Large-cap biopharmaceuticals AbbVie (NYSE:ABBV) and Roche (OTC:RHHBY) announced last week that the U.S. Food and Drug Administration (FDA) had granted their joint effort, Venclexta, a breakthrough therapy designation in combination with an existing chemotherapy, azacitidine, for the treatment of higher-risk myelodysplastic syndrome (MDS). MDS is a cancer of the blood and bone marrow.

Approximately 10,000 patients in the U.S. are diagnosed with MDS each year. Unfortunately, 30% of patients with this diagnosis go on to develop acute myeloid leukemia, or AML. The condition is diagnosed when "20 out of every 100 white blood cells in the bone marrow is a blast cell," according to the Aplastic Anemia and MDS International Foundation or AAMDS, resulting in an inability to normally produce blood.

An elderly person discusses treatment options with a doctor.

Image source: Getty Images.

The blast cells ("very young or immature white blood cells," per AAMDS) then go on to rapidly make copies of themselves, which inhibits the body's capability to produce red blood cells and platelets. This leads to just a 26% five-year survival rate in patients over the age of 20 with AML.

Physicians are able to differentiate between lower-risk MDS and higher-risk MDS by the number of blast cells for every 100 white blood cells. Lower-risk MDS is defined as when "fewer than 5 out of 100 white cells in your bone marrow are blasts," according to AAMDS. Higher-risk MDS is characterized by "between 5 out of 100 and 19 out of 100 white cells in your bone marrow" being blasts.

In higher-risk MDS patients, the risk is more than double that of lower-risk MDS patients (up to a 2 out of 10 chance of developing AML in lower-risk patients, versus more than 4 in 10 for higher-risk patients). This is why it's so important for higher-risk MDS patients to have more treatment options to reduce the potential of progression to AML.

The Venclexta/azacitidine combo has produced encouraging results

While there's a tremendous need for more treatments to combat MDS, it's not enough to secure an FDA breakthrough therapy designation. We'll now get into the hard data behind the Venclexta/azacitidine pairing that also played a significant role in the FDA's decision.

Among the 78 adults who were enrolled in the phase 1b study, "65% of patients who were dependent on red blood cell or platelet transfusions were able to achieve independence," according to AbbVie, the study's sponsor. It's no secret that such regular transfusions are time-consuming and interfere with a person's quality of life, so this is a monumental achievement. 

The study also reported that the 39.7% of patients who achieved complete remission did so at a median of 2.6 months; this response lasted a median duration of 12.9 months, which led to clinically meaningful improvements in dyspnea (difficulty breathing), fatigue, and quality of life.

AbbVie's vice chairman and president, Dr. Michael Severino, indicated in his opening remarks during AbbVie's Q1 2021 earnings call that the company expects the MDS study to conclude in the second half of this year. This supports its assumption that the Venclexta/azacitidine combo will receive FDA regulatory approval some time next year.

Provided that Venclexta's MDS phase 3 study results bear out the data from the phase 1b study as AbbVie is predicting, the company could be setting itself up to penetrate a multibillion-dollar -- and growing -- MDS market.

Referring to the "growing effort to introduce highly effective therapies for myelodysplastic syndrome" and "increasing incidence of the disease," Coherent Market Insights anticipates that the global MDS market will compound at 8.9% annually from $2.3 billion in 2018 to $5 billion in net sales by 2027.

Because AbbVie's Venclexta is only targeted toward higher-risk cases of MDS and the company is a newer player in the industry, it's reasonable to conclude that it could capture total global market share in the high single digits by 2027, which would lead to annualized MDS revenue of about $400 million.

Venclexta has a few potential indications in its near future

Although an MDS indication for Venclexta would be minimal stacked up against AbbVie's forecast of $55.9 billion in revenue during 2021, it's important to note that Venclexta has two other significant indications in its pipeline. The combination of Venclexta with Imbruvica (a cancer drug developed by AbbVie and Johnson & Johnson's Janssen Pharma) is anticipated to eventually secure regulatory approval for the treatment of Stage 1 chronic lymphocytic leukemia and relapsed or refractory mantle cell lymphoma, both of which are large markets in their own right.

AbbVie appears to be a solid buy at under $125 a share for investors who are looking for a safe 4.4% yield (more than twice the S&P 500 average) with moderate capital appreciation potential, as the stock returns to its fair value in the years ahead.

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