January 29, 2009
Barrons.com has identified five drugs that could pay off big for the companies that make them.
DESPITE A ROUGH REGULATORY environment and big setbacks last year, drug makers have some big breakthroughs coming to market in 2009.
Experts helped Barrons.com identify five drugs the Food and Drug Administration will likely approve in 2009. All the drugs could improve treatment of serious illnesses and eventually pay off.
The list includes blood thinners prasugrel from Eli Lilly & Co. (ticker: LLY) and Xarelto, co-marketed by Johnson & Johnson (JNJ) and Bayer (BAYRY).
J&J also has golimumab for rheumatoid arthritis. French drug maker Sanofi-Aventis (SNY) has the heart drug Multaq. And finally, Amgen (AMGN) awaits approval of denosumab for osteoporosis. Their approval could hike revenues and stock prices for the companies that developed them, a relief for an industry facing increased scrutiny and hobbled by scientific setbacks, and patent expirations, not to mention the recent bear market.
In fact, drugs launched this year could capture sales of $15.1 billion in 2014, according to Decision Resources.
"New drugs can not only revolutionize how a disease is treated, but change the game for a company, especially small drug makers," says Ira Loss, senior health policy analyst at Washington Analysis.
Of course, there are no guarantees. Drug makers complain that the FDA has grown too cautious. And the agency missed decision deadlines for several drugs thanks to a staff shortage.
In fact, only one out of five drug candidates highlighted last year by Barrons.com (see Weekday Trader, "Pills That Could Thrill in 2008," Jan. 15, 2008) received FDA clearance. None of those drugs made our list this year, though Cardiome Pharma's Kynapid could receive FDA approval in 2009, and Roche's Actemra has been delayed until 2010 by a request for more data.
"This is a very conservative FDA," says Geoffrey Porges, a biotechnology industry analyst for Sanford Bernstein. "But there will be successes."
Here's a rundown on the drugs and the top-line potential for the companies developing them.
Eli Lilly's Prasugrel
Scheduled for a Feb. 3 advisory panel, Eli Lilly's Effient, more commonly known by its chemical name prasugrel, is awash in controversy.
The agency has twice delayed a decision. Doctors are divided over the drug because, while patients taking it suffered fewer heart attacks and strokes than those on Plavix, they bled more.
Like Plavix, prasugrel prevents blood clots from forming by stopping platelets from sticking together.
Plavix is used on patients who have had blood vessels unblocked with a wire mesh tube, or stent, and patients with acute coronary syndrome (ACS), which refers to uncontrolled chest pains caused by a partially blocked coronary blood vessel.
If approved this spring, the drug's use may be limited by the FDA to exclude patients most at risk of a dangerous bleed. Still, prasugrel could capture sales of $1.6 billion by 2015.
Also known as dronedarone, Sanofi-Aventis' drug also has an interesting history with the FDA.
The drug was rejected in 2006 after it was linked to a higher risk of death for patients with heart failure. But in recent studies, Multaq reduced hospitalizations and deaths from atrial fibrillation -- caused when the heart's upper chambers beat too rapidly. It also was less harmful than other treatments to the lungs, liver and thyroid.
If approved by an advisory panel on March 18, the pill could be the first new treatment for atrial fibrillation, a leading cause of stroke, in almost a decade. Annual sales could exceed $1 billion in 2015.
J&J and Bayer's Xarelto
Big hopes surround the blood thinner Xarelto, developed by J&J and its partner Bayer to prevent and treat blood clots. Also called rivaroxaban, the anticoagulant targets an enzyme involved in blood clotting called Factor Xa.
Already for sale in Europe and Canada, Xarelto can be used with Plavix. But it would rival Lovenox, an injection, and Coumadin and its generic warfarin.
Called vitamin K antagonists, Coumadin and warfarin require frequent blood tests to make sure the dosage is correct. Also, the drugs react badly with some foods and medications.
Initially intended to prevent blood clots during orthopedic surgery, Xarelto is also being tested on patients with a history of blood clots, atrial fibrillation, acute coronary syndrome, and on bedridden hospital patients. In the U.S. alone, Xarelto sales could total $1.6 billion in 2014.
J&J and Schering's Golimumab
Also called Simponi, golimumab is the latest entry by J&J and its partner Schering-Plough (SGP) into a crowded $13 billion market for rheumatoid arthritis.
The two companies already market Remicade. And like Remicade, Abbott Laboratories' drug Humira and many other treatments, golimumab attacks the autoimmune disorder by inhibiting TNF, or tumor necrosis factor. But unlike the rest of the pack, golimumab can be either injected or given intravenously.
Plus, the drug is a fully humanized antibody. Many TNF inhibitors combine human and mouse antibodies, which sometimes get attacked by a patient's immune system. Due to be approved as early as April, sales could hit $1.5 billion by 2013.
Amgen's osteoporosis drug denosumab could also prove groundbreaking. Injected twice a year, the drug stops bone loss by inhibiting a protein called Rank Ligand and preventing cells called osteoclasts from consuming bone matter.
Drugs called bisphosphonates -- Fosamax, Boniva and Reclast -- dominate the $7 billion market, but cause stomach problems and may prevent the body from regrowing bone.
Insurers may balk at covering denosumab as an initial therapy. Still, sales could reach $2.8 billion by 2012. Of course, the FDA remains a significant hurdle for Amgen and other drug makers. The industry's record, meanwhile, remains spotty. Problems launching any of these drugs would hurt their makers. Yet, all five drugs hold promise, offering patients and shareholders reasons to hope.
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