of which only about 30 are passed via sexual contact – these types are usually referred to as genital HPV. The majority of genital HPV types are benign and do not pose a health risk although some types may cause genital warts (which themselves do not pose health risks). However, a few strains are known to cause cancer of the cervix, vagina, vulva, anus and penis.
Based on their oncogenic (cancer-causing) potential, HPV is typically divided into 2 subtypes: low risk and high risk. Low risk types rarely develop into cancer although some do cause benign cell growth in the form of warts. HPV types 6 and 11 are low risk types that together account for approximately 90% of cases of genital warts. High risk types can cause abnormal cell growth that can, if left untreated, lead to cancer. There are 13 to 18 HPV types (16, 18, 31, 33, 35, 39, 45, 51, 52, 56, 58, 59, 68, 69, and possibly a few others) that are considered to be of high oncogenic risks with types 16 and 18 causing approximately 70% of cervical cancer worldwide. While there are geographical variations in the dominant oncogenic types, type 16 is by far the most prevalent oncogenic HPV type worldwide (causing up to 59-70% of cervical cancers). Type 18 HPV is the second most common high-risk type, accounting up to 15% of cervical cancers worldwide.
Cervical cancer
Cervical cancer is the third most common cancer in the world and is the second most common cancer in women. The disease strikes 500,000 women each year with 270,000 women dying from the disease each year. Approximately 80% of cervical cancers arise in developing countries due to the lack of screening and early detection. Despite the availability of screening, an estimated 34,000 women die annually from the disease in the U.S. and Europe combined. In the U.S. alone, the American Cancer Society estimated that 10,370 new cases were diagnosed in 2005.
Prior to the introduction of the Papanicolaou (Pap) smear test in the 1950’s, cervical cancer was the leading cause of cancer deaths in women. The Pap test has dramatically improved morbidity and mortality since it can detect early changes in cervical cells, allowing for early treatment of these cells before they can become cancerous. Cervical cancer typically take years (usually 10-15 years) to develop, and the early detection and appropriate management can yield a survival rate of over 90%. However, given the cost of screening, it is estimated that only 5% of women in developing countries receive screening compared with 40-50% of women in developed countries.
The natural course of cervical cancer is not fully understood, but it is generally acknowledged that the persistent infection with a high risk subtype of HPV can lead to high grade precancerous lesions. These lesions can first become non-invasive cancer (where the cancer is still confined to the lining of the cervix) and ultimately advanced (invasive) cervical cancer. Detection and removal of the cancer before it becomes invasive yields a high cure rate and is the aim of the Pap test.
Types of precancerous changes
In the U.S., the Bethesda System is the standard by which abnormal cervical cells are classified:
While HPV screening has reduced the risk of cervical cancer in the Western world, it does not reduce the number of HPV infections and the consequent development of precancerous lesions. Furthermore, the Pap test is fairly insensitive and is subjected to human diagnosis and error. The Pap test fails to identify 15-50% of women with cervical cancer or precancerous lesions. A newer “liquid-based” Pap test has made the test more accurate. However, 15% of cases still fail to get diagnosed using this method. Therefore, treatment of cervical cancer remains an unmet medical need, particularly in developing countries where screening is uncommon.
Two vaccines are currently in late stage clinical development that have the potential to prevent the onset of cervical cancer: Gardasil (Merck) and Cervarix (GlaxoSmithKline). Unlike most vaccines that contain attenuated virus, Gardasil and Cervarix consist of the recombinant form of the HPV L1 protein. The L1 protein is the major HPV capsid protein that is highly conserved among all HPV types. The L1 protein in both vaccines encodes for the nucleocapsid which can self-assemble into a virus-like particle (VLP). The VLP is a non-infective shell that resembles an actual virus thus inducing an immune response and the production of antibodies against HPV.
Cervarix is a bivalent vaccine that contains the L1 proteins from HPV 16 and 18 and thus can prevent infections from both of these high risk types. Gardasil is a quadrivalent vaccine that not only inhibits types 16 and 18, but also the low risk types 6 and 11 that cause 90% of genital warts. Gardasil is more advanced clinically (it is currently under FDA and European regulatory review) and is set to become the first HPV vaccine to enter the market. GSK is currently planning to file for European approval for Cervarix in 2006 but the company remains vague on its U.S. filing timeframe.
