Axovant Sciences (NASDAQ:AXGT), Esperion Therapeutics (NASDAQ:ESPR), and Aerie Pharmaceuticals (NASDAQ:AERI) have late-stage drugs in development that could catapult them to profitability in the next few years. Will they overcome the odds and end up with billion-dollar blockbusters on their hands? 

A new standard of care

The Alzheimer's Association estimates that the number of people with Alzheimer's disease in the U.S. could more than triple by 2050, and sadly, the treatment options available to these patients are limited. 

Gold and silver pills spill out of a larger gold and silver pill, onto a pile of money.


Axovant Sciences hopes to change that. The company is developing intepirdine, a drug that boosts the production of acetylcholine, a neurotransmitter that's important for brain function. Intepirdine is being evaluated for use alongside Aricept, the best-selling Alzheimer's disease drug of all time, and results from a phase 3 trial are expected later this year.

If intepirdine proves that it can improve cognition and brain function when used alongside Aricept, it could become part of standard of care for patients with mild-to-moderate Alzheimer's disease. If so, Axovant Sciences share price could climb because Aricept was generating $2.4 billion in sales prior to losing patent protection, and Axovant's market cap is only $1.5 billion.

Crushing cholesterol

Statins like Lipitor are used to help prevent heart disease in millions of patients; however, statins don't work for everyone, so there's an important need for additional cholesterol-lowering drugs.

Esperion Therapeutics recently completed enrolling patients in a phase 3 study evaluating bempedoic acid alongside statins, and top-line results from this study are expected by the second quarter of 2018. 

In mid-stage studies, adding bempedoic acid to statin therapy reduced bad cholesterol levels by an additional 20%, and that's a significant enough number for me to think that if everything goes its way, this drug could eventually be used in millions of patients. 

At first, bempedoic acid could get approved for use alongside patients taking the maximum tolerated dose of statins, who have hypercholesterolemia, and who are at high risk of cardiovascular disease. Additional studies, however, could expand the addressable market opportunity to include the 5% to 20% of patients who are statin intolerant, as well as patients who use statins plus Zetia, another cholesterol-lowering medicine. 

Because sales of brand name statins totaled in the billions of dollars annually at their peak, an approval could make this stock worth far more than the company's current $810 million market cap.

A clear opportunity

Aerie Therapeutics is working on two drugs targeting the $2.8 billion glaumcoma market: Rhopressa and Roclatan. 

Rhopressa is being positioned as a more patient-friendly alternative to beta blockers used as an adjunct to latanoprost, the most commonly used glaucoma medicine. 

In studies, Rhopressa delivered similar efficacy to the common beta blocker Timolol. Unlike the twice-daily Timolol, Rhopressa is only dosed once per day. The dosing advantage could boost patient compliance and thus real-world efficacy, allowing Rhopressa to elbow market share away from Timolol. Currently, beta blockers account for about 13% of glaucoma prescriptions, so Rhopressa has nine-figure revenue potential, if regulators approve it. An FDA decision is expected later this year.

Roclatan could be an even bigger seller. Roclatan is a combination drug consisting of Rhopressa and latanoprost, and it already hit its efficacy target in one of two phase 3 trials. Data from its second phase 3 study is expected this quarter, and if it's good, then management could file for FDA approval as soon as later this year. If Roclatan does eventually secure an FDA market share, then it could be a billion-dollar blockbuster because latanaprost represents 36% of the glaucoma market -- and its sales were $1.6 billion per year before losing patent protection.