The Food and Drug Administration has approved 40 new medicines in 2015, but not all of them will be investor-worthy. To find those that might deserve investor attention, I scoured the list for drugs that I think are game-changing in their indication and that could also be top sellers for drug developers. Read on to see which newly approved medications I think have the best shot at moving the needle in 2016 and beyond.
No. 1: Praluent and Repatha
Sanofi (NASDAQ:SNY) and Regeneron (NASDAQ:REGN) Praluent and Amgen's (NASDAQ:AMGN) Repatha are PCSK9 inhibitors that boost the liver's ability to clear bad cholesterol from the bloodstream by limiting PCSK9's ability to break down bad cholesterol receptors.
Because these drugs work in an entirely new way to reduce cholesterol levels, they could revolutionize how doctors try to prevent heart disease.
Currently, the most common approach is to prescribe statins, which lower cholesterol production in the liver. Tens of millions of patients are treated with statins every year, but many people still fail to hit their cholesterol targets. Because of that, doctors may turn to prescribing Praluent and Repatha alongside statins to address stubborn high cholesterol. In trials, adding these drugs to statin therapy lowered bad cholesterol by about 60%.
For now, Praluent and Repatha are only approved for use in patients with specific genetic predispositions to high cholesterol levels or patients who have already suffered a major cardiac event, but studies are underway that could prove that these drugs lower the risk of heart disease, and if they do, then their use could expand to include millions of additional patients.
Since the addressable patient population is big and these drugs clock in with annual prices of roughly $14,000, they could add billions of dollars tor Sanofi, Regeneron, and Amgen's top line in the coming years.
No. 2: Tagrisso
When AstraZeneca plc (NYSE:AZN) secured approval for its novel lung cancer drug Tagrisso, it was thought that Clovis Oncology would soon challenge it for market share in EGFR patients with the T790 mutation.
However, Clovis Oncology's recent revelation that efficacy for its drug rociletinib may be lower than previously thought could mean that Tagrisso will dominate the indication.
If so, then the market opportunity for Tagrisso could exceed $1 billion per year because 10%-15% of non-small cell lung cancer patients are EGFR positive and the majority of EGFR positive patients who see their disease return have the T790 mutation that makes them resistant to other therapies.
Since 59% of patients responded to Tagrisso therapy in phase 2 trials and the five-year survival rate for lung cancer is a disappointing 22%, Tagrisso could offer hope to thousands of patients and, in the process, become a top seller for AstraZeneca.
No. 3: Empliciti
Multiple myeloma treatments like the corticosteroid dexamethasone and Celgene Corp.'s Revlimid have boosted five year survival rates for patients to 46.6%. That's a solid improvement over the 26.6% rate in 1975, but there's still a big need for new therapies such as Bristol-Myers Squibb (NYSE:BMY) and AbbVie's (NYSE:ABBV) Empliciti.
Empliciti is approved for use alongside Revlimid and dexamethasone and patients receiving the three drug combination in trials had progression free survival of 19.4 months versus 14.9 months for Revlimid and dexamethasone alone.
Because of its efficacy and the fact that roughly 27,000 new cases of multiple myeloma are diagnosed in the U.S. every year, Empliciti could be a blockbuster because Celgene's Revlimid, which costs $14,000 per month, is on pace to bring in at least $5.6 billion this year and Empliciti, which costs $10,000 per month, is approved for use alongside it.
Investors should remember, however, that any U.S. profits from Empliciti will be split between these two companies, with Bristol-Myers Squibb getting 70% and AbbVie getting 30%.
No. 4: Entresto
The FDA surprised industry watchers by approving Novartis (NYSE:NVS) Entresto six weeks ahead of schedule and that early approval is a good indication of just how important this drug could be for patients suffering from chronic heart failure.
Entresto is the next generation of Novartis' Diovan, a hypertension drug that has lost patent protection, but that had peak sales of about $6 billion per year.
In trials, Entresto reduced the risk of cardiovascular death by 20% versus the commonly used ACE inhibitor enalapril, and the company thinks that efficacy will lead to Entresto eventually hauling in $5 billion in peak annual sales.
That's a pretty aggressive target, but considering that the addressable patient population could be as high as 5 million people in the U.S. alone and Entresto's priced at about $4,500 per year, it would only require about 20% of patients being prescribed Entresto to hit Novartis' goal.
Of course, Novartis needs to overcome payer roadblocks that are reducing script volume, including national drug code (NDC) blocks, which can lower volume in the first six to 12 months of a drug launch, for that to happen.
No. 5: Zarxio
Novartis' Sandoz unit has been selling generic alternatives to blockbuster biologics in Europe for years, but it's only recently gotten a FDA go-ahead to begin selling them in America.
The FDA approved Novartis' Zarxio, a biosimilar to Amgen's (NASDAQ:AMGN) billion-dollar white-blood cell boosting drug, Neupogen, earlier this year and while this drug isn't expected to capture much more than 30% market share early on, the importance of Zarxio's approval to the industry can't be overstated.
Biologics, which are made in living organisms, are impossible to copy identically and in the past, that has kept generic versions of them on the sidelines. However, healthcare reform established a pathway for drugs that work similarly, but aren't an exact match, to reach the market and this year's approval of Zarxio paves the way for future approvals of other biologics.
When you consider that biologics with annual sales of $67 billion will lose patent protection over the next five years, you begin to understand just how important this approval really is to the industry.