Pfizer's (PFE) targeted lung cancer drug Xalkori (which is generally known as crizotinib) has come under fire in the United Kingdom because of its pricing which could have ramifications throughout countries with state healthcare systems. The Pfizer lung cancer drug is designed for patients with an abnormal ALK gene. That's about 5% of people diagnosed with "non-small cell" lung cancer. The drug has worked well in a high percentage of patients - it held off cancer growth for twice as long as standard therapies. The high price which is being questioned right now has been rationalized as worth it. But a 30 day supply is priced at $7079.00 while a course of treatment is estimated at about $77,000.00. Not everyone thinks the rationale is good.
UK's National Institute of Health and Clinical Excellence acknowledges how well the drug works but says it is not cost-effective at its present pricing. They have hinted that it would reconsider if the price appeared more feasible. The UK is not the only country balking at the price of the drug. Even though it is highly effective it also appears to have become a victim of the hard economic times on the European continent. While nations are faced with budget cuts and healthcare reforms, the rationale behind the price of certain drugs appears to be losing ground. The IQWiG in Germany assesses new treatments, comparing them with alternatives and determines if certain drugs can wear premium price tags. It has also balked at Pfizer's pricing just like the UK and may not be the last.
Tedizolid, or TR-701, is an important drug to Trius Therapeutics (TSRX) because it is the closest product in research to reaching markets and also has incredible potential. This is a "next generation" antibiotic designed to fight acute infections like superbugs. The drug recently met key phase 3 trial objectives so now the company is going to file for approval of the new antibiotic in the United States and Europe the second half of 2013. With the growing threat of resistant bugs that have just about conquered the old antibiotics, there is great need for new drugs like this. But it seems researching drugs like these are very expensive and many of the big pharmacy companies have focused on other areas that are more cost effective. This has opened up the door for small newer companies like Trius to focus on this type of research.
It may become the new alternative to Pfizer's Zyvox. This Pfizer drug is for patients with acute skin structure infections as well as bacterial infections. Tedizolid proved it was non-inferior to Zyvox while it met all its phase 3 primary goals. Zyvox needs to be taken twice a day for 10 days while Tedizolid only needs to be taken once a day for 10 days. The market is great considering Zyvox has been a top seller with revenue exceeding $1 billion since 2011. Zyvox also faces a patent expiration in 2015.
A Bright Spot- Breast Cancer Drug
Phase 3 research of a breast cancer drug by Pfizer known as PD-991 may begin this year and is a bright spot for Pfizer's future as well as breast cancer victims. The phase 2 study and results were applauded as patients with advanced metastasized breast cancer showed promising results. The PD-991 therapy combined with another breast cancer drug letrozole showed a medium progressive survival rate of 26.1 months as compared to 7.5 months for the group that only received the letrozole.
As I make my observations, I see Pfizer has been on a very nice bullish run since mid-November. Its strength can be seen in the fact that it used the middle Bollinger bands as support, and this always signifies a strong bullish move. I notice that the stock has dropped through the middle band twice and it appears it is on its third leg of the move up. Typically the third leg is the last leg and signifies the end of a run. I can observe a mild negative divergence taking place in the RSI indicator, which is also supported in the MACD indicator. I cannot say when this long bullish run is over but signs point to a weakening.
As Pfizer continues to search for revenue replacement from recent patent expirations, drugs like PD-991 will be part of the answer the company is looking for. At the same time, the company may have to make adjustments in pricing of drugs to adapt to the struggling economic markets like Europe. But I believe Pfizer will rebound and I will continue to research the drugs that the company has in its pipeline as a hope for future revenue.