Over the last year, Mylan has faced a difficult generic environment, but has managed to offset the pressure with the launch of its generic Copaxone and a strong ex-US business that has helped stabilize the business.

The key topics around Mylan are:

- Mylan's recently received approval of Fulphila, their Neulasta biosimilar. Analysts expect the drug to contribute to management's guidance and importantly, demonstrates the company's ability to bring complex generics and biosimilars to the market

- Investor focus now shifts to two upcoming, and sizable, opportunities: gAdvair on June 27, and gRestasis on July 31.

Neulasta Biosimilar Approval Demonstrates Ability to Bring Complex Generics to Market

Context: Neulasta is a branded drug that boosts white blood cells to help reduce infection rates from strong chemotherapy. The branded drug is owned by Amgen and generated about $4 billion in US sales over the last twelve months. 

The drug is delivered through one of two methods: through a prefilled syringe, or through Onpro, an on-body injector (also owned by Amgen, pictured below).

If administered by a prefilled syringe, the patient will need to travel to a cancer or oncology center to have the drug administered. Amgen estimates that 90% of patients live 150 miles or greater away from the hospital, meaning it's a significant chunk of time out of a patient's day. As a result, Onpro makes up roughly 60% of the franchise revenue, and the patients on Onpro are considered to be fairly sticky. 

What happened: Mylan recently received approval for their Neulasta biosimilar, marketed as Fulphila. This was seen as a positive result, and sent the stock up 5% the next day. Of note, some concerns had arisen recently among investors after the company received a form 483 (a list of observations during a factory inspection). The company received a CRL (complete response letter) last year, largely focused on qualitative observations at the facility. However, this was clearly not an issue for the company. Fulphila is the first biosimilar to Neulasta and therefore should enjoy some lead time and revenue benefits as the only generic available to patients.

Competition: Coherus is seen as the only other manufacturer that has a chance of receiving FDA approval on their Neulasta biosimilar this year. The company received a CRL on their Neulasta biosimilar in June 2017, and recently refiled their application in May 2018. Coherus has an action date on November 3rd, and many investors expect Coherus to receive approval.

Beyond Coherus, Amneal/Adello are expecting a filing date at some point this year, and Sandoz/Apotex  are also expected to file some time in 2019. Given the difficulty in getting approval, Mylan (and potentially Coherus) could be the only competitors available on the market for a couple of years.

Financial impact: How much share will Fulphila take from Neulasta? Onpro becomes a significant consideration as it protects some of Amgen's Neulasta revenue. Mylan did note this January that they will be exploring the development of an Onpro like device. However, it will likely be some time until that comes out. In the meantime, Onpro provides some protection for Amgen against Fulphila given the convenience of its delivery. As noted previously, the Onpro saves patients the time of having to travel to a cancer center to have the shot administered. However, on the flip side, biosimilars are likely to get more favorable reimbursement. This can be a major factor as Neulasta shots cost over $6,000 on average, and patients will likely be willing to drive a further distance when the savings are of that magnitude.

In total, analysts are forecasting anywhere between $30 to $150 million in Fulphila revenue and $0.04 - $0.08 in EPS this year, taking into account a number of factors:

- 5-10% market share
- Drug availability for half the year
- Onpro stickiness
- Coherus potential launch near the end of the year
- 25-40% discount on pricing

Beyond 2018, many analysts expect revenue to grow to over $300 million in revenue in 2019, contributing EPS of $0.10 or more. 

Focus Now Shifts to Advair and Restasis 

With the approval of the Neulasta biosimilar, investors are now focused on the next two catalysts in 2018: Advair and Restasis. Management gave guidance for 2018 that implies a step up in sales and earnings, and the approval of these drugs would go a long way in derisking sales and earnings targets. Additionally, investors will be looking for any updates on Herceptin, which is expected to be a 2019 event.

Advair: Advair has an upcoming action date on June 27. Recall that numerous manufacturers have struggled to receive approval on an Advair generic; Mylan received a CRL in March of last year, Sandoz received a CRL in February this year, and Hikma/Vectura received a CRL in March. 

On the positive side, competitor CRLs means that approval is not likely for them until late 2019/2020. If Mylan is able to get approval, they will likely enjoy a single-generic market for a year or longer. On the negative side, the Advair opportunity has notably shrunk over the last year. GSK (the owner of Advair) recently noted in April that payer negotiations had put pressure on pricing, and they now expect Advair sales to decline by 30% in 2018. This would put the opportunity at roughly $1.5 billion in branded sales - a significant decline from the $2.8 billion opportunity that Mylan had originally targeted in 2015, and the $2.2 billion sales generated in 2017.  

Overall, analysts believe the drug could contribute $0.12 - $0.15 in EPS if the drug receives approval by mid 2018.

Restasis: Restasis has an action date on July 31st. Mylan has noted that they do not have any significant outstanding scientific issues, increasing the likelihood that they receive approval. Outside of Mylan, the competitive landscape is a bit more uncertain, as both TEVA and Akorn are pursuing the opportunity, but have not yet settled with Allergan. Analysts believe Restasis approval could contribute $0.05 - $0.10 in EPS this year, with potential for upside depending on the competitive landscape. 

Herceptin:  Investors generally see Herceptin as a 2019 event, as several companies have had issues with receiving approval for the biosimilar (Amgen and Pfizer have both received CRLs this year). TEVA/Celltrion still believe that they could get approval before the end of the year.