Pfizer (NYSE:PFE) developed Eliquis in collaboration with Bristol-Myers Squibb (NYSE:BMY) and was approved by the FDA in December 2012. Sales estimates expected the drug to reach $4 billion in 4-5 years but the results were disappointing, with just $12 million in sales during Q2 2013. Nevertheless, I shall discuss why this drug still holds promise and why Pfizer is particularly poised to gain from Eliquis.
What Is Eliquis?
Eliquis, commonly known as Apaxiban, belonging to the family of anticoagulants, prevents the formation of blood clots especially in patients who have had elective hip and knee replacement surgery. It is also used for prevention of clots in patients with atrial fibrillation (heart rhythm disorder) thus, lowering the risk of stroke.
The drug is a major achievement as it can be used in both short and long term treatment of Venous thromboembolism. It will give Pfizer a major boost in its revenues after it saw some decrease in sales initially due to the loss of Lipitor's patent, the company's famous blood cholesterol drug.
The impressive study
Researchers proved Eliquis' worth with the successful completion of its 3rd phase of clinical trial for the treatment of deep vein thrombosis. The study conducted on a sample size of 4,808 nonvalvular atrial fibrillation patients revealed that Eliquis matches the standard utility of age-old anticoagulant warfarin.
It can be successfully used for treatment of venous thrombosis ((NYSEARCA:VT)) and pulmonary embolism (NYSE:PE) without constant surveillance and dietary restrictions as in the case of warfarin. It also showed reduction in cases of major bleeding in contrast to usage of warfarin and heparin, another blood thinner typically given to warfarin patients in the early part of treatment.
What is Venous Thromboembolism?
Typically, deep venous thrombosis refers to the blood clot in veins which, if in case breaks away, goes to the heart and ultimately to the lungs causing pulmonary embolism. In the U.S. around 900,000 people suffer from this fatal condition every year, according to the Centers for Disease Control and Prevention in Atlanta.
In October, last year, Pfizer and Bristol-Myers Squibb entered into a joint agreement with Portola Pharmaceuticals to advance the scientific understanding of the role of PRT4445 as a potential antidote for Eliquis. The drug was developed in a joint venture by Pfizer and Bristol-Myers Squibb. It helps to reduce the risk of bleeding that is associated with anticoagulants like Eliquis.
A competitor that dropped out of anticoagulant race
Merck (NYSE:MRK) gave up its oral anticoagulant betrixaban as the drug did not satisfy questions about its efficacy. Moreover, competition for Pfizer and Bristol-Myers Squibb may have forced Merck to give up on its anticoagulant drug as well. Merck had paid $50 million to Portola way back in 2009 in hopes of developing cardiovascular drugs. Certainly, the loss of betrixaban hit Merck pretty hard. If Merck had met all the milestones, it would have struck a deal worth $420 million with the help of the oral anticoagulant.
With a market cap of $188 billion and an enterprise value of $189 billion, Pfizer is one of the largest companies in the world. However, the company is walking in overvalued territory with a PEG ratio of 4.29. To make up for this, the company has a good revenue figure of $57 billion.
The company's 5-year average dividend yield is 4.40%, which is on the lower side but is good for those who want to save on taxes. With an operating cash flow of $16 billion, Pfizer has enough money to develop newer and more effective drugs that will generate profit and revenue for the company.
Eliquis is not an early entrant in the market as Pradaxa and Xarelto, due to which it saw its sales lagging. Recent studies about the drug's relative safety over its competitors will likely boost its sales. Moreover, Eliquis can also be used for other conditions as I have described above.
All these factors boost investor confidence and brighten long-term sales forecasts for Pfizer. Besides this, there is a major strategy chalked out by the company to lift the sale of its off-patent drug Lipitor with its projected sales pegged at $3 billion. Pfizer stock is definitely going to be one of the more interesting and promising big pharma stocks.
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.