New drug approvals are important for drugmakers to drive profits forward. Going from development-stage to a drug on the market is a huge step. Going from one to two can double a biotech's revenue. Even approvals at larger biotechs are important for driving incremental increases in revenue and profits.
But drugmakers have another option for driving revenue. Rather than getting a new drug approved, they can get the FDA to expand the label for their existing drugs. With an expanded recommendation, the biotech can market the drug to doctors, increasing sales of the drug.
Here are three biotechs that were able to convince the FDA to expand their drugs' markets potential this year.
Celgene's (NASDAQ:CELG) Abraxane has been on the market since 2005, back when the drug was owned by Abraxis Bioscience. But Celgene didn't buy the biotech for Abraxane's sales as a second-line treatment for breast cancer.
Instead, Celgene saw the potential for Abraxane in pancreatic and lung cancer. When Celgene bought Abraxis in 2010, the biotech said it expected the acquisition would add about $1 billion in revenue in 2015, a substantial increase from the $315 million Abraxane posted in 2009.
This year, Celgene saw its plan move forward with an FDA approval for both pancreatic and lung cancer. In the third quarter, sales of Abraxane were up 60% to $170 million and should continue higher. The U.S. pancreatic cancer approval only happened in September, and a positive opinion from the European authorities came in November.
Coming to a pharmacy near you
VIVUS' (NASDAQ:VVUS) approval for its obesity drug Qsymia wasn't your typical label expansion, but it had the same effect -- bringing the drug to more patients. In April, the FDA modified Qsymia's Risk Evaluation and Mitigation Strategy, or REMS, which previously restricted the drug's distribution to mail-order pharmacies.
The new REMS allows VIVUS to sell the weight-loss drug in retail pharmacies as long as they're certified by the company, which isn't that big of a deal. Qsymia has the potential to produce birth defects, so the FDA wants to make sure the warning paperwork gets distributed with the drug.
The move didn't send sales of Qsymia skyward, but sales of Arena Pharmaceuticals' (NASDAQ:ARNA) Belviq have been just as stagnant, and Arena Pharmaceuticals' marketing partner Eisai could start selling Belviq in retail pharmacies from the get go. The change in the REMS was a necessary but not sufficient move to get sales higher.
Back on the market
When Theravance (UNKNOWN:THRX.DL) gained FDA approval for Vibativ to treat patients with pneumonia caused by a certain type of bacteria, the biotech wasn't even marketing the antibiotic for the skin infections it was originally approved for. Vibativ was left in limbo after Thereavance's marketing partner Astellas Pharma handed back rights to the drug following slow sales and manufacturing issues.
The new approval allowed Theravance to reintroduce Vibativ to the U.S. market in August. The biotech is considering "commercialization alternatives," presumably either finding a marketing partner to replace Astellas or selling the antibiotic outright.
While not a major factor in the value of Theravance -- most is tied up in its respiratory program with GlaxoSmithKline -- anything Theravance can get for Vibativ is better than the antibiotic sitting on a shelf.
Fool contributor Brian Orelli has no position in any stocks mentioned. The Motley Fool recommends Celgene. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.