Cervarix (GlaxoSmithKline and MedImmune)
Cervarix is a bivalent vaccine that targets the HPV strains 16 and 18, which together account for approximately 70% of all cervical cancers worldwide. Cervarix contains the AS04 adjuvant, which consists of Corixa’s MPL adjuvant combined with aluminium salts. GSK acquired Corixa in 2005. Some studies have shown that the AS04 adjuvant produces an enhanced immune response compared to adjuvants of aluminium salts alone. Therefore, the AS04 adjuvant in Cervarix may produce a stronger immune response that may also persist longer. Indeed, Cervarix produced a strong antibody response in all females vaccinated. In a phase III trial in 158 pre-teen/adolescent girls of ages 10-14 years of age and 458 women of ages 15-25 years, Cervarix induced an antibody response with 100% of women vaccinated. Women were given three doses of Cervarix at months 0, 1, and 6. Seropositivity (the presence of antibodies against vaccine antigens) was detected at 7 months after the first injection with the antibody titers found to be higher in the adolescent group.
In a phase III study that enrolled 1113 women between the ages of 15 to 25 years, Cervarix provided 100% protection against persistent infections caused by HPV 16 and 18. The vaccine was found to provide 91.6% protection against incident infection by the two HPV types. The protection from persistent infections by the vaccine resulted in the protection from developing CIN 1 or 2 lesions. At 27 months after the first injection, 6 women in the placebo group developed CIN 1 or 2 while only 1 woman in the vaccine group developed CIN 1, however her CIN 1 was judged to be due to a persistent infection by HPV type 51. The vaccine was extremely well tolerated with mild and transient injection site symptoms reported more commonly in the vaccine group, though the difference was not significant. Therefore, Cervarix was found to prevent persistent infections by types 16 and 18, and this protection led to the prevention of precancerous changes in the cervix.
Cervarix is currently in phase III studies in the U.S. GSK is likely to file for European approval in 2006 as planned. While GSK announced in 2005 that they planned to file for marketing approval for Cervarix in the U.S. in 2006, this now appears unlikely – the company has stated that they are currently in discussions with the FDA. We speculate that the FDA may require 2 year data from the pivotal phase III study before approval (similar to Gardasil’s BLA data set). This phase III study was initiated in 2004 and as such, we believe that this 2 year data will not be available until later in 2006. While we believe that both the FDA and EMEA will eventually approve Cervarix based on the vaccine’s impressive efficacy and safety, Cervarix is likely to suffer from being the second HPV vaccine to come onto the market.
Gardasil (Merck and MedImmune)
Gardasil is a quadrivalent HPV vaccine that contains a mixture of 4 recombinant HPV type-specific virus-like particles (VLP). The vaccine is designed to prevent infections by types 6, 11, 16, and 18. Therefore, the vaccine has the potential to not only prevent infection by the cancer-causing types 16 and 18, but also the genital warts-causing types 6 and 11.
Gardasil is administered with aluminium salts as the adjuvant and like Cervarix is given as three injections (months 0, 2 and 6). While the AS04 adjuvant used in the Cervarix vaccine may induce a stronger antibody response, results from a phase II study found that all women given Gardasil developed detectable antibody responses to the four HPV strains at 7 months after the first vaccine injection. The antibody titer was found to decline at 7 months however, the antibody titer was maintained above the level found in previously infected women who developed natural immunity to the virus (a level that is thought to provide protection). Interestingly, 94% of women had a maintained antibody level at 36 months to HPV 6, 11, and 16, while only 76% of women had antibody responses to HPV 18. While ongoing studies are being carried out to evaluate the need for booster injections, ongoing studies that have been monitoring vaccinated women for over 4 years have indicated that the antibody remains at protective levels (above those found in women with natural immunity) 4 years after vaccination. However, further studies are required to determine the duration of vaccine protection and whether booster doses are required.
In a phase II study that enrolled over 1158 women between the ages of 16 and 23 years, Gardasil reduced the incidence of persistent infections by types 6, 11, 16, or 18 by 90% compared to placebo. While this study was originally not powered to assess vaccine efficacy in terms of clinical disease, it was found that in this study, Gardasil provided 100% protection against clinical disease associated with HPV 6, 11, 16, or 18 (such as warts or CIN).
A phase III study (FUTURE II) was designed to assess whether the prevention of persistent HPV infection can indeed protect women against developing cervical cancer. FUTURE II is a randomised, placebo controlled study that enrolled over 12,000 women between the ages of 16 to 26. The study evaluated whether Gardasil protected these women from HPV 16/18 associated cervical intraepithelial neoplasia (CIN) 2 or 3 and non-invasive cancers (adenocarcinoma in situ or AIS).
