Companies Betting on the Next 10 Blockbuster Drugs
> Drug: obeticholic acid (OCA) in an experimental model of liver disease
Intercept Pharmaceuticals Inc. (NASDAQ: ICPT) has been incredibly volatile, and its stock at one point was up more than 1,000% from its lows of 2013. Even After losing 40% from its peak, it is valued at more than $5 billion now. Intercept’s lead candidate OCA in liver fibrosis (NASH) met its primary endpoint to target a multibillion dollar market with no approved drugs. NASH is believed by some to be one of the last few remaining large markets. To prove the point: the data announcement alone sent shares from under $75 to well above $400 in two trading days. Intercept has spent just under $60 million in R&D in the past four years, so it could have a serious profit. Just don’t expect a final outcome any time soon. OCA is being developed for a variety of chronic liver diseases and patient populations including, PBC, PSC, NASH, cirrhosis, portal hypertension, alcoholic hepatitis and bile acid diarrhea.
> Drug: Linzess, linaclotide, for irritable bowel syndrome with constipation (IBS-C) or chronic idiopathic constipation (CIC)
Ironwood Pharmaceuticals Inc. (NASDAQ: IRWD) is just getting things going with its Linzess, or linaclotide, for IBS and CIC as a once-daily treatment for adults. Ironwood’s market value is almost $1.5 billion, and it has had limited revenues. Linzess could ultimately become a leading player in next-generation treatment for chronic constipation and IBS, but sales are expected to rise almost 250% to about $80 million in 2014 and another 130% to more than $181 million in 2015. In short, this may take years to become a blockbuster. Credit Suisse recently saw 50% upside to the stock when its early April report came out. Ironwood has spent more than $350 million in total R&D expenses in the past four years.
> Drug: iSONEP in wet age-related macular degeneration
Lpath Inc. (NASDAQ: LPTN) is such a small company (worth well under $100 million) and is hardly known, making it hard to cover without some serious caveats. The first is that getting a blockbuster drug from a $67 million valued company seems hard to imagine. That being said, Canaccord Genuity recently issued a research report calling for a massive upside of about 300%. Another analyst sees it rising closer to 200%. iSONEP was touted as having a shot of being paradigm-changing in wet AMD (age-related macular degeneration), with some $2.4 billion in peak sales potential. Phase 2 data are not due until late in 2014, so it is potentially two years or more before an outcome is known. Lpath’s R&D spending has been only about $37 million combined over the past four years.
> Drug: Afrezza as inhalable insulin for diabetes
MannKind Corp. (NASDAQ: MNKD) has tried to get its Afrezza approved by the FDA for years. If approved, this would be the only approved inhalable insulin treatment on the market. The company has spent more than just in the hundreds of millions in testing and studies, and the FDA keeps pushing back. As of mid-April, the chances of an FDA approval rose after an FDA panel overwhelmingly suggested that it be approved. Diabetes spending is in the hundreds of billions each year, and billions are spent on insulin. Afrezza sales can easily jump into the billions of dollars if it is approved, and if there are no serious reactions by users. MannKind’s R&D tally has been nearly $380 just in the past four years, and well over a billion since it began.
> Drug: Xtandi in prostate cancer
Medivation Inc. (NASDAQ: MDVN) has a top prostate cancer drug in the already-approved Xtandi, also with potential upside treatment indications in breast cancer. There has been at least some hope that Medivation could even be a valuable acquisition target, calling it a highly leverageable likely blockbuster product in prostate cancer. The company is already expected to move into profitability in 2014 after Xtandi was approved by the FDA in 2012, and its total company sales are expected to double to nearly $550 million this year and rise more than 40% in 2015 to almost $780 million. Xtandi is under an extended European Marketing Authorization Application approval process. Medivation is worth close to $5 billion already, and the company has spent $360 million in R&D in the past four years.
> Drug: H.P. Acthar injectable gel, approved for 19 different conditions
Questcor Pharmaceuticals Inc. (NASDAQ: QCOR) is in the process of being acquired by Mallinckrodt PLC (NYSE: MNK), but the outcome of this merger is not yet known. The reason for the buyout is that this one-trick pony’s (more or less) H.P. Acthar injectable gel has been approved as a treatment for 19 different conditions. Many of the approvals are associated with autoimmune and inflammatory conditions, and the list of treatment indications just seems to keep growing. The company’s sales of almost $800 million in 2013 are up almost fourfold from 2013, and the company is expected to generate sales of $1.06 billion in 2014 and more than $1.2 billion in 2015. The company spent just over $110 million in R&D in the past four years combined, but Acthar’s manufacturer BioVectra was bought by Questcor.
> Drug: eteplirsen for Duchenne muscular dystrophy (DMD)
Sarepta Therapeutics Inc. (NASDAQ: SRPT) is a very controversial company, with a very volatile stock history over the past year after FDA disappointment, followed by a more recent favorable FDA reversal. Eteplirsen indication for Duchenne muscular dystrophy is one of those strange categories of rare disease treatments. DMD puts boys in wheelchairs, ultimately to die in their early 20s, and it impacts about 15,000 boys in the United States. Amazingly, the drug has been well tolerated even if it stopped working in some patients. Barron’s recently suggested that eteplirsen could become the basis for a family of DMD drugs, and the financial journal said that it could have several billion dollars worth of revenue from it if the drug is approved. It may not be until 2015 before this outcome is known, and Sarepta’s R&D program has spent more than $225 million just in the past four years.