An Update On Pfizer's Recently Approved Drugs

| About: Pfizer Inc. (PFE)

Pfizer's stock (NYSE:PFE) has been on a nice run the last year despite facing a host of patent expirations. While stock repurchases and spin-offs have helped, I believe most of this growth in the stock price is because Pfizer's pipeline is finally producing again. Here is a quick update on three recently approved drugs that Pfizer will be depending on for revenue over the next decade.


I will start with the drug that I believe is the most promising. Eliquis is a promising new anti-coagulant used for atrial fibrillation that Pfizer is co-marketing with Bristol-Myers (NYSE:BMY). In the first quarter the companies launched Eliquis in the United States, Britain, Germany, Denmark, and Japan. They will be splitting revenues 50/50. Pfizer did not give sales data for the drug but its partner Bristol-Myers did report sales of 22 million. The other Xa inhibitor currently on the market Xarelto, did approximately 400 million in sales for all of 2012. The next two years will be vital in determining which drug comes out on top. Fortunately I don't think it is a zero sum game for these two drugs. While Eliquis looks to have superior data compared to Xarelto, Xarelto is taken once daily and is approved for more indications. Both drugs are attempting to replace Warfarin and there are only two things holding them back, cost and an effective antidote. Warfarin is cheap but the ever cost conscious NICE recently recommended Eliquis due to its superior effectiveness. On the antidote side, JNJ and Bayer are working with Portola Pharmaceuticals for an antidote for Xarelto. Unfortunately for them any antidote Portola develops would most likely work with Eliquis as well. While currently behind by a large margin I think over the long run Eliquis will slightly overtake Xarelto in annual sales.


Xeljanz is Pfizer's first to market oral JAK3 inhibitor that is currently approved in the US for rheumatoid arthritis. Once again Pfizer didn't release sales for the first quarter so we will have to wait till next quarter to get an actual number. CEO Ian Reed did mention that he is encouraged with early prescribing and that they will start direct to consumer advertising in the summer. The real news regarding Xeljanz was that the pill was rejected by European regulators. Pfizer plans to appeal but I would not be to hopeful, at least in the short term. Long term if more positive data comes out you could see an approval in Europe. Pfizer is also looking to gain a number of new indications for Xeljanz with Phase III trials underway for Psoriasis and Ulcerative Colitis, as well as Phase II trials for Psoriatic Arthritis, Ankylosing Spondylitis, and Crohn's Disease.


Xalkori is approved for ALK positive late stage non small cell lung cancer. Since this is a small subset of lung cancer patients, don't look for Xalkori to reach blockbuster status but its success is important because it is one of the first gene specific oncology drugs on the market. Xalkori is also important because it is extremely effective for the small subset of patients it is approved for. Sales in the first quarter were 53 million, which was a 20% increase from the last quarter of 2012. Look for sales to continue to grow as issues identifying the ALK gene continue to be ironed out.

Lastly Pfizer recently announced a new collaboration with Merck (NYSE:MRK). The two companies plan to develop and market a combination pill containing Metformin, Januvia, and Pfizer's experimental drug ertugliflozin. The two companies will split revenues from the combination drug 60/40 favoring Merck. Ertugliflozin is a SGLT-2, which stands for sodium glucose cotransporter 2. In simplest terms the drug works by limiting the reabsorption of glucose in the kidney thereby reducing glucose levels in the blood. Anybody that would like a more detailed breakdown of the drug class can read this paper, which gives a much more in depth explanation. The deal will help Pfizer's ertugliflozin set itself apart from a number of other SGLT-2's that are already on the market or in development. Johnson & Johnson (NYSE:JNJ) recently had the FDA approve its SGLT-2 called canagliflozin, which will be the first in the drug class to the US market. Another SGLT-2 called dapagliflozin that is being co-marketed by Bristol-Myers and AstraZeneca was not approved by the FDA due to concerns about cancer. However dapagliflozin was approved for use in the EU late last year. Other companies such as Sanofi and Eli Lilly also have SGLT-2's in development so this new drug class will get crowded quickly. Phase III trials for ertugliflozin are set to begin towards the end of this year.

To conclude, Pfizer has weathered Lipitor's patent expiration fairly well, and their labs are finally developing drugs that can potentially replace all that lost revenue. Investors should watch these three drugs diligently as their success will be vital to Pfizer's future. In my mind to justify Pfizer's recent run all three of these drugs need to show excellent growth over the next few years. Investors should also keep a close eye on Pfizer's pipeline as they will soon have to start replacing Viagra and Celebrex revenue as well.

Disclosure: I am long PFE. 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.

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