Could this new indication create a blockbuster for Pfizer?

In mid-January, Pfizer (NYSE: PFE) announced that the US Food and Drug Administration (FDA) has approved Cibinqo as a treatment for patients with moderate to severe atopic dermatitis (eczema) whose disease is not adequately controlled with other treatments .

Why has the FDA approved Cibinqo for patients with moderate to severe eczema? And what could this mean for earnings from Pfizer’s pharmaceutical stock? Let’s take a look at the clinical trial results of Cibinqo and the US eczema market to address these two questions.

Image source: Getty Images.

An impressive treatment option for a challenging condition

Eczema is a common inflammatory skin condition with symptoms that include redness, dryness, and itching. If eczema is not treated, it can lead to sleep problems and decrease the patient’s quality of life.

That’s why it’s important for patients to set up a treatment plan with a doctor. Initial treatment options usually include steroid creams and ointments or light therapy. Unfortunately, 55% of patients with moderate to severe eczema report inadequate disease control.

The good news is that with Cibinqo now approved as a treatment in the US (not to mention Japan and the UK), more patients may finally be able to get their moderate to severe eczema under control. So what data is behind the most recent US approval?

Two phase 3 clinical trials randomized patients to receive Cibinqo (abrocitinib) 100 mg or 200 mg oral tablets once daily or placebo. Cibinqo was shown to be far superior in helping a greater proportion of patients achieve lighter skin than placebo. Eczema can be measured using the Eczema Area and Severity Index (EASI), which examines the surface area and severity of eczema. A significant improvement from a patient’s pre-treatment baseline during treatment indicates that a treatment is effectively controlling the condition. The gold standard for whether a treatment is effective is the number of patients whose skin clears at least 75% as measured by EASI during treatment, known as EASI75.

Patients receiving the lower dose of Cibinqo achieved at least 75% lighter skin (or EASI75) at a maximum rate of 44.5% in the two clinical trials, while patients receiving placebo achieved only 11 .8% of patients achieving EASI75. Patients were able to achieve EASI75 at a much higher rate with the 200 mg dose, peaking at 62.7% in the two clinical trials.

An indication with blockbuster potential

There are 6.6 million adults in the US with moderate to severe eczema. While 55% of those adult patients report that their condition is not adequately controlled with their current treatment, I estimate that 20% would be eligible to start treatment with Cibinqo, erring on the side of caution. This would equate to a patient pool of approximately 1.3 million.

Since there are other drugs on the market such as Sanofi Y Regeneron‘s Dupixent and AbbVieRinvoq, I will conservatively assume that Cibinqo can start by capturing 5% of these patients, or 66,000 people.

The reason for my low forecast of Cibinqo’s potential market share has to do with the fact that the drug is part of the Janus kinase (JAK) inhibitor class of drugs along with Rinvoq. Because this class of drugs carries an increased risk of cancer, serious heart events, and blood clots, the FDA could restrict the higher dose of Cibinqo in a worst-case scenario. A restriction to just one lower dose of Cibinqo would remove the drug’s competitive advantage in a crowded market.

While pricing information for Cibinqo in the US is not yet publicly available, the Institute for Clinical and Economic Review recommends an annual list price of between $30,000 and $40,000 for the drug. I will use an annual list price of $30,000. And taking into account patient assistance programs and health insurance negotiations on drug pricing, I’ll forecast an annual net price of $15,000 per patient for Cibinqo.

This essentially equates to $1 billion in annual sales potential for Cibinqo in the US. Although Pfizer expects $81.5 billion in revenue for 2021 at the midpoint, an additional $1 billion in sales is enough to move the needle. . That’s especially the case considering this would be a 2.2% increase in non-COVID vaccine revenue for the company.

Pfizer is a strong buy for 2022

Pfizer is down 6% year-to-date as a result of the downturn in the broader market. This begs the question: Is Pfizer a buy right now?

Pfizer trades at a P/E ratio of 7.8, which is well below other drugmakers: the overall industry average is 11. This is despite the fact that the projected annual earnings growth rate of Pfizer’s 19% over the next five years is much higher than the industry average of 10%.

Pfizer offers investors above-average growth at a below-average price. And if that wasn’t enough, investors can be paid a 3% dividend yield while they wait for the stock to rise.

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Kody Kester owns AbbVie and Pfizer. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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