Bristol's Diabetes drugs carry $3.0b potential
Monday, 17 September 2007
Lisa Rapaport
Bristol-Myers Squibb Co., the maker of the most prescribed diabetes pill, is developing three new drugs to target the world's fastest-growing disease, each of which carries sales potential of $1.0 billion a year.
The company is teaming with Pfizer Inc., the world's biggest drugmaker, and AstraZeneca Plc to create two novel medicines that may change how diabetes is treated. A third candidate, now in final testing, is in the same family as Merck & Co.'s Januvia, a drug approved in October that analysts say may bring in $2.5 billion a year.
The first of the new pills could go on sale in two years and by 2011 may generate revenue of $1.0 billion, adding about 20 cents a share to profit, analysts said. Each holds the promise of surpassing the $2.7 billion in peak revenue from Glucophage, the Bristol-Myers drug available in cheaper generic forms since 2002. Success could boost shares in a company that only six analysts now rate a buy, among 23 surveyed by Bloomberg.
``You're talking peak sales in the multiple billions for all three drugs, if they succeed,'' said Les Funtleyder, a Miller Tabak & Co. analyst in New York, in a telephone interview.
By developing treatments for the $15 billion worldwide diabetes market with New York-based Pfizer and London-based AstraZeneca, Bristol says it will limit risk as the company seeks to replace sales lost when Glucophage's patent expired.
The strategy will also help the drugmaker recover from the failure of Pargluva, a promising diabetes pill it stopped testing with Whitehouse Station, New Jersey-based Merck after studies found an increased risk of heart attacks and strokes.
Bristol-Myers needs new medicines after the patent on Plavix, its best-seller with $3.3 billion in revenue last year, expires in 2011.
``These three drugs could replace Plavix, and then some,'' Miller Tabak's Funtleyder said.
Bristol-Myers rose 46 cents, or 1.6 percent, to $28.80 at 4:02 p.m. in New York Stock Exchange composite trading. The stock has climbed 9.4 percent this year, beating the 4.2 percent increase in the Standard & Poor's 500 Health Care Index.
Based on today's closing price, the company is trading 7.3 percent below the average $31.08 target of 8 analysts surveyed by Bloomberg.
AstraZeneca will pay Bristol-Myers as much as $1.35 billion to develop two pills, the one similar to Merck's Januvia and another that may be the first to reduce blood sugar by blocking the kidneys from absorbing glucose. Bristol-Myers will pay Pfizer $50 million to test novel compounds designed to block the creation and storage of body fat, believed by doctors to promote diabetes.
Partnerships enable Bristol-Myers to use resources to test medicines for other diseases, said Fred Fiedorek, vice president of global clinical research.
``It makes sense to mitigate risk and increase the chance to sustain our pipeline,'' Fiedorek said in a statement.
More than 180 million people worldwide have diabetes, and the number may more than double to 366 million by 2030, according to the World Health Organization in Geneva. Diabetes can cause blindness, permanent nerve damage and kidney failure. Deaths from the disease, which kills about 1.1 million each year, are forecast to increase more than 50 percent in the next 10 years.
The most advanced of the three new drugs, saxagliptin, is in the third and final stage of trials needed for U.S. approval. Like Januvia, it is in a new class of drugs known as DPP4- inhibitors that spur the pancreas to produce more insulin and signals the liver to make less glucose, or blood sugar.
AstraZeneca and Bristol-Myers say they will seek clearance for the drug next year. Novartis AG's similar drug, Galvus, was delayed in November after U.S. regulators sought more data showing that skin lesions in monkey tests hadn't appeared in people. In early trials, Bristol's pill also caused similar sores in monkeys.
``If we see phase 3 studies showing this drug doesn't cause skin lesions in humans, that could speed up the approval process and help it take more share from Januvia,'' said Barbara Ryan, an analyst with Deutsche Bank in Greenwich, Connecticut, in a telephone interview.
Saxagliptin could go on sale in 2009 and generate revenue of $1 billion, or 15 cents to 20 cents a share, by 2011, Ryan said. She rates the stock a ``buy'' with a target price of $35.
Bristol-Myers and AstraZeneca are starting the third stage of regulatory testing on another medicine, dapagliflozin, which may be the first in a new family known as SGLT2-inhibitors. These drugs are designed to control diabetes by helping the kidneys flush excess glucose from the body. Sanofi-Aventis SA and GlaxoSmithKline Plc are in earlier stages of testing similar medicines.
With Pfizer, Bristol-Myers is developing compounds in another new class of medicines known as DGAT-1 inhibitors, which interfere with a process that produces and stores fat. The compounds are in pre-clinical development.
Pfizer and Bristol-Myers, the first companies to announce plans to develop this type of drug, haven't said when human tests might begin.
In another bid to repeat the success of Glucophage, now sold generically as metformin, Bristol-Myers will test saxagliptin and dapagliflozin for use in combination therapy.
