Latest failure of experimental Pfizer drug in late testing shows worrisome trend, hurts stock

Latest Pfizer drug failure shows worrisome trend

TRENTON, N.J. — Yet another experimental drug heavily touted by Pfizer Inc. has foundered in advanced testing, raising worries about productivity problems at the world’s biggest drugmaker.

Safety problems with potential osteoarthritis treatment tanezumab, quietly disclosed Wednesday evening, on Thursday triggered a drop in Pfizer shares and a burst of notes to investors from analysts concerned about the trend.

“This is the second negative for (Pfizer) this week,” after the company pulled a cancer drug off the market, Miller Tabak & Co. analyst Les Funtleyder wrote. “We continue to have reservations about (the company’s) R&D capabilities and this announcement only confirms those.”

That’s after a highly anticipated Alzheimer’s drug flamed out in March, a failure doctors called a big setback because many hoped it might be the first treatment to stop or reverse the mind-robbing disease.

This Monday, New-York Pfizer said it was pulling bone cancer drug Mylotarg off the market 10 years after it got accelerated U.S. approval, because recent research found the drug increased chances of dying in patients also getting chemotherapy.

Late Wednesday — at the urging of the Food and Drug Administration — Pfizer said it was immediately suspending worldwide testing of tanezumab in patients with osteoarthritis, a common condition in which the cartilage lining joints deteriorates. Pfizer cited “a small number of reports” of patients who received the injected pain treatment having their osteoarthritis worsen, leading to joint replacement.

Just last week, two small companies developing other pain drugs in collaboration with Pfizer announced a total of three drugs, for osteoarthritis or rheumatoid arthritis, weren’t reducing pain as much as expected.

That all adds up to significant potential pain for Pfizer shareholders, who also have seen five late-stage studies of different cancer drugs fail in the last 18 months. In addition, Pfizer has sharply reduced its prized dividend, to help pay for its $68 billion acquisition of Wyeth last October.

On Thursday, Pfizer shares fell more than 3 percent, closing down 40 cents at $14.48, a big swing for a company with $68 billion in revenue.

“Biomedical R&D is one of the riskiest and most challenging businesses in the world,” said Pfizer spokesman Ray Kerins. “While our latest announcements demonstrate the risks and difficulties inherent in working with complex diseases, our pipeline demonstrates our ongoing commitment to focus on high-priority disease areas where there is significant unmet medical need.”

In this year’s biggest disappointment, Alzheimer’s treatment Dimebon, which Pfizer and partner Medivation Inc. were developing, failed to work in a late-stage study. That was after it had kept patient symptoms such as trouble with thinking and daily function from worsening for a year in a prior study.

Pfizer is continuing two other studies of Dimebon, one in combination with other Alzheimer’s drugs and taken for a longer period, and one in patients with Huntington’s disease, so it might still salvage the drug.

Likewise, Pfizer said it is still testing tanezumab in 17 studies for pain due to conditions other than osteoarthritis, including cancer and lower back pain, nerve pain related to diabetes and interstitial cystitis, a chronic bladder inflammation. The company is to discuss the future of those studies soon with FDA officials.

UBS Securities analyst Marc Goodman said he was reducing his sales forecast for tanezumab from $325 million to $200 million in 2015.

“We wouldn’t be surprised if we eventually have to remove all sales,” Goodman wrote.

Leerink Swann analyst Seamus Fernandez did exactly that, eliminating the $525 million in sales he expected in 2016.

He called the tanezumab news “yet another” late-stage pipeline failure and further evidence of Pfizer’s “R&D productivity challenges.”

Since acquiring Wyeth, Pfizer has significantly pruned their combined research portfolio, eliminating many programs no longer considered priority areas or where early results didn’t justify large, very expensive studies in patients.

Now Pfizer desperately needs some research successes, given that its $11.5 billion a year cholesterol blockbuster Lipitor will see sales plummet when it starts getting generic competition at the end of 2011. Sales are already down from Lipitor’s $13 billion peak because insurers and cash-strapped patients are turning to generic versions of similar drugs.

Meanwhile, at least eight other Pfizer drugs that are big sellers with high profit margins also will face generic competition in the next few years, BernsteinResearch analyst Tim Anderson notes.

Pfizer now spends roughly $9 billion a year on research and development, according to Anderson. That’s about 13 percent of its annual revenue.

“Investors should expect — and demand — that a certain level of pipeline progress will be made,” he wrote.