Results from FUTURE II were presented in October 2005 after it followed these women for an average of 17 months post vaccination. In this study, Gardasil provided 100% protection against CIN 2 or 3 (high-grade pre-cancer) and non-invasive cancer. There were no cases of CIN or AIS reported in the vaccinated group in contrast to 21 cases in the placebo group. A secondary analysis that included women with prior infections with HPV 16 or 18 and those that did not complete all three doses of the vaccine (but had at least one injection) found that 97% of women (one woman developed CIN2/3 or AIS) administered Gardasil were protected from CIN2/3 and AIS two years after vaccination.
Overall, the results for Gardasil have been impressive, demonstrating that the vaccine protects women from persistent infections by HPV 6, 11, 16, and 18 and that the protection against HPV 16 and 18 corresponds to a total protection against the development of pre-cancerous lesions. The results also show that Gardasil can protect against pre-cancerous development even after the first injection. Furthermore, the results show that women who have previously been infected with HPV 16 or 18 can benefit from the vaccine – an important consideration given that the majority of women of childbearing age have already been infected with HPV.
Competitive landscape
Vaccine preference
Both Cervarix and Gardasil have demonstrated impressive efficacy in preventing persistent infections by HPV 16 and 18. Both have also demonstrated 100% efficacy in preventing development of cervical cancer (although the results for Cervarix is less mature). Therefore, the vaccines appear to be equivalent in terms of efficacy. While Cervarix may possess a stronger immune response (and potentially a longer duration of protection), the levels induced by Gardasil has shown to be sufficient at preventing infection and disease. The duration of protection from either vaccine is currently unknown, and unless Cervarix can demonstrate a significantly longer protection period from the initial 3 vaccinations, we feel that the stronger immunogenicity of Cervarix is not an important consideration.
Given Cervarix’s and Gardasil’s equivalent efficacy, we believe that the two most important factors that will govern market share is the protection from genital warts and the first to market advantage by Gardasil. We believe that the added benefit of protection against genital warts provided by Gardasil will likely make the vaccine more appealing than Cervarix. While genital warts do not pose health risks, they do cause patient discomfort and distress and may be costly to remove. The prevention of genital warts also opens the door for adoption in males, which we discuss below. Therefore, we believe that Gardasil is a more attractive vaccine due to its broader HPV protection.
Gardasil is set to become the first cancer vaccine to enter the market. Merck filed for both U.S. and European approval for Gardasil in December 2005 and has already received a priority review in the US and we expect an expedited review in Europe, placing both approvals around mid 2006. Therefore, Gardasil is likely to have the first-to-market advantage in both the U.S. and Europe. Our belief that most people would prefer a quadrivalent vaccine to a bivalent vaccine, coupled with Gardasil’s first to market advantage, leads us to conclude that Gardasil will dominate the HPV vaccine market.
Need for additional vaccines?
While Cervarix is designed to protect against HPV 16 and 18 and Gardasil against HPV 6, 11, 16, and 18, there is speculation that both vaccines can provide a much broader protection. The L1 protein is highly conserved between HPV types and thus, these vaccines may also protect against infections by other HPV types (this is known as “cross protection”). Indeed, at the annual HPV conference in May 2005, Cervarix was shown to protect against other HPV types including 31, 45, and 52, all of which can cause cervical cancer. Merck indicated that they are also currently evaluating Gardasil’s efficacy to protect against other HPV types. The protection against other subtypes of HPV is an exciting development that could extend the life of these vaccines since new vaccines encompassing more HPV types may not be necessary. Moreover, given HPV strain variations in different geographical locations, cross-protection makes these vaccines more broadly applicable.
Vaccine uptake
Studies of the vaccine have thus far been carried out in girls as young as 10 years of age through to women in their mid twenties. We do not foresee issues with women in their twenties receiving the vaccines as we predict that this population would be the most willing recipients for an HPV vaccine. However, the HPV vaccine should ideally be given to people before they become sexually active. Some groups (especially faith based organizations) have declared opposition to providing an HPV vaccine to adolescents on the belief that this may encourage sexual activity. These organizations prefer to promote abstinence as a way to prevent contracting HPV.
Another important consideration of vaccine uptake is physician education. Pediatricians may not be aware of the prevalence of HPV infections and the link to cervical cancer as this tends to be associated with an older patient population. Therefore, education of pediatricians is likely to be necessary to maximize the uptake of the vaccine in adolescents. A study published in the Journal of Pediatric Adolescent Gynecology found that pediatricians familiar with HPV are more likely to prescribe the vaccine. Moreover, the study found that pediatricians are more likely to recommend the vaccine if organizations such as the American Academy of Family Physicians (AAFP) recommends the vaccine. Therefore, we believe that the uptake of the vaccine will depend largely on the recommendation of the Advisory Committee on Immunization Practices (ACIP), a panel convened by the CDC. The ACIP will meet in February and June 2006, and it is likely that Merck will present data at the February meeting and an ACIP decision on Gardasil is probable at the June meeting.
