Since the 1950's, the standard of care for patients using oral anticoagulants has been either aspirin or warfarin (Coumadin). Several crucial problems have been found with warfarin, however. Problems include INR normalization, overall healthcare costs due to its use, and an ever growing list of medicines that interact. A new generation of anticoagulants has hit the market in 2011 and 2012, which will compete for revenues in what is expected to be a $9 billion dollar a year market space in 2014. I am much more bullish on this market as I have seen the issues that warfarin patients deal with currently. I believe that the new anticoagulants will revolutionize the treatment of stroke in atrial fibrillation patients and VTEs, thus making the $9 billion dollar estimate for oral anticoagulants inaccurate. I estimate that oral anticoagulants will take a total market of $12 billion by 2014 and $15 billion by 2016. There are several factors that cause me to be more optimistic regarding this potential market. The $9 billion dollar estimate most likely assumes minimal increase in the number of patents who ultimately take anticoagulants, and it assumes that these drugs will have a similar cost to warfarin. I believe that the new generation of anticoagulants will increase patient access because the cumbersome and expensive INR normalization process will not need to occur on a patient by patient basis. In developing countries, it is nearly impossible to measure and maintain the INRs for patients, and thus, these patients are often left untreated for their condition. The ability to give one or two pills a day to a patient in a developing country is certainly much more feasible for the treatment of a serious condition than the current standard of care presented by warfarin.
Whatever the actual market share for anticoagulants is in 2020, the likes of Pfizer (PFE), Johnson & Johnson (JNJ), and Bristol-Myers Squibb (BMY) should ultimately benefit. The big "if" with these drugs is whether they will stand up to long-term legal scrutiny. Any medication prescribed for use in high-risk patients can cause serious adverse events, which may or may not be attributable to the actual drug. In today's litigious society, the big pharmaceutical companies can be held financially responsible for the damages. Merck could ultimately payout more than $5 billion total in lawsuits related to Vioxx. With several potential lawsuits against one of the new anticoagulant medications, the others could soon be next. While I do not ultimately see any of these new medications going down the route of a Vioxx, these lawsuits could affect the prescribing habits of physicians, and thus affecting revenues. If the Phase IV trials currently being conducted can further prove the safety and efficacy of these drugs in a standard of care situation, sales will certainly benefit.
The anticoagulant market is a dream space for pharmaceutical companies as it allows them to access a large number of patients, who only currently have one oral treatment choice. In 2008, warfarin had worldwide sales of over $700 million. This may seem to be a tiny market segment, but this is because warfarin can cost about only pennies per day, compared to the new generation of anticoagulants, which can be several dollars. Furthermore, as previously explained, INR normalization is a difficult and expensive process, which limits the use of warfarin mainly to developed countries. In the United States, Pradaxa (Boeringer Ingelheim GnBH), Xarelto and Eliquis have been approved for the use in stroke prevention in atrial fibrillation patients. I will compare and contrast the two Factor Xa inhibitors (Xarelto and Eliquis) and how their market shares could impact their respective companies.
Stroke is a leading cause of cardiovascular morbidity and mortality worldwide. Approximately, 795,000 strokes occur in the USA each year, 610,000 of which are first events, and 185,000 of which are recurrent events. Through the ROCKET-AF and ARISTOTLE-AF trials, both of the new treatment choices have been proven to be non-inferior choices in stroke prevention when compared to warfarin. The market share for each product will ultimately be decided by the sales force of each product and the safety profile that will be better understood with post-marketing safety trials, which are currently ongoing.
|Weekly Anticoagulant Scripts, U.S. Market Share|
|Brand||Nov. 2 2012, percent share of 821,110 scripts||Nov. 4 2011, percent share of 793,332 scripts|
|Source: Barclays/IMS Health|
Xarelto, an oral, direct FXa inhibitor, has a half-life of up to 12 hrs in elderly subjects, and up to 9 hrs at steady state in healthy young subjects. The compound has no direct effect on platelet aggregation, but it potently inhibits prothrombinase activity, as well as free and clot-associated FXa activity in human plasma. It currently has the broadest label in the US, with use in prevention of VTEs, and prevention of stroke in atrial fibrillation patients. This enables Xarelto to capture a massive worldwide market as blood clots obstructing blood flow in deep veins or in the lungs kill more than 2,300 people every day worldwide.
