It’s not often that a single event can cause a substantial move in the stock price of one of the titans of the drug industry. But that appears to be precisely the case Aug. 28 for Bristol-Myers Squibb (NYSE:BMY) and Pfizer (NYSE:PFE). That’s when detailed data from an 18,000-patient clinical trial of the companies’ new blood thinner will be presented at the European Society of Cardiology annual meeting in Paris.
If the data confirms strong efficacy and low bleeding risk for the drug, Bristol-Myers shares could jump about 5% and Pfizer could see a 2% to 3% boost, according to Chris Schott of JP Morgan.
The drug in question — apixaban, to be sold as Eliquis — likely will be the third of a new generation of anticoagulants fighting to replace warfarin, a 50-year old drug that carries serious bleeding risk, requires frequent dosing adjustments and requires strict diet restrictions. The two others are Boehringer Ingelheim’s Pradaxa, or dabigatran, which already is on the market, and Xarelto, or rivaroxaban, a drug developed by Bayer (PINK:BAYRY) and Johnson & Johnson (NYSE:JNJ) that got FDA approval in early July. A fourth medicine called edoxaban from Daiichi Sankyo is on the horizon. Of course, good news on Eliquis could hurt the share prices of the makers of these competitors.
Both Bristol-Myers and Pfizer saw their shares spike in late June when the companies announced results of a clinical trial that clearly exceeded the expectations of Wall Street analysts and cardiologists. The trial showed Eliquis was superior to warfarin both in terms of efficacy and safety.
However, the gains — and more — were given back during the early August market conflagration. Bristol-Myers has recovered reasonably well in the past few weeks, Pfizer less so. Therefore, investors in both companies would welcome an upbeat report on Eliquis, especially because the two members of Big Pharma are staring at a combined loss of more than $30 billion in revenue loss because of patent expirations through 2016.
The market for drugs to replace warfarin is one of the biggest opportunities currently available to the drug industry. The drug is used to prevent strokes in patients with a heart rhythm disorder called atrial fibrillation as well as blood clots following surgery. Companies with effective warfarin replacements could be looking at a market that eventually could top $12 billion annually or more.
The recent and forthcoming data on Eliquis could lift it to the top of the replacement drug list. Bristol Myers and Pfizer have another big advantage over their competitors: a solid cardiovascular franchise thanks to the success of their respective cholesterol fighter Lipitor and blood clot preventer Plavix. With their cardiovascular marketing muscle and reputations, both companies should have little problem gaining the ear of prescribers.
Mark Schoenebaum, a health care analyst at stock research firm ISI Group, says sales of Eliquis for atrial fibrillation alone could reach a peak of $3.5 billion annually. A more conservative estimate comes from Timothy Anderson at Bernstein Research, who is forecasting $1.4 billion in annual sales in 2015. He wrote in a note to investors that if he’s low by just $500 million, it would boost Pfizer’s 2015 earnings per share by 1% and Bristol’s by 5%.
Disclosure: Barry Cohen owns BMY and PFE.