Another factor in the uptake of these vaccines is the likelihood of males being vaccinated. Though HPV poses more of a health risk to women, some types of HPV can cause anal and penile cancer in men (as well as genital warts). Men are also carriers of the virus and total eradication of the virus is likely to require “herd vaccination” in which both males and females are vaccinated. Cervarix is not being evaluated in males (since the vaccine was solely designed to protect women from cervical cancer) and accordingly, we do not foresee the use of Cervarix in males. In contrast, Merck is currently evaluating the efficacy of Gardasil in males, but it is not yet known when these results will become available. Given the efficacy of Gardasil in women, we speculate that the vaccine will also demonstrate efficacy in males. We believe that Gardasil will eventually be available for males (perhaps in 2008 – although the timing is unclear) and we foresee older teens and those in there twenties to be the main recipients of the vaccine initially. Going forward, we believe that all teens (both males and females) should be given the vaccine, but this will likely require a mandate from the ACIP.
Women who have already been infected with HPV are another patient population to benefit from the vaccine. Studies carried out with both Cervarix and Gardasil have included women who have had previous HPV infections although these women did not have persistent HPV infections nor did they have more than 6 sexual partners prior to the study. The results have shown that both vaccines can prevent new infections in these women and we believe that these women will be willing recipients of the vaccine. However, results from both vaccines to date have only included women up to 26 years of age. There are studies currently ongoing that will evaluate whether the vaccines will likely benefit women who are older (25 to 45 years). Given the benefit seen in young women who have already been infected with HPV, we believe that these studies will yield positive results that will expand the use of the vaccine to women older than 26 years of age.
REVENUE MODELS
We have added two revenue models for Gardasil and Cervarix. Given the uncertainty surrounding the uptake of this vaccine in adolescents, we have modeled two different scenarios to reflect the potentially different outcomes – one in which the vaccine may not be willingly administered to adolescents and the other to reflect a wider adoption of the vaccine.
Model Methodology
We have modeled the potential for an HPV vaccine out to 2016. Because a number of assumptions are made regarding usages among sexes and age cohorts, our model is constructed to allow easy changes as data becomes available. As vaccines, the models are somewhat different than other therapeutics we have previously modeled and as such, we have detailed our methodology below.
Prevalence/Percent Treated
The prevalence is defined as the male and female population aged 0-50 years using the U.S. Census Bureau IDP Population Pyramids, which estimate 50 years-worth of national populations throughout the world by age group. We have then used 95% as the percent treated in the U.S. (90% in EU; 90% in Japan), as approximately this portion of the U.S. population receive necessary vaccinations.
We have split the population for each region into six different age cohorts:
1) New 10 year olds-We feel these will be the earliest children to receive the vaccine in the next 10 years.
2) 11-14 year olds-This represents the middle school years where there is the possibility for mandatory requirements and first sexual activity.
3) 15-19 year olds-Represents the high school years and increased sexual activity, however, health decisions are still primarily made by a parent.
4) 20-24 year olds-Almost all people will have become sexually active and now will be responsible for their own health decisions.
5) 25-39 year olds-This older women cohort is still being studied in clinical trials and we feel the decision among this age grouping will be similar, as each make their own health decisions, but also many will be married and may not feel that they will need the vaccine.
6) 40-50 year olds-This is the oldest cohort in which we see the vaccine being used.
Percent Eligible
After arriving at the broad population that we feel the vaccine will target, we have defined the percent eligible as the number of people we feel could potentially be given the vaccine in a given year. We have first modeled for females aged 10-24 to be vaccinated until data is released in the older female and male populations. We expect these two populations to then start being vaccinated in 2008, with a small amount of off-label use before then. When a person is given the vaccine they are no longer eligible to receive it again (we have not modeled for any booster doses used in the next 10 years).
The estimate for the people potentially vaccinated was done based on a combination of factors:
First we looked at different vaccines and the rates at which they have seen market uptake. An estimate of the uptake for the HPV vaccine proved difficult to determine as there are unique characteristics that differentiate this vaccine from others that have come to market over the last two decades. Despite these differences, we found it helpful to analyze the uptake of the Hepatitis B vaccine in the 1990’s and the more recent Varicella (chickenpox) vaccine in order to help us determine what factors may potentially influence the growth rate of this new drug.
