Pfizer Challenged Due to cancelling of cholesterol drug Torcetrapid Development
Pfizer shares plunge after cholesterol drug fails
Mon Dec 4, 2006 10:15am ET
By Lewis Krauskopf and Ben Hirschler
NEW YORK/LONDON, Dec 4 (Reuters) - Shares of Pfizer Inc. (PFE.N: Quote, Profile , Research) fell 15.6 percent in opening trade on Monday, wiping out nearly $30 billion of market value, after the world's biggest drugmaker scrapped development of its most important experimental medicine.
Pfizer halted work on torcetrapib, which was designed to raise levels of "good" HDL cholesterol, because of increased deaths and heart problems among patients given the product in a late-stage trial.
Torcetrapib had been expected to fill a gap left when Pfizer's patent on Lipitor, the world's biggest-selling cholesterol drug with annual sales of about $13 billion, expires in 2010 or 2011.
Drugs like Lipitor, which lower "bad" LDL cholesterol, cut the risk of heart attack by about 30 percent. Experts hope drugs that raise HDL -- which removes excess LDL from the bloodstream -- could drive heart attack risk much lower.
Pfizer shares fell as low as $23.52 in early trade but later recovered a bit to $24.50, down 12 percent, on the New York Stock Exchange. The stock's year low is $20.27.
The failure of torcetrapib leaves Pfizer with a multibillion-dollar hole in its anticipated future revenue stream. The company is expected to try to fill that hole by buying in other products.
"These guys were already on the acquisition trail for new products and new technologies, but the scale of what they would consider might now change," said Mike Ward, an analyst with Nomura Code Securities in London.
"Rather than the $1 billion to $4 billion range of acquisitions, which has been fairly consistent Pfizer policy for a while, there will now be speculation that it could be almost anything."
Ward said Pfizer might consider buying companies such as Wyeth (WYE.N: Quote, Profile , Research) or Amgen Inc. (AMGN.O: Quote, Profile , Research), which offer assets in vaccines and antibodies.
Credit Suisse also said Pfizer should consider sizable acquisitions.
The decision to scrap torcetrapib took investors by surprise, although there had been concerns that the drug caused elevations in blood pressure, itself a major risk of heart disease.
Just days ago, at a meeting with industry analysts and money managers, Pfizer executives pinned high hopes on torcetrapib and said they might seek U.S. approval for it next year.
JP Morgan analyst Chris Shibutani said the "shocking revelation (on torcetrapib) ... engenders a litany of challenging questions and uncertainties that we expect to tether share performance for the near to intermediate term."
Also last week, Pfizer ended a joint development program with Akzo Nobel (AKZO.AS: Quote, Profile , Research) for schizophrenia drug asenapine.
For some of Pfizer's rivals, the problems facing the New York-based giant are good news.
Industry analysts at Morgan Stanley said the failure of torcetrapib was an "important positive" for AstraZeneca Plc (AZN.L: Quote, Profile , Research) since the product had been the biggest potential competitor to AstraZeneca's fast-growing cholesterol drug Crestor.
AstraZeneca shares, which have been punished recently following setbacks for its own drugs in development, added 0.5 percent in London and 0.7 percent in New York.
Switzerland's Roche Holding AG (ROG.VX: Quote, Profile , Research) might also benefit among European pharmaceutical companies, since it is developing a rival to torcetrapib licensed from Japan
But some investors are wary that the problems with torcetrapib could turn out to be a class effect.
Roche stock fell slightly after an early advance.
Another potential winner from Pfizer's woes is expected to be Abbott Laboratories Inc. (ABT.N: Quote, Profile , Research), which is acquiring Kos Pharmaceuticals Inc. Kos markets Niaspan, part of an older class of niacin medicines that also raise HDL.
Abbott shares rose 2.4 percent in early trade.
