Respiratory Drug Maker About to Take Off

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Chronic obstructive pulmonary disease (COPD) is America’s third leading cause of death. It is a lung disease caused due to continuous poor airflow as a result of which the lung tissues breakdown. More than 80% of the cases are due to smoking and tend to worsen with increase in age and smoke intake.

When over 13 million people in the US are affected by a single disease then it gives drug makers an opportunity to cater to this market. The good news for COPD patients is that a number of companies are in the process of making various drugs to treat this ailment and I expect some of them to launch shortly.

One company which has drawn my attention in this regard is Theravance (NASDAQ: THRX). The company is about to get an approval for its highly anticipated drug Anoro, which would be good news for the patients of COPD and investors alike.

Products and pipeline

Theravance has been working with GSK on  the discovery of products related to the treatment of respiratory problems. Currently the two FDA approved drugs of the company includes: “Breo Ellipta” for the treatment of COPD and “Vibativ” for the treatment of a bacterial pneumonia caused by Staphylococcus aureus.

Another drug of the company called Relvar Ellipta is also under review by FDA and EU authorities. All these drugs have helped the company lift sales from $25 million in 2011 to $136 million in 2012. Furthermore, the company has a long pipeline of Phase II compounds related to the treatment of respiratory problems, bacterial infections, CNS/Pain and GI Motility Dysfunction.

Anoro

Where other approved drugs for COPD have either a long-acting beta agonist (LABA) or a long-acting muscarinic antagonist (LAMA), Anoro is a combination of both. The LABAs relax the airway muscles along with the LAMAs which help minimize airway obstruction.

Clinical studies have indicated that Anoro would be better than all the other COPD treatment drugs currently available in the market. The drug is expected to get its approval from the FDA and E.U. by December and analysts believe that it has the capacity to generate revenues as high as $1 billion annually.

Competitors

Due to the size of the healthcare industry in the U.S., it is quite difficult to maintain exclusivity on a drug. So even if Anoro gets approved by the end of this year it would not be the only LABA/LAMA COPD drug in the market.

Novartis (NYSE: NVS) is making sure that the time span of Anoro’s exclusivity in the market is as small as possible. They are coming up with their own LABA/LAMA COPD drug i.e. QVA149. Novartis submitted QVA149 for approval in Japan and Europe in October last year. Filling for FDA approval in the U.S. is expected in 2014, mainly due the delays from some dosing issues. Just like Anoro, on the basis of clinical studies, QVA149 proved to be more effective at preventing COPD than the well-known drug Spiriva from Pfizer (NYSE: PFE). Analysts believe that the drug might not perform as well as Anoro in the U.S. because Anoro will have first mover advantage. Still, projections are that it might be able to get hold of around $700 million annually.

With both these companies bringing new drugs to the COPD market Boehringer Ingelheim and Pfizer have become concerned about the success of  Spiriva. That is why Boehringer has received a green light from an FDA advisory committee for the use of Olodaterol alongside Spiriva. Olodaterol is a LABA, and Spiriva is a LAMA. Boehringer Ingelheim thinks that the final approval for olodaterol might balance the scales against  Theravance/Glaxo and Novartis. But taking two drugs instead of one would be a disadvantage for Pfizer and Boehringer so they will have to do something about it in the long run or else Spiriva would not be able to generate revenues.

Final assessment

Theravance seems to be the company which is leading the way to combined LABA/LAMA COPD drugs. That is why its drug Anoro should be the first one to get FDA approval and might generate more revenue than other drugs in this market. Novartis’s QVA149 is also expected to be in the market by 2013. These advancements would be greatly welcomed by COPD patients and these companies' investors alike.


usman iftikhar has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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