PFIZER INC.:FUNDAMENTAL ANALYSIS+PRICE ACTION|NEXT TARGET|LONG🔔Earlier this month, Pfizer announced promising first-line results from a Phase 2b/3 trial testing the JAK inhibitor ritecitinib for the treatment of alopecia(baldness), suggesting that the drug could finally be approved to treat this autoimmune disease that causes hair loss.
But as Jeff Little noted, "The FDA has recently been paying increased attention to the potential side effects of JAK inhibitors, which belong to a family of drugs called DMARDs (disease-modifying anti-rheumatic drugs)." Let's look at the results of the study, what the FDA's concerns mean for this drug and others like it, and whether pharmaceutical giant Pfizer has a chance to make a name for itself in the growing global market for alopecia medications.
Pfizer's phase 2b/3 study of the drug ritlecitinib examined the drug's effect on alopecia treatment in a randomized clinical trial involving 719 patients. These patients were 12 years of age or older, had 50% or more scalp hair loss (as measured by the Severity of Alopecia Tool scale, or SALT), and had experienced a current episode lasting six months to 10 years.
Pfizer remarked that a clinically meaningful proportion of patients who received 30 mg or 50 mg of ritlecitinib daily achieved less than 20% head hair loss on the SALT scale after 24 weeks of treatment opposed to placebo, consistent with the study's primary efficacy endpoint of improved head hair regrowth.
According to Pfizer, the scientific basis for ritlecitinib is that the drug stops the body's immune system from attacking hair follicles, which is thought to contribute to hair loss in patients with alopecia.
Despite the study's encouraging results, it's worth noting that ritlecitinib's path to FDA approval for the alopecia indication (or for vitiligo, rheumatoid arthritis, Crohn's disease, and ulcerative colitis, for that matter) will be even more thorough than usual because of its special class of drugs.
Ritlecitinib belongs to the class of Janus kinase inhibitors, or JAK inhibitors, which have been under scrutiny by the FDA lately. As per Fierce Pharma, a post-marketing study of Pfizer's JAK-inhibitor Xeljanz revealed serious heart and cancer side effects when the study results were published at the beginning of the year. This urged the FDA to delay the potential approval of the JAK inhibitor back in February while the agency investigates further.
Xeljanz was first approved by the FDA in 2012 to treat rheumatoid arthritis, or RA, an autoimmune disease that can cause joint pain and damage throughout the body. The drug was also approved by the FDA in 2017 to treat psoriatic arthritis and in 2018 to treat ulcerative colitis.
Although no serious adverse cardiac events or deaths were reported in Pfizer's study of ritlecitinib, it is in this class of drugs. As a result, its future remains very uncertain.
If the JAK inhibitor class ultimately withstands increased regulatory scrutiny and the efficacy of ritlecitinib safely treating alopecia persists, the drug could provide a reliable revenue stream for Pfizer.
To support this thesis, let's take a look at the global alopecia market and its growth forecast.
Pointing to the "increasing prevalence of hair loss" as well as "technological advances in alopecia treatment," Grand View Research believes that the total global alopecia market will grow at an annual rate of 8.1% from $7.6 billion in 2020 to $14.2 billion by 2028.
If the alopecia market stays at 35.2% of the total global alopecia market as it was in 2020, Pfizer's total addressable market in this area will be $5 billion by 2028.
Given that Pfizer will likely face competition from Concert Pharmaceuticals' JAK inhibitor CTP-543 (first Phase 3 results not expected until 2022) and Eli Lilly and Incyte's JAK inhibitor baricitinib (currently awaiting FDA decision) when it enters the alopecia market, a fragmented market share of 15% is realistic.
This would result in $750 million in annual revenue associated with the alopecia drug indications by 2028, which is about 1% of Pfizer's projected 2021 revenue of $78-80 billion.
As questions arise about whether JAK inhibitors such as ritlecitinib will be able to gain regulatory approval in the future, it is worth noting that Pfizer does not significantly necessitate that approval to boost earnings in the coming years.
In addition to the BNT162b2 COVID-19 vaccine, developed with German company BioNTech, Pfizer also expects to be able to apply for approval in the fourth quarter of this year for the emergency use of the oral antiviral drug COVID-19, known as PF-07321332. Keith Speights thinks this could be a real blockbuster given the huge addressable market, especially since Pfizer won't have to share the profits from oral therapy as it does with BioNTech in the case of BNT162b2.
In addition to COVID-19, Pfizer's oncology biosimilars (Ruxience, Zirabev, and Retacrit) tripled their combined sales from $107 million in the second quarter of 2020 to $352 million in the second quarter of 2021, another good catalyst for growth going forward.
Nearly half of Pfizer's projected sales this year will come from the $33.5 billion the company expects from its BNT162b2 COVID-19 vaccine (after splitting revenue with a partner, BioNTech). This is based on the 2.1 billion doses the company estimates will be delivered this year.
Given sales of the breast cancer drug Ibrance ($1.4 billion through Q2 2021) and the anticoagulant Eliquis ($1.5 billion through Q2 2021), we can assume that these two drugs will also bring in about $3 billion each.