The Hepatitis B vaccine was first recommended in the U.S. for high-risk groups by the Centers for Disease Control and Prevention (CDC) in 1982. The recommendation was then extended by the CDC in 1991 to include all infants. The majority of states did not legally require the vaccine until the mid to late 1990’s and as of April 2004, the Immunization Action Coalition reported that all but two states had childhood requirements in place for Hepatitis B. In 1994 the CDC reported coverage levels for the vaccine at 29.4% for children aged 19-35 months and by the end of 1999, the coverage level had reached 87%.
The Varicella vaccine was recommended in the U.S. by the American Academy of Pediatrics (AAP), Committee on Infectious Diseases in 1995. Per the Immunization Action Coalition, the majority of individual states did not begin a Varicella mandate until the year 2000 or later. A study by the AAP (PEDIATRICS Vol. 105 No. 1 January 2000, pp. 136-141) reported that U.S. Varicella vaccine coverage in 1998 was 34% (with wide variations among different states, ranging from 6% to 52%) among children 19-35 months. In a more recent study completed in 2002, the CDC reported that vaccine coverage reached 80% for this same age group.
We feel it will take eight years for an HPV vaccine to reach 95% saturation; i.e. people are knowledgeable of the vaccine and the vaccine is available to them if they should choose to have it. This rate has a higher slopping curve in the first four years, as it reaches 65% by year four and starts to slow from there.
Second, we have estimated acceptance rates among each age cohort; i.e. if the vaccine is available, the percentage of people who are willing to get vaccinated. We feel that the majority of people will accept the vaccine and at some point be willing to get vaccinated. This will be aided by Merck and GSK’s ability to promote the marketing message of these being cancer vaccines rather than STD vaccines. However, religious beliefs and those who are married and see no need for the vaccine will play a role here.
We have included the ability to rate the acceptance on a state-by-state basis to model the possibility of different attitudes towards the vaccine and mandatory requirements. The states have been split between Low, Moderate and High acceptance rates. To determine where a state ranks we tried mainly to gauge a state’s attitude towards sex by looking at abortion rates, abstinence programs, and also poverty rates, as populations in these states will likely be less educated about HPV. A peak acceptance rate is the maximum percentage of people we feel will be willing to get vaccinated, which we have further separated by age cohort. In the younger cohorts this decision will be made by a parent.
While we feel this will vary state-to-state, we have computed a weighted average for our potential vaccinated percentage:
U.S. Females
| New 10yr | 11-14yr | 15-19yr | 20-24yr | 25-39yr | 40-50yr |
| 42.84% | 61.91% | 70.03% | 75.96% | 65.96% | 20.96% |
| New 10yr | 11-14yr | 15-19yr | 20-24yr | 25-39yr | 40-50yr |
| 25.96% | 41.91% | 52.84% | 61.91% | 40.96% | 5.00% |
(Note: Our estimates for peak acceptance rates are based on our belief the vaccine will be seen more as a cancer vaccine and be highly adopted in the U.S. We have done a low case scenario, where the acceptance rates are reduced 50% in the 10-19 year olds, 33% in the 20-24 year olds, 67% in the 25-39 year olds and 75% in the 40-50 year olds. The results of this scenario are discussed in the Total Revenue section below.)
These peak rates are then multiplied by the vaccination growth rate for that year to arrive at a vaccination potential percentage. Taking the total population for an age cohort that has not yet been vaccinated and multiplying it by the vaccination potential percentage we then arrive at the total amount of people we have the potential to be vaccinated in a given year.
Market Share
Once the vaccines’ potential number of people is determined, we have then estimated the amount of market share each will get from that pool. This percentage represents only those who actually purchase and receive the vaccine.
Currently we expect Gardasil to take the vast majority of female patients and be the only vaccine used in the male population. We estimate 75% peak market share for Gardasil by 2008. While we feel Cevarix also offers a compelling option, we do not think many doctors will chose to give it over Gardasil as it will not offer protection against as many types of HPV. As such, we estimate Cervarix to only achieve a 20% peak market share in 2010.
Our model results in an accumulated vaccination rate of 76.3% in 2016 for U.S. females and 57.6% for U.S. males. For the EU the accumulated vaccination rate by 2016 is 73.9% for females and 54.2% for males. In Japan the accumulated vaccination rate by 2016 is 53.7% for females and 21.9% for males.
Cost
We estimate that each dose of the vaccines will cost $100 and have reduced this cost by 25% for those not able to complete all three doses in a year (i.e. 2.25 does per patient/year). We have then discounted the cost further, as we feel Merck and GSK will receive approximately 85% of the annual wholesale price (AWP). The final result is $191/patient per year. We have then grown this number at 2.5% annually through 2016 (although this is a conservative price growth estimate).
