Please ensure Javascript is enabled for purposes of website accessibility

It's Wait Until Next Year for These Drugmakers

By Brian Orelli, PhD - Updated Apr 5, 2017 at 8:07PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Drugs from AstraZeneca and Eli Lilly face delays because of the FDA.

On Friday, two major drugmakers got the wrong end of the Food and Drug Administration's wishbone for drug applications. Both plan to resubmit their applications for approval in the first half of next year, but the delays likely will have different effects on the companies.

First, the FDA sent AstraZeneca (NYSE:AZN) a complete response letter for motavizumab, its respiratory syncytial virus (RSV) prophylactic. AstraZeneca didn't say what problems the agency had with its marketing application, but it did let investors know that more clinical trials probably wouldn't be necessary.

The delay shouldn't hurt AstraZeneca much because motavizumab likely will just replace sales of Synagis, its current RSV treatment. AstraZeneca eventually needs to get the more-effective motavizumab approved to compete with up-and-coming drugs like Alnylam Pharmaceuticals' (NASDAQ:ALNY) RNAi-based treatment for RSV, but Alnylam's drug is still in phase 2 development, so AstraZeneca has some time to fix the issues cited by the FDA.

Second, Eli Lilly (NYSE:LLY) didn't wait for any letter, but instead pulled its application to expand Cymbalta's label to include the treatment of chronic pain. The company's meetings with the FDA were clearly not going well -- the agency had "questions about efficacy and dosing" -- so it'll regroup and submit the package again after adding data from a study showing that the drug treats chronic osteoarthritis pain in the knees.

Sales of Cymbalta have trounced other depression drugs like Pfizer's (NYSE:PFE) Zoloft and GlaxoSmithKline's (NYSE:GSK) Paxil in part because it also treats diabetic nerve pain and a pain disorder called fibromyalgia. If the blockbuster drug had won approval to treat chronic pain, it would have been a big boost to Lilly, and the increased sales surely will be missed.

When investors value label expansions or drugs in a company's pipeline, they need to factor in the possibility of a delay -- especially in this regulatory environment. More importantly, you've got to know how much a delay is going to hurt the company if the drug isn't approved on its first go-round.

More Foolishness:

Pfizer, Eli Lilly, and GlaxoSmithKline are Motley Fool Income Investor picks. Pfizer is also an Inside Value recommendation, and the Fool owns shares. Try any of our Foolish newsletters today, free for 30 days

Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. The Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Eli Lilly and Company Stock Quote
Eli Lilly and Company
LLY
$303.38 (0.12%) $0.36
AstraZeneca PLC Stock Quote
AstraZeneca PLC
AZN
$66.01 (0.18%) $0.12
Pfizer Inc. Stock Quote
Pfizer Inc.
PFE
$49.42 (-0.71%) $0.35
GSK Stock Quote
GSK
GSK
$38.01 (-5.05%) $-2.02
Alnylam Pharmaceuticals, Inc. Stock Quote
Alnylam Pharmaceuticals, Inc.
ALNY
$229.18 (2.60%) $5.81

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
373%
 
S&P 500 Returns
122%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/10/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.