Merck & Co Inc. (MRK.N: Quote, Profile , Research) is conducting trials of its own long-acting form of niacin and of a separate drug that would be combined with it to prevent facial flushing -- a side effect of niacin. Merck shares rose 1.6 percent. (Additional reporting by Lewis Krauskopf in New York)
Pfizer Failure May Spur Delay on Roche, Merck Drugs
By Michelle Fay Cortez
Dec. 4 (Bloomberg) -- The failure of Pfizer Inc.'s experimental cholesterol drug may delay the drive for a new heart medicine by at least five years as Pfizer, Roche Holding AG and Merck & Co. sort out whether the treatment's risks carry over to similar cholesterol therapies.
Eighty-two patients taking the product, torcetrapib, with Pfizer's Lipitor died in a study of 15,000 enrollees, a 60 percent higher rate than among those who got only Lipitor. That caused Pfizer to halt work on the drug just days after the New York-based company said it would seek U.S. approval to sell torcetrapib in 2007. Roche and Merck are testing similar drugs.
Doctors have been searching for new ways to control heart disease, which kills about 650,000 Americans a year. Drugs such as Lipitor, called statins, lower bad cholesterol and cut risks of heart-related deaths by about a third. Scientists hoped that new medicines that raise good cholesterol, such as torcetrapib, would lower those risks further.
``We're going to keep attacking this,'' said Steven Nissen, chair of cardiology at the Cleveland Clinic in Ohio and president of the American College of Cardiology. ``But here's the bad news - we're not going to have anything until 2010 or 2011 at the earliest given the failure of torcetrapib.''
Pfizer, the world's biggest drugmaker, led Roche and Merck in the race to market a drug to raise good cholesterol, or HDL. The New York-based company expected torcetrapib to replace revenue lost when Lipitor's patent protection runs out in 2010, opening the way for cheaper generic competition. Pfizer has similar follow up products to Lipitor in earlier stage tests that it may turn to now, analysts said.
``Suddenly you've really got a race,'' said Peter Cartwright, an Evolution Securities analyst in London. ``Pfizer had been a lap ahead, but now it's a race again.''
Lipitor, the world's best-selling drug, generates about $13 billion in annual revenue for Pfizer and accounts for about half of net income. Analysts have said they expected torcetrapib to eventually generate as much as $20 billion a year.
Shares of Pfizer fell $4.18 to $23.68 in early trading after closing at $27.86 in New York Stock Exchange composite trading on Dec. 1. They had gained 19.5 percent in 2006 prior to today. Analysts at JPMorgan, Lehman Brothers and Morgan Stanley all cut their ratings on Pfizer shares today.
Merck's shares rose 68 cents, or 1.5 percent, to $45.74 after closing at $45.06 Dec. 1. Basel-based Roche's stock rose 30 centimes, or 0.1 percent, to 212.6 Swiss francs in Zurich.
Doctors must now determine if the elevated risks stem from torcetrapib's tendency to boost blood pressure levels, or if the damage extends to the entire class of drugs. These drugs work by blocking the cholesterol ester transfer protein, or CETP, which converts good cholesterol, or HDL, into the bad form, or LDL.
``If it relates to blood pressure, we know of reports of other agents that are CETP inhibitors that don't have a blood pressure increase,'' said Chris Cannon, a cardiologist at Brigham and Women's Hospital in Boston. ``It's still too early to know the cause of the increased mortality.''
Whitehouse Station, New Jersey-based Merck refuses to talk about its CETP inhibitor, although it is widely discussed among investors, analysts and doctors.
Before the torcetrapib announcement, Merck had been expected to discuss details of its drug at a meeting later this month. Merck spokeswoman Janet Skidmore declined to comment after the Pfizer announcement came out.
Roche announced in 2004 it had licensed a CETP inhibitor from Tokyo-based Japan Tobacco Inc. Roche said its medicine hasn't increased blood pressure in trials, and is still expected to be submitted for approval after 2009.
``So far we have seen no blood pressure problems,'' said spokeswoman Katja Prowald in a telephone interview today. ``Everything's going to plan. The regulatory filings are still planned for sometime after 2009.''
While neither medication is tied to high blood pressure so far, doctors caution that torcetrapib's impact on blood pressure wasn't seen until phase 2 studies were complete. The side effect worsened during the third and final stage.