Total Revenue
Based on our belief that an HPV vaccine will be highly accepted, our revenue estimates ramp up and peak within five years for the female population. Our model assumes uptake in the 0-24 year old female cohorts in 2006 and 2007, with limited off-label use in 25 and over females and males of all age groups. In 2008, we expect use in both the over 25 females and all males and as such 2008 revenues increase significantly in both the U.S. and EU.
Gardasil
For Gardasil in the female population we project peak U.S. revenue of $2.32 billion in 2010 and total U.S. revenue through 2016 of $13.54 billion. For the females in the U.S., EU and Japan combined we project peak revenue of $4.82 billion in 2010 and total revenue through 2016 of $28.83 billion.
When males are added we project peak U.S. revenue of $4.34 billion in 2010 and total U.S. revenue through 2016 of $27.17 billion. For males and females in the U.S., EU and Japan we project peak revenue of $8.97 billion in 2011 and total revenue through 2016 of $56.17 billion.
Cervarix
For Cervarix (females only) we project peak U.S. revenue of $619.0 million in 2010 and total U.S. revenue through 2016 of $3.43 billion. For Cervarix in the U.S., EU and Japan combined we project peak revenue of $1.32 billion in 2010 and total revenue through 2016 of $7.40 billion.
Low Acceptance Scenario
We have also modeled a lower acceptance scenario where the acceptance rates are reduced 50% in the 10-19 year olds, 33% in the 20-24 year olds, 66% in the 25-39 year olds and 75% in the 40-50 year olds. This results in the following acceptance rates:
U.S. Females
| New 10yr | 11-14yr | 15-19yr | 20-24yr | 25-39yr | 40-50yr |
| 21.42% | 30.96% | 35.01% | 50.64% | 21.99% | 5.24% |
| New 10yr | 11-14yr | 15-19yr | 20-24yr | 25-39yr | 40-50yr |
| 12.98% | 20.96% | 26.42% | 41.27% | 13.65% | 1.25% |
In this scenario, the two vaccines’ combined peak revenue is 59% of our estimate. However, because less people are vaccinated each year, there are more left to potentially receive the vaccine and revenues decline to a lesser degree, so that by 2016 total revenues are actually 71% of our higher scenario. In this scenario the accumulated vaccination rate in 2016 is 56.6% for U.S. females and 37.5% for U.S. males.
While we have chosen a scenario much lower than our base estimate, there are rates of acceptance below our base case that yield higher returns by 2016 for the vaccines. While Merck and GSK will probably have little control over acceptance rates, one that is between our two scenarios may be ideal in terms of maximizing revenue before the vaccines come off patent.
Gardasil-Low Acceptance
For Gardasil in the female population peak U.S. revenue would be $1.34 billion in 2011 and we would see total U.S. revenue through 2016 of $10.18 billion. When males are added peak U.S. revenue would be $2.61 billion in 2011 and total U.S. revenue through 2016 would be $19.16 billion.
Cervarix-Low Acceptance
For Cevarix peak U.S. revenue would be $356.3 million in 2011 and total U.S. revenue through 2016 would be $2.64 billion.
REVENUE MODELS
We have added two revenue models for Gardasil and Cervarix. Given the uncertainty surrounding the uptake of this vaccine in adolescents, we have modeled two different scenarios to reflect the potentially different outcomes – one in which the vaccine may not be willingly administered to adolescents and the other to reflect a wider adoption of the vaccine.
Model Methodology
We have modeled the potential for an HPV vaccine out to 2016. Because a number of assumptions are made regarding usages among sexes and age cohorts, our model is constructed to allow easy changes as data becomes available. As vaccines, the models are somewhat different than other therapeutics we have previously modeled and as such, we have detailed our methodology below.
Prevalence/Percent Treated
The prevalence is defined as the male and female population aged 0-50 years using the U.S. Census Bureau IDP Population Pyramids, which estimate 50 years-worth of national populations throughout the world by age group. We have then used 95% as the percent treated in the U.S. (90% in EU; 90% in Japan), as approximately this portion of the U.S. population receive necessary vaccinations.
We have split the population for each region into six different age cohorts:
1) New 10 year olds-We feel these will be the earliest children to receive the vaccine in the next 10 years.
2) 11-14 year olds-This represents the middle school years where there is the possibility for mandatory requirements and first sexual activity.
3) 15-19 year olds-Represents the high school years and increased sexual activity, however, health decisions are still primarily made by a parent.
