A couple of years back, Pfizer Inc. (NYSE:PFE) took a lot of heat in order to pull off a massive $14 billion acquisition that added Xtandi and a potential new cancer drug called talazoparib to its pipeline. At the time, America's biggest pharma quelled investor skepticism with confident boasting that talazoparib would easily outperform a handful of related treatments that it will probably end up competing with.

The experimental therapy Pfizer picked up is one of two related drugs headed to the FDA for treatment of a very specific breast cancer population. Can Pfizer's candidate perform well enough in a commercial setting to help the giant acquisition pay off down the road? Let's see how it stacks up against the competition.

Slot machine in action.

Image source: Getty Images.

Good, but better?

There are so many variables at play during cancer drug studies that you can't make accurate comparisons when different populations take different drugs. Until someone runs an actual head-to-head study, though, these imperfect comparisons are all we have, and talazoparib just hasn't delivered a clear sign of superiority.

One of talazoparib's biggest potential rivals for breast cancer patients is a pill that AstraZeneca (NYSE:AZN) launched in 2014. Lynparza works in the same way, but it's been limited to ovarian cancer patients since its launch. Recently released results from the pivotal OlympiAD study, though, suggest it will be tough to beat in breast cancer. Lynparza reduced the risk of disease progression or death by 42% for advanced stage breast cancer patients with BRCA mutations. During the pivotal Embraca trial that's supporting talazoparib's applications, Pfizer's candidate led to a 46% reduction of patients' risk of disease worsening.

Talazoparib also seems to shrink tumors a bit more often than Astra's drug. Investigators recorded responses among 63% of patients taking Pfizer's candidate versus just 27% of those in the chemo group. During OlympiAD, the tumor response rate in the Lynparza group was 60% versus 29% in the chemo group.

Scientist mixing two flasks.

Image source: Getty Images.

Look a little closer

Talazoparib's lead over Lynparza looks pretty slim until you consider a slight (but important) difference in the two trials' enrollment guidelines. Lynparza's study excluded patients who had been treated with more than two lines of chemotherapy, while talazoparib's trial included patients that had received up to three chemo regimens. 

Generating slightly better results from a patient population that may have been more advanced mildly suggests talazoparib could be more effective.

A safety surprise

While Pfizer's candidate may have a slight efficacy edge, safety data during the Embraca trial wasn't nearly as good as expected. Talazoparib is so potent, it produced results with a 1.0 mg dose once daily, while patients in OlympiAD took 300 mg of Lynparza twice daily.

Unfortunately for Pfizer, potency hasn't translated into an obvious safety advantage. In fact, during the Embraca study, there was a slightly higher rate of serious adverse events in the group of patients receiving talazoparib than those given standard chemo. 

What about Xtandi?

If talazoparib is going to become a blockbuster drug that replaces standard care, we need to see better safety data. Even if it doesn't come in, though, an important expansion decision coming up soon could significantly boost sales of the other drug that attracted Pfizer's $14 billion bid, Xtandi. The FDA is currently reviewing an application that could expand the prostate cancer treatment's addressable population to include patients with tumors that haven't spread yet, which could lead to significantly longer average treatment duration and, in turn, higher sales.

If Pfizer owned Xtandi outright, it would certainly come out ahead on its Medivation deal, but it has to share those sales with Astellas. The Japanese pharma cuts Pfizer a tiered royalty on international sales, and the partners share U.S. profits. Despite having to share, Pfizer's on pace to record around $638 million in Xtandi-related revenue this year. If the FDA green-lights an earlier indication for the drug, it could begin contributing around $1 billion annually in high-margin revenue within a few years.

It isn't a foregone conclusion yet, but it looks like Pfizer has a pretty good shot at coming out ahead on its Medivation deal. Talazoparib still needs to earn an approval in breast cancer, and Xtandi needs an expansion, but I think this company's big bet from a couple of years ago still has a chance to deliver a modest return for shareholders.

Cory Renauer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.