Barrons.com
January 27, 2010
Five Drugs That Could Be Blockbusters
These treatments could help the bottom lines of companies such as Johnson & Johnson, Bayer and Novo Nordisk
By JOHANNA BENNETT
THE HEYDAY OF BLOCKBUSTER drug discoveries may be gone, but some companies still have big plans for 2010.
Drug companies could receive Food and Drug Administration approval for 50 new therapies this year with the potential to generate sales totaling $15 billion a year by 2015, according to Decision Resources.
But which drugs have the ability to shine above the others and boost the bottom lines of the companies that make them?
Doctors and industry experts helped Barrons.com find five drug candidates that could hit the U.S. market in 2010, improving the treatment of serious illnesses.
The list includes Novo Nordisk's (NVO) diabetes drug, Victoza, and Dendreon's (DNDN) prostate cancer therapy, Provenge.
Then there's Vivus' (VVUS) obesity treatment, Qnexa, and Amgen's (AMGN) remedy for osteoporosis, Prolia.
Finally, Johnson & Johnson (JNJ) and Bayer (BAYRY) hope to jointly market a blood thinner, Xarelto.
It must be remembered that the FDA is "the most unpredictable hurdle for drug makers," says Viren Mehta, managing partner at the investment firm Mehta Partners.
For example, just three drugs highlighted by Barrons.com in 2009 (see Weekday Trader, "Drug Blockbusters of the Future," Jan. 29, 2009) were approved last year. The remaining pair -- Xarelto and Prolia -- hit snags, but earned spots on this year's list.
Here's a rundown of the drugs and their top-line potential.
Novo Nordisk's Victoza
Delayed for 10 months by safety worries, this once-a-day injectable diabetes drug received FDA approval Monday, which pushed Novo's U.S.-listed stock to a 52-week high.
Developed to control blood sugar levels, Victoza belongs to a drug class called GLP-1 analogue. These drugs stimulate insulin production. Unlike insulin and older diabetes drugs, Victoza helps patients lose weight and avoid hypoglycemia.
Also called liraglutide, Victoza carries warnings about the added risks of thyroid cancer and pancreatitis by taking the drug. Yet Byetta, an older diabetes drug, also has safety issues. And the once-weekly version of Byetta awaiting an FDA ruling may prove difficult to use.
Thanks to an aging population, the number of Americans with diabetes could double by 2034.
By 2015, Mehta Partners predicts that annual Victoza sales could hit $2 billion.
Dendreon's Provenge
It's been nearly three years since regulators told Dendreon they needed more information before deciding Provenge's fate. But if approved on May 1, it will be the first therapy that uses live human cells to stimulate the immune system to attack prostate cancer.
Cells harvested from a patient's blood get sent to a laboratory and are cultured with a bioengineered protein found on prostate cancer cells, thus creating an individualized vaccine.
Insurers may balk at what's expected to be an enormous price tag.
Still, Dendreon's stock price has skyrocketed since April 2009 when study results showed that Provenge extended survival for men with advanced prostate cancer. Flu-like symptoms lasting a few days were common side effects.
Decision Resources see sales exceeding $1 billion a year by 2018.
Vivus’ Qnexa
Racing against two other experimental weight-loss drugs, Qnexa has the most successful weight loss data, with patients losing an average of 15% of their body mass.
Demand for effective weight-loss drugs is huge, despite memories of fen-phen, the diet drug combo linked to heart damage.
If approved by the FDA, Qnexa sales could reach $1.16 billion by 2015, according to Jefferies & Co. But safety concerns could give regulators pause.
Qnexa combines the epilepsy drug topiramate with the appetite suppressant phentermine, which was the unharmful half of the fen-phen cocktail.
The concern, however rests with topiramate, which can cause dull-headedness and depression.
Qnexa uses small amounts of both drugs. Clinical trials didn't detect major problems, though dry mouth, tingling, constipation and insomnia were common side effects.
J&J and Bayer's Xarelto
Also known as rivaroxaban, Xarelto made our list last year. In May 2009, the FDA declined to approve the blood thinner and requested more information.
Exactly what data the agency wanted and when Bayer and J&J will resubmit their application is unclear. But big hopes still surround Xarelto.
Already available in Europe and Canada, it rivals Coumadin and its generic warfarin, which are widely used but require frequent blood tests and react badly with some foods and drugs.
Initially intended to prevent blood clots in patients undergoing orthopedic surgery, Xarelto is also being tested on atrial fibrillation (a type of heart palpitation), acute coronary syndrome and patients with a history of blood clots.
Barclays Capital sees sales totaling $2.3 billion by 2015; Mehta Partners expects $1.5 billion.
Amgen's Prolia
Big expectations for the osteoporosis drug have fueled Amgen's share price over the last two years (see Barron's, "At Amgen, a Prescription for Success," Sept. 7, 2009).
Injected twice-yearly, Prolia will compete in a $7 billion market dominated by drugs called bisphosphonates.
An FDA ruling should come by June, but it's been a rough ride.
On Monday, Amgen announced that it has submitted information requested by the FDA in October 2009, when the agency declined to approve the drug.
Prolia is intended to prevent and treat postmenopausal osteoporosis and bone loss in prostate and breast-cancer patients undergoing hormone therapy. But an FDA advisory panel has suggested limited uses for the drug, and insurers may balk at paying for it.
But Mehta Partners sees sales potentially totaling $4.5 billion by 2017.
Of course, it's hard to handicap the FDA.
And the drug industry's track record remains spotty, littered with failed research projects and scientific setbacks.
Yet these five drugs could be what the doctor ordered for a sales-starved industry and investors looking for returns.