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The European Medicine Agency (NYSEMKT:EMA) has conditionally approved Pfizer’s (NYSE:PFE) Bosulif as a second-line treatment in certain chronic myelogenous leukemia (a type of white blood cell cancer) adult patients [Pfizer’s BOSULIF® (bosutinib) Receives Conditional Marketing Authorization From The European Commission, Pfizer, March 29 2013]. The approval for the drug was largely anticipated following the FDA’s nod last year and the EMA’s positive recommendation in January.

The EMA’s conditional approval will open the European market for the drug but only to a limited patient base at this stage. However, with a steep price tag of over $8,000 per month and continued approvals in other markets, the drug is expected to achieve over $300 million in peak sales and add to robust growth in the Oncology franchise. Below we discuss the outlook for the oncology division.


Robust Growth Ahead

With over $1.2 billion in revenue, Sutent, a first-line treatment for metastatic-renal cell carcinoma or “mRCC” (an advanced stage of renal cell or kidney cancer), generates most of the revenues in Pfizer’s oncology franchise. Considering its strong brand recall among physicians and a historically proven track record, we believe Sutent will continue to dominate the mRCC market. What should also help Sutent is the lack of competition. GSK’s Votrient, which was being considered a significant threat, has shown no major benefits over Sutent in COMPARZ trial [GSK’s Votrient non-inferior to Pfizer’s Sutent, trial shows, Pharmatimes, Oct 1 2012]. Further, the drug maker is also working on extending the drug as a second-line treatment in a much wider patient base of renal cell carcinoma (currently limited to advanced stage of RCC). We expect revenues from Sutent to top $2 billion by the end of our forecast period.

The recent approval of Inlyta as a second-line treatment for mRCC patients will also help Pfizer in tapping additional revenues as the drug is prescribed to patients who have failed to respond to treatments with Pfizer’s own Sutent. Another major growth driver is expected to be Xalkori. The drug, which is mainly approved for non-small cell lung cancer, has seen a strong uptake since its launch in the U.S. Despite a small number of eligible patients currently, we expect the drug to generate sales of more than $1 billion by 2015, with its steep price tag of close to $9,000 per month and the addition of new indications.

Xalkori recently received conditional approval from the EMA for use in adult lung cancer patients who have received at least one treatment for the condition. A recent American Society of Clinical Oncology’s study also found the drug to completely eradicate indications of three deadly tumors relating to nerves, blood and soft tissue in some children [Pfizer Lung Drug Stops Deadly Child Cancers in Study, Bloomberg, May 18 2012].

Experimental Breast Cancer Drug Gives Room For Upside

However, the upside could come from an experimental advanced breast cancer drug, PD-0332991, which has exhibited impressive efficacy coupled with strong safety in a recently concluded mid-stage trials. When taken with Letrozole (a conventional drug for the disease manufactured as Femara by Novartis), it delayed the worsening of symptoms in breast cancer patients by a statistically significant 18 months over those with Letrozole alone (total 26 months against 6 months of Letrozole alone) [Pfizer breast cancer drug delays progression 18 months, Reuters, Dec 5 2012].

Various reports suggest that Pfizer may be planning to apply for an early approval of the drug, even as the drug maker has yet to begin final-stage trials for the drug, which can only conclude by 2015-end [Pfizer May Push $5 Billion Breast Cancer Hope for Ruling, Bloomberg, Jan 10 2013]. The drug, if approved as a first-line treatment, could bring in as much as $5 billion in revenues and lead to upside to our current $31 price estimate as we have not yet considered the drug’s full revenue potential in our model.

Disclosure: No positions

Source: Pfizer's Oncology Division Gets A Boost With European Approval For Bosulif