4) 20-24 year olds-Almost all people will have become sexually active and now will be responsible for their own health decisions.
5) 25-39 year olds-This older women cohort is still being studied in clinical trials and we feel the decision among this age grouping will be similar, as each make their own health decisions, but also many will be married and may not feel that they will need the vaccine.
6) 40-50 year olds-This is the oldest cohort in which we see the vaccine being used.
Percent Eligible
After arriving at the broad population that we feel the vaccine will target, we have defined the percent eligible as the number of people we feel could potentially be given the vaccine in a given year. We have first modeled for females aged 10-24 to be vaccinated until data is released in the older female and male populations. We expect these two populations to then start being vaccinated in 2008, with a small amount of off-label use before then. When a person is given the vaccine they are no longer eligible to receive it again (we have not modeled for any booster doses used in the next 10 years).
The estimate for the people potentially vaccinated was done based on a combination of factors:
First we looked at different vaccines and the rates at which they have seen market uptake. An estimate of the uptake for the HPV vaccine proved difficult to determine as there are unique characteristics that differentiate this vaccine from others that have come to market over the last two decades. Despite these differences, we found it helpful to analyze the uptake of the Hepatitis B vaccine in the 1990’s and the more recent Varicella (chickenpox) vaccine in order to help us determine what factors may potentially influence the growth rate of this new drug.
The Hepatitis B vaccine was first recommended in the U.S. for high-risk groups by the Centers for Disease Control and Prevention (CDC) in 1982. The recommendation was then extended by the CDC in 1991 to include all infants. The majority of states did not legally require the vaccine until the mid to late 1990’s and as of April 2004, the Immunization Action Coalition reported that all but two states had childhood requirements in place for Hepatitis B. In 1994 the CDC reported coverage levels for the vaccine at 29.4% for children aged 19-35 months and by the end of 1999, the coverage level had reached 87%.
The Varicella vaccine was recommended in the U.S. by the American Academy of Pediatrics (AAP), Committee on Infectious Diseases in 1995. Per the Immunization Action Coalition, the majority of individual states did not begin a Varicella mandate until the year 2000 or later. A study by the AAP (PEDIATRICS Vol. 105 No. 1 January 2000, pp. 136-141) reported that U.S. Varicella vaccine coverage in 1998 was 34% (with wide variations among different states, ranging from 6% to 52%) among children 19-35 months. In a more recent study completed in 2002, the CDC reported that vaccine coverage reached 80% for this same age group.
We feel it will take eight years for an HPV vaccine to reach 95% saturation; i.e. people are knowledgeable of the vaccine and the vaccine is available to them if they should choose to have it. This rate has a higher slopping curve in the first four years, as it reaches 65% by year four and starts to slow from there.
Second, we have estimated acceptance rates among each age cohort; i.e. if the vaccine is available, the percentage of people who are willing to get vaccinated. We feel that the majority of people will accept the vaccine and at some point be willing to get vaccinated. This will be aided by Merck and GSK’s ability to promote the marketing message of these being cancer vaccines rather than STD vaccines. However, religious beliefs and those who are married and see no need for the vaccine will play a role here.
We have included the ability to rate the acceptance on a state-by-state basis to model the possibility of different attitudes towards the vaccine and mandatory requirements. The states have been split between Low, Moderate and High acceptance rates. To determine where a state ranks we tried mainly to gauge a state’s attitude towards sex by looking at abortion rates, abstinence programs, and also poverty rates, as populations in these states will likely be less educated about HPV. A peak acceptance rate is the maximum percentage of people we feel will be willing to get vaccinated, which we have further separated by age cohort. In the younger cohorts this decision will be made by a parent.
While we feel this will vary state-to-state, we have computed a weighted average for our potential vaccinated percentage:
U.S. Females
| New 10yr | 11-14yr | 15-19yr | 20-24yr | 25-39yr | 40-50yr |
| 42.84% | 61.91% | 70.03% | 75.96% | 65.96% | 20.96% |
| New 10yr | 11-14yr | 15-19yr | 20-24yr | 25-39yr | 40-50yr |
| 25.96% | 41.91% | 52.84% | 61.91% | 40.96% | 5.00% |
(Note: Our estimates for peak acceptance rates are based on our belief the vaccine will be seen more as a cancer vaccine and be highly adopted in the U.S. We have done a low case scenario, where the acceptance rates are reduced 50% in the 10-19 year olds, 33% in the 20-24 year olds, 67% in the 25-39 year olds and 75% in the 40-50 year olds. The results of this scenario are discussed in the Total Revenue section below.)
