Seeking Alpha
Long only
Profile| Send Message|
( followers)  

Summary

  • Palbociclib’s overall survival rate is not statistically significant but Pfizer is still the leader.
  • Competitors Novartis and Eli Lilly are working hard to catch up.
  • Sell Pfizer? Some thoughts.

Palbociclib update

Early approval hopes of palbociclib, based on Phase 2 data, are fading.

At the annual meeting of the American Association for Cancer Research in San Diego, Pfizer (NYSE:PFE) presented details of the Phase 2 study.

The drug cut in half the risk that cancer would worsen, which is PFS (progression free survival). The median time before the disease progressed or the woman died was 20.2 months for those who received the drug, compared with 10.2 months for the control group.

This is not quite as good as the numbers presented in February. The interim results at that point were 26.1 months for palbociclib versus 7.5 months for the control group. Even so, the numbers are excellent.

The drug also extended OS (overall survival) but not by a statistically significant amount. Those who received the drug lived a median of 37.5 months compared with 33.3 months for those in the control group.

The number of trial participants were not large enough to generate satisfactory overall survival numbers. Researchers said that because only about 30 patients in each arm of the 165-patient trial had died, it was still too early to define the drug's impact on survival.

Dr. Richard S. Finn, a principal investigator said:

"Survival events in estrogen positive breast cancer take time to evolve. A first look at the survival data is very encouraging...The curves are starting to separate ... It hasn't reached statistical significance, but patients are still being followed."

Also, memories of the iniparib trials from 2009 remind people that a successful Phase 2 does not necessarily mean a successful Phase 3. Iniparib in Phase 2 with 122 patients reported statistically significant PFS and OS but the subsequent Phase 3 showed no activity.

Pfizer's palbo data is impressive but some analysts argue that phase 3 will be required for approval.

Two Phase 3 trials are recruiting patients.

One of the trials, Paloma-2, will again combine palbociclib with Femara.

Paloma-3 is combining palbociclib with AstraZeneca's (NYSE:AZN) Faslodex versus Faslodex plus placebo. Patients in these trials have been previously treated with hormone therapy but the cancer has since progressed.

The FDA normally requires larger Phase 3 studies, but sometimes makes exceptions for drugs for cancers and other life-threatening illnesses.

If Pfizer can get early approval, the drug could probably reach the market next year. If the company must complete a Phase 3 study, which is already underway, approval might be delayed a couple of years, according to the ISI Group. ISI analysts see a compromise option whereby the FDA tells Pfizer to file on interim Phase 3 data combined with Phase 2.

If FDA approves palbo based on Phase 2, the drug could reach the market in 2015.

If Phase 3 results are needed, Pfizer hopes to have these from the two Phase 3 studies in the first half of 2015, though this seems optimistic.

Novartis

While Pfizer is in the lead to bring this new class of drugs to market, Novartis has begun late-stage testing of its own CDK 4/6 inhibitor. Last December, pushed its rival compound, LEE011 into Phase 3.

Novartis aims for a 2016 filing for LEE011 based on that trial which will evaluate the efficacy of LEE011 in combination with Femara.

Eli Lilly

The company recently posted plans for a Phase 3 study of LY2835219 for breast cancer on clinicaltrials.gov. The study will be testing a combination of the experimental drug with AstraZeneca's Faslodex against Faslodex monotherapy in a comparison arm.

An earlier, small trial found that LY2835219, used on its own, shrank tumors in 25 percent of women with metastatic estrogen-positive breast cancer, and stabilized the cancer in 55 percent of the same group of women.

At this point it is difficult to compare the drugs except to note a difference in delivery. Lilly's drug can be given continuously, while Pfizer's drug may need to break the treatment cycle every three weeks. The reason for that is the Lilly's drug causes less severe neutropenia (low rates of white blood cells).

Sales estimates

Analysts have estimates of peak potential sales for palbociclib ranging from $1 billion to more than $6 billion.

Sales projections vary widely and the optimism is based on the fact that the drug works for a type of breast cancer that a majority (about 60 percent) of advanced patients have: an inoperable cancer that is both estrogen receptor positive, meaning tumors grow in response to estrogen, and HER2-negative, meaning that the HER2 protein is not causing the cancer.

Leerink Swann analyst Seamus Fernandez projected that palbociclib could generate $3 billion a year with an approval for first-line treatment for metastatic breast cancer.

Sanford Bernstein analyst Tim Anderson expects $1.9 billion in sales by 2020.

UBS's late launch scenario puts sales at $720 million in 2020, while JP Morgan projects revenue to $2.5 billion by 2020.

Morgan Stanley is the most optimistic, seeing $5.5 billion in 2020, from a 2016 launch.

Palbociclib could possibly be appropriate for over 200,000 breast cancer patients in developed markets alone.

Sell Pfizer?

This question becomes important to a long-term Pfizer investor mainly when he or she believes the whole market is turning negative.

Is that the case now?

Yes, according to Warren Buffett's formula.

Buffett says that the percentage of total market cap (TMC) relative to the U.S. GNP is "probably the best single measure of where valuations stand at any given moment."

The ratio Warren Buffett uses for market valuation, TMC/GNP, is equivalent to the P/S (price per sales) ratio, used in stock evaluation, applied to the economy.

In recent days the Total Market Index was at $19321.2 billion, which is about 113.1% of the last reported GDP. That means the market is overvalued.

In 2000, just before the dot-com bubble burst, the market capitalization was 183% times the GDP. And in 2007, just before the housing credit bubble was bursting, the ratio was 135% times the GDP. In March 2009, the ratio of market cap to GDP has lowered to 73%, signaling a buying opportunity.

However, in 2003, the ratio was around 130%, which was still overvalued but the market went on to produce all-time highs over the next few years.

Which means that the formula, useful as it is, cannot be used for timing the market.

In hard times potential business growth is just as important. Palbociclib is an important ingredient in Pfizer's growth strategy.

Source: Pfizer Vs. Eli Lilly, Novartis In Breast Cancer Race