Doctors say HDL carries LDL away from the arteries and back to the liver, where it's passed from the body. LDL can slowly build up in the inner walls of the arteries that feed the heart and brain, blocking blood flow.
The worry is that the HDL created by blocking CETP is dysfunctional. The particles are larger than normal and may inadvertently add to plaque buildup, doctors said.
``The HDL particles created with this approach are so large and so structurally different that the HDL particles we think of as being protective may not be,'' said James Stein, director of preventive cardiology at the University of Wisconsin.
The results of a 1,190-patient study that's almost complete, being conducted by Nissen and his colleagues, may help doctors understand what happened. The trial used ultrasound to look at the impact of two years of torcetrapib plus Lipitor on the buildup of artery clogging plaque. Researchers are now analyzing results, Nissen said.
``If we look at the data and it shows the drug is increasing the buildup of plaque, then it may suggest the entire class'' of CETP inhibitors ``won't work,'' he said.
Regardless, investigators say they will continue to look for ways to increase levels of good cholesterol.
Abbott Laboratories agreed to buy Kos Pharmaceuticals Inc. for $3.7 billion last month to gain access to HDL-raising Niaspan. Studies show it helps remove some fatty plaque buildup on blood vessels walls that can cause heart attacks and strokes.
Niaspan, an extended release version of niacin, works differently than CETP inhibitors and carries other side effects, such as facial flushing.
Pfizer faces share price collapse as torcetrapib is terminated
Just two days after an upbeat analysts meeting, Pfizer's pipeline has suffered a serious setback on the news that the firm has stopped all clinical trials of the cholesterol-lowerer torcetrapib due to safety concerns.
Pfizer took the decision after the independent Data Safety Monitoring Board which was monitoring the morbidity and mortality study for torcetrapib, called ILLUMINATE, recommended terminating trials "because of an imbalance of mortality and cardiovascular events." The company noted that patient participants have been told to stop taking the drug immediately and the entire development programme for the compound has been axed.
Dr Philip Barter, chairman of the steering committee overseeing the ILLUMINATE study and director of the Heart Research Institute in Australia could not hide his amazement, saying that "based on all the evidence we have seen regarding torcetrapib and in light of prior study results, we were very surprised by the information received from the DSMB, the only body with access to the unblinded safety data." He added that "this new information was totally unexpected and disappointing, given the potential benefits of this drug."
Pfizer's chief executive Jeffrey Kindler said the news was "both
surprising and disappointing," and "we understand the challenge that this represents and we will respond quickly and aggressively to it." However, in reference to the company's business as a whole, he claimed "it is important to put this information in the context of both our commitment to transform Pfizer and our overall product and financial strength."
He was referring to the aforementioned analysts' day which saw Pfizer raise its earnings estimates and highlight a pipeline that should produce six new products a year starting in 2010.
Launch had been scheduled for '07
Nevertheless, there is no disguising the negative impact that the
termination of torcetrapib will have, given that Pfizer had been hoping to launch the product next year. The drug, which raises protective high-density lipoprotein cholesterol, was to be launched on its own and in combination with blockbuster Lipitor (atorvastatin).
Over $800 million has already been spent developing torcetrapib, which was supposed to take the place of Lipitor when the latter faces patent expiry in 2010 or 2011, though earlier clinical trials showed that it may raise blood pressure levels.
It also comes at the time when the company is looking to soften the blow of patent expiries on other blockbusters such as the antidepressant Zoloft (sertraline), the epilepsy drug Neurontin (gabapentin) and the hypertension treatment Norvasc (amlodipine).
The US Food and Drug Administration said it "fully supports Pfizer's
decision to suspend this trial" and added that will continue to work with the company and "other sponsors developing molecules in this class of drugs (cholesteryl-ester-transfer-protein inhibitors) to ensure that appropriate protections are in place."
The bad news about torcetrapib came out on Saturday, so the effect this will have on Pfizer's shares will not become clear until later today. Some observers have predicted a 5% decline, with others plumping for a much worse fall.