3 Big Pharma Stocks With Credible Threats to Their Blockbusters

Health and Healthcare

Published: May 5, 2016 7:35 am

Last Updated: January 13, 2020 9:51 am

A pharmaceutical company could face a threat to one of its products for a number of reasons, ranging from an improved formulation, a new drug approval to simply a patent expiry and the opening of the floodgates for generic competition. AbbVie Inc.’s (NYSE: ABBV) issue with mega-blockbuster Humira’s upcoming U.S. patent expiry in December is well known, but here are three Big Pharma companies currently facing threats that may have escaped attention in the Humira frenzy.

Pfizer

Pfizer Inc. (NYSE: PFE) may have one of its blockbuster drugs challenged by Exelixis Inc. (NASDAQ: EXEL). Exelixis just picked up a Food and Drug Administration (FDA) approval for cabozantinib, its lead renal cancer candidate. With the approval out of the way, Exelixis is conducting a Phase 2 trial that compares the efficacy and safety of cabozantinib directly with one of Pfizer’s best-selling oncology products, Sutent (sunitinib), which sold $1.12 billion in 2015, 2% of its top line. 2018 revenues are projected at $1.55 billion.

If Exelixis can demonstrate improved efficacy, or at least equivalence combined with an improved safety profile in the ongoing comparison trial, the FDA could approve the drug as a first-line treatment in stage III, stage IV and clear cell renal cancer. This would pose a huge threat to Pfizer’s ability to meet its projected revenue targets for Sutent, as physicians would have a more effective or safer alternative to offer patients, assuming the price is roughly equivalent.

There’s still a while to go before the threat becomes reality. Primary completion for the comparison trial is slated for 2017, and the FDA may require another trial beyond the current Phase 2 before it will accept a supplemental New Drug Application (NDA). Before the close of the decade, however, cabozantinib might well be redirecting a large portion of Pfizer’s Sutent sales toward the Exelixis balance sheet.