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Drug Roundup – June 28, 2011
There have been several noteworthy developments in the drug space recently, which will likely have a material impact on the companies in this sector and the markets they serve. Companies featured in this review include Watson Pharmaceuticals (WPI), Teva Pharmaceuticals (TEVA), Pfizer (PFE - Free Pfizer Stock Report), GlaxoSmithKline (GSK), Valeant Pharmaceuticals (VRX), Merck & Co. (MRK - Free Merck Stock Report), Mylan Inc. (MYL), Bristol-Myers Squibb (BMY), Bayer (BAYRY), and Johnson & Johnson (JNJ - Free Johnson & Johnson Stock Report).
Watson Receives Favorable Ruling
The leading generic manufacturer received good news in June when the United States District Court denied Teva Pharmaceutical’s request to prevent Watson from launching a generic version of its birth control drug, Seasonique. Watson had filed an Abbreviated New Drug Application (ANDA) for a generic version of the drug back in January 2008. Since it was the first company to file, it is likely that Watson will have 180 days of market exclusivity. Watson reported global generic sales of $600 million in the first quarter, representing a 10% year-over-year increase.
New Pfizer Drug Shows Promise In Late Stage Study
On June 21st, the world’s largest drugmaker announced positive results in a late-stage study of its pain treatment Lyrica. The study, which involved 220 subjects from 10 different countries, showed that Lyrica did better than a placebo in reducing one type of pain related to spinal cord injuries. The pain is called neuropathic pain and is caused by a lesion in the central nervous system, a condition that occurs frequently following a spinal cord injury. Researchers indicated that initial results were encouraging and further analysis would be performed in the coming months.
GlaxoSmithKline/Valeant Drug Gains FDA Approval
GlaxoSmithKline and Valeant Pharmaceuticals announced that their epilepsy drug, Potiga, was granted FDA approval as an adjunctive treatment of partial-onset seizures in patients 18 years and older. The two partners expect the drug to be launched before year’s end.
Pfizer Seeks To Cut More Costs
Earlier this year, Pfizer announced plans to cut spending by as much as $2 billion, or roughly 25% of its industry-leading $8 billion R&D budget in order to meet its 2011 and 2012 earnings forecasts. As it turns out, these projections may have been a bit modest as recent reports indicate deeper cuts will likely be necessary on top of the $2 billion already announced. Management is currently reviewing different options with the goal of slashing an additional $500 million this year and $1 billion in 2012, mostly on the administrative side.
Merck Pulls Out On Cladribine
On June 22nd, the company announced it was pulling the plug on development and marketing plans for its multiple sclerosis (MS) treatment Cladribine, citing heightened scrutiny from U.S. drug regulators. Management noted that clinical trials were very unlikely to address the U.S. FDA’s requirements, and new trials would not justify the costs. Merck also indicated it would be withdrawing the drug from markets in Australia and Russia where it had already been approved under the name Movectro. We view the recent withdrawal as a significant blow to Merck, which was contending with Novartis to bring the first oral MS treatment to a major market. The global market for MS treatments is estimated at over $10 billion.
Mylan Gains Approval For Generic Aricept
Generic drugmaker Mylan gained FDA approval in June to start selling a lower-cost version of the popular Alzheimer’s treatment Aricept. The drug, marketed by Pfizer, lost patent protection in November of 2010, and a number of generics have surged into the market in recent months, including one made by Teva Pharmaceuticals. Mylan noted that U.S. sales of the drug totaled $2.3 billion in the twelve months ended March 31st.
New Blood Thinner Makes A Splash
On June 23rd, Pfizer and Bristol-Myers Squibb announced that a Phase III clinical trial for Apixaban, also called Eliquis, showed that it was as effective in helping prevent strokes in patients with an irregular heartbeat as Warfarin, a leading blood thinner. On word of the news, shares of Pfizer and Bristol rose 3%, and 5%, respectively, while shares of Bayer and Johnson & Johnson trended downward. Bayer and J&J have been working together to develop a similar product called Xarelto, and the likelihood of increased competition in the marketplace pressured each company’s share price. Both Pfizer and Bristol indicated they hope to file for U.S. and European regulatory approvals during the third and fourth quarters, respectively.
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.