On March 1, GlaxoSmithKline's (GSK 0.07%) marketing authorization application for its anemia of chronic kidney disease (CKD) drug called daprodustat was accepted by the European Medicines Agency (EMA).
Now that the EMA has accepted GlaxoSmithKline's application for daprodustat, regulatory approval for the drug is potentially just around the corner. But what would the overall sales potential be for the pharma stock? Let's dig into the clinical results for the drug and the anemia of CKD market to find out.
Patients could soon have a much-needed treatment option
CKD is a condition that results in the gradual loss of kidney function. The kidneys are responsible for filtering waste and excess fluids from the blood.
CKD has five stages of progression. In the first three stages, the kidneys can still filter waste out of the blood. These three stages of CKD often have no symptoms or complications. But if patients don't receive treatment and/or make the appropriate lifestyle changes (i.e., a healthier diet and more physical activity), the disease can advance to the fourth and fifth stages. At this point, patients either need to receive dialysis treatment to help the kidneys filter waste products or undergo a kidney transplant.
The later stages also are often associated with a serious medical complication called anemia, which is characterized by insufficient red blood cells and low hemoglobin levels. Roughly 10% of the global population around the world has CKD and 20% of those patients have anemia as well. Anemia of CKD can cause significant fatigue and reduced quality of life, as well as increased risk of hospitalization, heart complications, and death.
The current standard of care for anemia of CKD patients both on dialysis and not on dialysis is a type of drug class called erythropoietin stimulating agents (ESAs), which are injections that correct anemia.
According to Dr. Ajay Singh, the principal investigator of daprodustat's clinical trials, there are two common problems within the non-dialysis anemia of CKD population that the drug is targeting. First, the group is undertreated because some patients don't have easy access to healthcare facilities, and anemia treatment is currently a physician-supervised process. Second, patients also don't like getting injections because they're uncomfortable.
The good news for patients with anemia of CKD is that daprodustat is an oral pill, and it has proven to be an effective and safe substitute for ESAs.
In both the dialysis patient and non-dialysis patient clinical trials, daprodustat demonstrated that it was just as effective as ESAs in treating anemia of CKD patients. Daprodustat raised average hemoglobin levels during the clinical trials in dialysis and non-dialysis patients at amounts that were similar to ESAs.
And the 19.5% of non-dialysis patients receiving daprodustat that experienced a major cardiovascular event was essentially the same as the 19.2% rate for ESAs. Furthermore, 25.2% of dialysis patients taking daprodustat experienced a major cardiovascular event during the clinical trial compared to 26.7% of patients receiving ESAs.
A bump in revenue
Daprodustat offers patients a more convenient alternative treatment that requires less supervision from a doctor. And the best part is that this doesn't appear to come at the cost of safety or efficacy.
Aside from the potential approval in the EU in the months ahead, GlaxoSmithKline is set to file daprodustat with the U.S. Food and Drug Administration and other major regulatory agencies around the world this year.
The company's peak sales forecast of between $675 million and $1.3 billion for daprodustat appears realistic. With AstraZeneca (AZN -0.05%) and Fibrogen's (FGEN -7.93%) roxadustat hitting a roadblock to FDA approval, GlaxoSmithKline looks positioned to capitalize.
Thanks to the eventual launch of oral anemia of CKD treatments like daprodustat, Research & Markets expects that the global anemia of CKD market will compound at 3.4% annually to reach $6.6 billion in 2029.
The middle of GlaxoSmithKline's sales ($1 billion) forecast works out to approximately 15% of the $6.6 billion forecast for the anemia of CKD market. For context, an extra $1 billion in annual sales would be a 2.1% lift over the $48.1 billion in sales that analysts predict GlaxoSmithKline will deliver in 2022. This drug alone seems to be enough to move the needle for the stock.
The stock is a buy for income investors
As a result of its late-stage pipeline of several dozen projects, analysts believe that GlaxoSmithKline will deliver 7.6% annual earnings growth through the next five years. At the current $47 share price, yield-hungry investors can snatch up GlaxoSmithKline's market-crushing 4.7% dividend yield at a forward price-to-earnings ratio of 14.5. This makes the stock a compelling buy for income investors.