Please ensure Javascript is enabled for purposes of website accessibility

3 Big Battles Brewing in Biotech

By Todd Campbell - Apr 10, 2016 at 7:21AM

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

New drug approvals on the horizon set the stage for a market share brawl.

SOURCE: FLICKR USER STOCKMONKEYS.COM.

Competitors are always angling to dethrone established leaders, and that's no different in the world of biopharma. Research money often gets prioritized toward indications that offer blockbuster potential, and even slight advantages can shift the market share landscape significantly. Soon, the FDA will weigh in on drugs from three companies that could reshape existing markets. Let's learn more about them and what may be at stake.

Big pharma goes after an upstart
The FDA approval of Relypsa's (RLYP) hyperkalemia drug Veltassa last October means that it has a first-to-market advantage, but if AstraZeneca plc's (AZN 0.30%) competing hyperkalemia drug, ZS-9, gets the regulatory go-ahead in May, it could be the bigger seller of the two drugs.

AstraZeneca spent $2.7 billion on ZS Pharma last fall, and if the FDA opts for a more favorable prescribing label for ZS-9 than Veltassa, then it could prove to be money well spent. Veltassa's label includes a black-box warning of interactions with other oral drugs, and as a result, other oral drugs shouldn't be taken within six hours of Veltassa.

Because hyperkalemia, or abnormally high levels of potassium in the blood, often occurs in patients with significant medical needs, such as those with chronic kidney disease and heart failure, a cleaner label for ZS-9 could be a big advantage.

Overall, industry watchers think this market could eventually be worth $1 billion or more, and that means these companies are likely to fight tooth-and-nail to be the market share leader.

SOURCE: SYNERGY PHARMACEUTICALS.

No. 2: An upstart challenges a fast grower
On Jan. 29, small-cap biotech Synergy Pharmaceuticals (NASDAQ: SGYP) filed for FDA approval of plecanatide, a drug for the treatment of chronic idiopathic constipation (CIC).

If approved, plecanatide will face off against Ironwood Pharmaceuticals (IRWD -0.18%) and Allegan plc's (AGN) fast-growing CIC drug, Linzess. U.S. sales of Linzess, which won FDA approval in 2012, clocked in at $455 million last year, up 53% from 2014.

Plecanatide could mount a solid challenge to Ironwood and Allergan's Linzess, because in trials, the rate of occurrence of diarrhea was arguably lower for plecanatide than it was for Linzess. Allergan and Ironwood hope to launch a lower-dose version of Linzess that could decrease the risk of diarrhea and insulate it more from a plecanatide threat, so it's not clear who will eventually be the winner in this indication. Given that Ironwood pegs Linzess' peak annual sales at $2 billion, this is one battle worth watching.

No. 3: Two biggies prepare to duke it out
Incyte Corporation 
(INCY 2.71%) and Eli Lilly & Co. (LLY 1.25%) have filed for FDA approval of a new JAK-inhibiting therapy, baricitinib, that could win away business from AbbVie Inc.'s (ABBV -1.97%) top-selling Humira in rheumatoid arthritis.

Humira has a 22% market share in the $18 billion RA drug market, and baricitinib delivered arguably best-in-class results in clinical trials. Specifically, baricitinib outpaced the commonly used disease-modifying antirheumatic drug (DMARD) methotrexate in early RA patients, and it improved symptoms in patients who failed to respond to anti-TNF drugs such as Humira. Importantly, baricitinib also outpaced Humira in a head-to-head study involving patients who fail to improve on DMARD therapy, suggesting that it, rather than Humira, could be used first in that patient population.

Adding confidence to that possibility is that, unlike Humira, baricitinib is dosed orally, rather than via injection. 

Humira has been a mainstay in this indication for years, and doctors are comfortable with its use, so it may take some time for baricitinib's market share to build, but nonetheless, this could be the biggest battle over market-share turf in this indication in years, and that means investors need to be paying attention to it. 

 

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
$302.60 (1.25%) $3.75
Ironwood Pharmaceuticals, Inc. Stock Quote
Ironwood Pharmaceuticals, Inc.
IRWD
$11.37 (-0.18%) $0.02
Allergan plc Stock Quote
Allergan plc
AGN
AstraZeneca PLC Stock Quote
AstraZeneca PLC
AZN
$66.41 (0.30%) $0.20
Incyte Corporation Stock Quote
Incyte Corporation
INCY
$76.91 (2.71%) $2.03
AbbVie Inc. Stock Quote
AbbVie Inc.
ABBV
$148.03 (-1.97%) $-2.98
Relypsa, Inc. Stock Quote
Relypsa, Inc.
RLYP

*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 service.

Stock Advisor Returns
330%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/24/2022.

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.