(To contact the reporter on this story: Lisa Rapaport in New York at [email protected])
Bloomberg
Bristol-Myers Squibb Co., the maker of the most prescribed diabetes pill, is developing three new drugs to target the world's fastest-growing disease, each of which carries sales potential of $1.0 billion a year.
The company is teaming with Pfizer Inc., the world's biggest drugmaker, and AstraZeneca Plc to create two novel medicines that may change how diabetes is treated. A third candidate, now in final testing, is in the same family as Merck & Co.'s Januvia, a drug approved in October that analysts say may bring in $2.5 billion a year.
The first of the new pills could go on sale in two years and by 2011 may generate revenue of $1.0 billion, adding about 20 cents a share to profit, analysts said. Each holds the promise of surpassing the $2.7 billion in peak revenue from Glucophage, the Bristol-Myers drug available in cheaper generic forms since 2002. Success could boost shares in a company that only six analysts now rate a buy, among 23 surveyed by Bloomberg.
``You're talking peak sales in the multiple billions for all three drugs, if they succeed,'' said Les Funtleyder, a Miller Tabak & Co. analyst in New York, in a telephone interview.
By developing treatments for the $15 billion worldwide diabetes market with New York-based Pfizer and London-based AstraZeneca, Bristol says it will limit risk as the company seeks to replace sales lost when Glucophage's patent expired.
The strategy will also help the drugmaker recover from the failure of Pargluva, a promising diabetes pill it stopped testing with Whitehouse Station, New Jersey-based Merck after studies found an increased risk of heart attacks and strokes.
Bristol-Myers needs new medicines after the patent on Plavix, its best-seller with $3.3 billion in revenue last year, expires in 2011.
``These three drugs could replace Plavix, and then some,'' Miller Tabak's Funtleyder said.
Bristol-Myers rose 46 cents, or 1.6 percent, to $28.80 at 4:02 p.m. in New York Stock Exchange composite trading. The stock has climbed 9.4 percent this year, beating the 4.2 percent increase in the Standard & Poor's 500 Health Care Index.
Based on today's closing price, the company is trading 7.3 percent below the average $31.08 target of 8 analysts surveyed by Bloomberg.
AstraZeneca will pay Bristol-Myers as much as $1.35 billion to develop two pills, the one similar to Merck's Januvia and another that may be the first to reduce blood sugar by blocking the kidneys from absorbing glucose. Bristol-Myers will pay Pfizer $50 million to test novel compounds designed to block the creation and storage of body fat, believed by doctors to promote diabetes.
Partnerships enable Bristol-Myers to use resources to test medicines for other diseases, said Fred Fiedorek, vice president of global clinical research.
``It makes sense to mitigate risk and increase the chance to sustain our pipeline,'' Fiedorek said in a statement.
More than 180 million people worldwide have diabetes, and the number may more than double to 366 million by 2030, according to the World Health Organization in Geneva. Diabetes can cause blindness, permanent nerve damage and kidney failure. Deaths from the disease, which kills about 1.1 million each year, are forecast to increase more than 50 percent in the next 10 years.
The most advanced of the three new drugs, saxagliptin, is in the third and final stage of trials needed for U.S. approval. Like Januvia, it is in a new class of drugs known as DPP4- inhibitors that spur the pancreas to produce more insulin and signals the liver to make less glucose, or blood sugar.
AstraZeneca and Bristol-Myers say they will seek clearance for the drug next year. Novartis AG's similar drug, Galvus, was delayed in November after U.S. regulators sought more data showing that skin lesions in monkey tests hadn't appeared in people. In early trials, Bristol's pill also caused similar sores in monkeys.
``If we see phase 3 studies showing this drug doesn't cause skin lesions in humans, that could speed up the approval process and help it take more share from Januvia,'' said Barbara Ryan, an analyst with Deutsche Bank in Greenwich, Connecticut, in a telephone interview.
Saxagliptin could go on sale in 2009 and generate revenue of $1 billion, or 15 cents to 20 cents a share, by 2011, Ryan said. She rates the stock a ``buy'' with a target price of $35.
Bristol-Myers and AstraZeneca are starting the third stage of regulatory testing on another medicine, dapagliflozin, which may be the first in a new family known as SGLT2-inhibitors. These drugs are designed to control diabetes by helping the kidneys flush excess glucose from the body. Sanofi-Aventis SA and GlaxoSmithKline Plc are in earlier stages of testing similar medicines.
With Pfizer, Bristol-Myers is developing compounds in another new class of medicines known as DGAT-1 inhibitors, which interfere with a process that produces and stores fat. The compounds are in pre-clinical development.
Pfizer and Bristol-Myers, the first companies to announce plans to develop this type of drug, haven't said when human tests might begin.
In another bid to repeat the success of Glucophage, now sold generically as metformin, Bristol-Myers will test saxagliptin and dapagliflozin for use in combination therapy.
(To contact the reporter on this story: Lisa Rapaport in New York at [email protected])
Bloomberg