Pfizer Blockbuster Zyvox Under Attack

Incoming competition for Pfizer's (NYSE: PFE  ) $1.4 billion Zyvox market is threatening on multiple fronts. With several important revenue streams drying up, this one has become more important than ever to the drug company.

Recently, an FDA advisory committee smiled on potential competitors from Durata Therapeutics (NASDAQ: DRTX  ) and Cubist Pharmaceuticals (NASDAQ: CBST  ) . Let's take a closer look at what's coming.

Expiration dates
Pfizer owns three U.S. patents that protect the antibiotic Zyvox. It is typically used to treat infections caused by Gram-positive bacteria resistant to other antibiotics. Patients with severe conditions can receive it via infusion, or injection, then switch to pills when leaving the hospital. The basic product patent expires in May 2015, but those concerning delivery methods extend further. A patent on the crystalline form that enhances the solubility of the injectable formulation expires in June 2018. Another patent related to tablet formulation expires in 2020. 

Teva Pharmaceutical (NYSE: TEVA  ) already has an approved injectable generic version waiting in the wings. Pfizer might take a shot at preventing generics from entering the market following expiration of the basic product patent, though. With annual sales of about $1.4 billion, it's certainly worth the effort.

Safety and convenience
Generic competition aside, Zyvox sales could begin falling even earlier. Two separate antibiotics that are likely to compete with the blockbuster have a chance of hitting the U.S. market before the end of the year.

Late last month, an FDA advisory committee voted unanimously in favor of Durata Therapeutics' dalbavancin. The FDA isn't required to follow the recommendation, but it sometimes does -- so stay tuned for more information here.. 

During the late-stage Discover trials, investigators measured outcomes for patients with acute skin infections given either dalbavancin, or vancomycin followed by Zyvox. Dalbavancin was non-inferior to the combination, but the results were extremely close.

While Durata's antibiotic might not be able to compete on efficacy alone, it wins big with higher marks for convenience. Patients in the combination arm received twice daily vancomycin infusions, followed by oral Zyvox after two to three days. Dalbavancin patients received infusions once weekly.

In terms of safety, 32.8% of patients receiving dalbavancin experienced adverse events, versus 37.9% of patients in the vancomycin/linezolid arm. With just 1,303 patients the difference was not wide enough to be considered statistically significant. Significant differences dalbavancin's favor included the total number of drug-related adverse events, and death. 

Cubist Pharmaceuticals faced an advisory committee on the same day as Durata. The company's antibiotic tedizolid also received a unanimous recommendation for approval.

Unlike Durata's Discover trial, Cubist's Establish study measured tedizolid head-to-head with Zyvox alone and achieved similar results. Overall, Cubist's antibiotic was slightly more effective than Pfizer's, but not enough to claim outright superiority. Like dalbavancin, tedizolid patients experienced fewer adverse events. Patients in the tedizolid arm were treated once daily for six days, and 20.5% reported adverse events. Zyvox patients were treated twice daily for 10 days, with 24.8% reporting adverse events.

Doesn't add up
The sad irony of this story is that Pfizer used to own dalbavancin. The company took it all the way to the goal line before regulators moved the posts. Zyvox comprised 2.2% of Pfizer's annual revenue when the company sold its potential replacement to Durata at the end of 2009. Durata paid Pfizer just $10 million upfront for dalbavancin, and agreed to a $25 million milestone payment following its first approved sale in a major market.

I applaud Pfizer's relatively successful restructuring efforts, but the decision to let go of a winner like dalbavancin for next to nothing is a real head-scratcher.

Final take
If approved and competitively priced, either of the new branded antibiotics could pose a more immediate threat to Zyvox sales than next year's generics. Their pivotal studies strongly suggest that they're not inferior, and less frequent dosing is a plus. The problem is, both might have trouble competing with cheap generic Zyvox going forward. Cubist's tedizolid requires fewer treatments, but that's really it's only significant advantage. Durata's dalbavancin has an arguably better safety profile, but it might not be enough for government payers to overlook an inexpensive alternative. 

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