Dollars today are worth a whole lot more than dollars you might receive a few years from now, so when a relatively conservative market research provider pins an 11-digit net present value to a drug still in development, it pays to understand why.
Every year, EvaluatePharma ranks experimental drugs in development based on what they could earn if approved, and this year the top five are worth a combined $47 billion. Here's what investors need to know about the top five in reverse order.
5. GSK2857916 from GlaxoSmithKline
The fifth most valuable research and development project right now belongs to GlaxoSmithKline (NYSE:GSK) and it's so fresh it doesn't even have a proper name yet. GSK2857916 is a fancy protein bound to a lethal dose of chemo that it only releases when it finds its target. In this candidate's case, the target is beta-cell maturation antigen, a protein often found on the surface of cancer cells in people with multiple myeloma.
Multiple myeloma is the second most common form of blood cancer, and existing treatments rack up billions in annual sales. Relapsed patients rarely respond to subsequent treatments, but GSK2857916 shrank tumors for 21 of 35 people in a group that had seen a median of five prior lines of treatment.
If GlaxoSmithKline's candidate keeps producing results like these, it's going to fill a big unmet need, which is why its net present value is an estimated $7.5 billion. We'll know more about its chances once the company finishes a phase 2 clinical slated to begin any day now.
4. Brolucizumab from Novartis
Age-related macular degeneration (AMD) is the leading cause of irreversible vision loss among people over 50 years of age. The condition isn't curable, but pricey treatments can slow it down. EvaluatePharma thinks this candidate from Novartis (NYSE:NVS) is worth $8.1 billion right now because it looks like a big improvement over Eylea, a currently popular injection that racked up $3.7 billion in sales last year.
Holding back AMD requires constant dosing, but patients aren't so thrilled about regular eyeball jabs. Novartis' experimental treatment looks like it can do the job for most patients on a 12-week schedule even though Eylea treatment calls for an injection every eight weeks.
3. Aducanumab from Biogen
Biogen Inc.'s (NASDAQ:BIIB) Alzheimer's disease hopeful topped the list last year, but repeated failures with experimental drugs that attack the disease from a similar angle have all flopped. Despite the risk, EvaluatePharma estimates aducanumab's present value at around $8.4 billion and this figure will rise or fall dramatically when the company reads off results of ongoing pivotal trials, probably in early 2020.
During a relatively small study, investigators noticed patients in groups treated with aducanumab declined less in their performance on a clinical dementia test, although the differences weren't all strong enough to be considered statistically significant. There are no treatments that slow this debilitating disease that affects 5.7 million people in the U.S. alone. If Biogen's candidate can prove itself in larger trials, this could be the best-selling drug of its time.
2. Upadacitinib from AbbVie
AbbVie Inc.'s (NYSE:ABBV) flagship rheumatoid arthritis (RA) treatment is the world's best-selling drug today, and its next addition to this space could be worth $9.9 billion. A 30 mg dose of upadacatinib helped half of the patients that received it achieve clinical remission versus just 18% among those given a standard first-line RA treatment.
AbbVie intends to submit an application for the treatment of RA before the end of 2018 with a possible launch slated for next year. Given solid pivotal trial data we've already seen in RA, plus mid-stage results that suggest upadacatinib could also treat Crohn's disease and eczema, this estimate could rise a bit further next year.
1. VX-659 + tezacaftor + ivacaftor from Vertex
It seems fitting that the most valuable research and development program in the biopharma space also has the most complicated name. Vertex Pharmaceuticals (NASDAQ:VRTX) thinks adding VX-659 to two drugs that are already on the market can help a lot more patients with cystic fibrosis breathe easier.
The company's currently running phase 3 trials with two relatively large groups of cystic fibrosis patients, and we should have some early efficacy data to look at in the second half. If the triple-combo hits the mark, its estimated net present value of $13.1 billion could get adjusted higher still.
Before you get too excited and run out buying up shares of these drugmakers, it's important to realize biotech estimates can change dramatically. Last June, AbbVie had another candidate near the top of this list. Rova-T was thought to be worth $8.5 billion, but following a recent clinical trial disappointment, its estimate fell to just $193 million.
Outlooks for experimental new drugs are always subject to new data, plus the Food and Drug Administration throws plenty of curveballs. With this in mind, investors should always consume prelaunch estimates with a big grain of salt.
Cory Renauer has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Biogen. The Motley Fool recommends Vertex Pharmaceuticals. The Motley Fool has a disclosure policy.