Eliquis is currently being reviewed for these indications and information on the study should be presented in the near future. Xarelto (rivaroxaban) has shown similar safety to warfarin in preventing VTEs, but better efficacy, which will give it the edge in prescribing habits for this indication. 900,000 patients in the US annually suffer a VTE, and with burdensome standards of care (heparin, warfarin), Xarelto is currently positioned to take a large portion of this market. Once Eliquis is approved for this indication (I expect this to occur), the market for VTEs will become much more diluted. I expect that Xarelto will hold the edge in the VTE market, having been the first to be released to the market. Speculating on expected sales numbers for each Factor Xa inhibitor in the VTE market would not be advantageous as approval for Eliquis has not yet occurred, but it could easily generate upwards of 40% of each product's revenue. Xarelto also currently has the marketing advantage in this area as it is the only once daily anticoagulant. This may not seem to be very important, but a medicine that is easy to dose is much more effective in elderly patients who may otherwise not be compliant with the label recommendation.
Xarelto has proven to have similar efficacy as warfarin with similar rates of major bleeding in the pivotal ROCKET-AF study. The rate of stroke was not statistically different in this trial. However, absolute rates of hemorrhagic stroke were considerably lower than for warfarin, but ischemic stroke events were almost identical. Clinically relevant bleeding events were about the same in both groups, however (14.9% per year in rivaroxaban and 14.5% in warfarin). Fatal bleeding was reported at a 150% lower frequency with rivaroxaban, however, which gives it a certain safety advantage. A new analysis of Xarelto's ROCKET-AF trial data published in late October found that the rate of major and non-major clinically relevant GI bleeding was higher with Xarelto compared to warfarin. Bayer CEO Marijn Dekkers expects the drug to garner worldwide sales $2.6 billion dollars at its peak for Bayer. I would expect revenues to peak at around $4.5 billion dollars if further trials show that Xarelto is non-inferior to warfarin in safety and efficacy. This would mean that Johnson and Johnson would also bring in about $2.25-2.5 billion dollars annually along with Bayer. I believe that Eliquis will bring in slightly more revenues unless the long-term Phase IV registries currently being conducted show non-superiority to warfarin in safety.
Currently, the trial data from ROCKET-AF and ARISTOTLE-AF is the only information separating Eliquis and Xarelto. Eliquis is an oral, direct FXa inhibitor that is a highly selective and potent inhibitor of free FXa and prothrombinase activity. Eliquis also is excreted via the renal and digestive system. The half-life is 12 hours, which is a positive because it allows a once-daily dosing, but it also does not allow for excretion of the medicine for a much longer period if an adverse event occurs. In the ARISTOTLE study, Eliquis demonstrated a 21% reduced risk of stroke or systemic embolism and a reduced risk of major bleeding by 31.1%. The risk of hemorrhagic stroke was cut by 49% and risk of ischemic stroke by 8%, as reported in the New England Journal of Medicine on Sept. 15, 2011. Furthermore, there was a non-significant decrease in MI rates and an 11% decrease in overall mortality. I believe that this data will ultimately give Eliquis the intermediate-term advantage over the other new anticoagulants. Xarelto has the advantage of a broader label but Eliquis has a better safety and efficacy profile when comparing ROCKET and ARISTOTLE.
Eliquis should be just one of the several blockbusters that BMY and PFE will bring to market to replace Plavix and Lipitor. 80% profitability can be expected for Eliquis, so with my estimate at peak sales, BMY would bring in $1.6 billion in pure profits and PFE $2.4 billion. This will depend on approval for use in VTEs, which should occur 4Q 2013 or 1Q 2014 (Trial ongoing). Deaths from VTEs were shown to be reduced by greater than 80% in Eliquis over placebo patients in a previous trial. While bleeding was slightly higher in Eliquis patients than placebo, overall mortality was decreased by greater than 50% in the 2.5 mg group and 70% in the 5.0 mg group. As explained in my previous article, Why Bristol-Myers Squibb is Not Overvalued, the same Plavix sales team for BMY could most likely be utilized for Eliquis, and I believe this is the same for Pfizer and their Lipitor team.
Ultimately, a large portion of market share currently occupied by warfarin will be taken by the three new generation oral anticoagulants, but the exact market share of each drug will not be determined until further Phase-IV trials are completed. Eliquis currently seems to provide the best combination of safety, efficacy, and ease of use, which I believe will drive market share. Xarelto has been shown to be slightly less effective in reducing stroke, which I believe will ultimately hurt sales. This leads me to believe that Eliquis will see greater than a $5 billion dollar market share, of which Pfizer will see 60% and BMY 40% (Apologies for my previous article where I mentioned it was a 50/50 split).
The lack of overall bleeding, lack of drug interactions, lack of nuisance side effects, and ease of dosing will allow these new medicines take the bulk of the market share from warfarin. I do not think any class action lawsuits that take place will cause any significant revenue damage to any of the mentioned companies, however. I would like to reiterate my previous "buy" rating on BMY, a short term target of $38, and a one year target of $41-42. I also believe that Pfizer is a long term "buy" stock with a target of $32-34. With a strong pipeline and 3.56% dividend PFE should give a nice return, with limited risk and downside potential. I plan to report on why Pfizer may be a good buy in the near future.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.