These peak rates are then multiplied by the vaccination growth rate for that year to arrive at a vaccination potential percentage. Taking the total population for an age cohort that has not yet been vaccinated and multiplying it by the vaccination potential percentage we then arrive at the total amount of people we have the potential to be vaccinated in a given year.
Market Share
Once the vaccines’ potential number of people is determined, we have then estimated the amount of market share each will get from that pool. This percentage represents only those who actually purchase and receive the vaccine.
Currently we expect Gardasil to take the vast majority of female patients and be the only vaccine used in the male population. We estimate 75% peak market share for Gardasil by 2008. While we feel Cevarix also offers a compelling option, we do not think many doctors will chose to give it over Gardasil as it will not offer protection against as many types of HPV. As such, we estimate Cervarix to only achieve a 20% peak market share in 2010.
Our model results in an accumulated vaccination rate of 76.3% in 2016 for U.S. females and 57.6% for U.S. males. For the EU the accumulated vaccination rate by 2016 is 73.9% for females and 54.2% for males. In Japan the accumulated vaccination rate by 2016 is 53.7% for females and 21.9% for males.
Cost
We estimate that each dose of the vaccines will cost $100 and have reduced this cost by 25% for those not able to complete all three doses in a year (i.e. 2.25 does per patient/year). We have then discounted the cost further, as we feel Merck and GSK will receive approximately 85% of the annual wholesale price (AWP). The final result is $191/patient per year. We have then grown this number at 2.5% annually through 2016 (although this is a conservative price growth estimate).
Total Revenue
Based on our belief that an HPV vaccine will be highly accepted, our revenue estimates ramp up and peak within five years for the female population. Our model assumes uptake in the 0-24 year old female cohorts in 2006 and 2007, with limited off-label use in 25 and over females and males of all age groups. In 2008, we expect use in both the over 25 females and all males and as such 2008 revenues increase significantly in both the U.S. and EU.
Gardasil
For Gardasil in the female population we project peak U.S. revenue of $2.32 billion in 2010 and total U.S. revenue through 2016 of $13.54 billion. For the females in the U.S., EU and Japan combined we project peak revenue of $4.82 billion in 2010 and total revenue through 2016 of $28.83 billion.
When males are added we project peak U.S. revenue of $4.34 billion in 2010 and total U.S. revenue through 2016 of $27.17 billion. For males and females in the U.S., EU and Japan we project peak revenue of $8.97 billion in 2011 and total revenue through 2016 of $56.17 billion.
Cervarix
For Cervarix (females only) we project peak U.S. revenue of $619.0 million in 2010 and total U.S. revenue through 2016 of $3.43 billion. For Cervarix in the U.S., EU and Japan combined we project peak revenue of $1.32 billion in 2010 and total revenue through 2016 of $7.40 billion.
Low Acceptance Scenario
We have also modeled a lower acceptance scenario where the acceptance rates are reduced 50% in the 10-19 year olds, 33% in the 20-24 year olds, 66% in the 25-39 year olds and 75% in the 40-50 year olds. This results in the following acceptance rates:
U.S. Females
| New 10yr | 11-14yr | 15-19yr | 20-24yr | 25-39yr | 40-50yr |
| 21.42% | 30.96% | 35.01% | 50.64% | 21.99% | 5.24% |
| New 10yr | 11-14yr | 15-19yr | 20-24yr | 25-39yr | 40-50yr |
| 12.98% | 20.96% | 26.42% | 41.27% | 13.65% | 1.25% |
In this scenario, the two vaccines’ combined peak revenue is 59% of our estimate. However, because less people are vaccinated each year, there are more left to potentially receive the vaccine and revenues decline to a lesser degree, so that by 2016 total revenues are actually 71% of our higher scenario. In this scenario the accumulated vaccination rate in 2016 is 56.6% for U.S. females and 37.5% for U.S. males.
While we have chosen a scenario much lower than our base estimate, there are rates of acceptance below our base case that yield higher returns by 2016 for the vaccines. While Merck and GSK will probably have little control over acceptance rates, one that is between our two scenarios may be ideal in terms of maximizing revenue before the vaccines come off patent.
Gardasil-Low Acceptance
For Gardasil in the female population peak U.S. revenue would be $1.34 billion in 2011 and we would see total U.S. revenue through 2016 of $10.18 billion. When males are added peak U.S. revenue would be $2.61 billion in 2011 and total U.S. revenue through 2016 would be $19.16 billion.
Cervarix-Low Acceptance
For Cevarix peak U.S. revenue would be $356.3 million in 2011 and total U.S. revenue through 2016 would be $2.64 billion.