Wyeth (NYSE:WYE) has delivered on its promise to submit paperwork to regulatory authorities as it seeks approval for its newest drug, Tygacil. The medicine is an innovative broad-spectrum antibiotic and, according to the company, has the potential to reach at least $1 billion in sales.
Still, investors were hardly overjoyed with the news. Wyeth shares declined slightly in recent trading, even as the company managed the impressive feat of turning in required approval documentation to authorities in the U.S., Europe, Canada, and Australia.
Indeed, Wyeth's valuation is among the lowest of the pharmaceutical giants. This seems strange given the company's pipeline: bifeprunox, a potential blockbuster treatment for schizophrenia, is in phase 3 testing, and some other fairly innovative medications are in early testing. Perhaps the company's greatest strength, though, is that it is not facing the kind of patent expiration problems plaguing rivals such as Bristol-Myers Squibb (NYSE:BMY) and Merck (NYSE:MRK).
Unfortunately for Wyeth, investors appear far more inclined to focus on its problems than its potential. As W.D. Crotty recently wrote, the drug maker continues to wrestle with liability associated with the withdrawal of its diet drug fen-phen even though it has already spent $13 billion related to that problem. Further, the firm's antidepressant franchise is under siege. British authorities recently warned that Wyeth's Efexor, which had sales of $893 million in the third quarter, is connected with more overdose deaths than other antidepressants and that the medication may cause heart problems. Regulators in Britain are now recommending that the drug be prescribed only by specialists and not provided to patients with heart conditions.
Still, Wyeth appears to be having some success in producing new molecular entities, or totally new drugs. With continued innovation in the pipeline, Wyeth's chances of rising above its difficulties look good.
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Fool contributor Brian Gorman is a freelance writer living in Chicago. He does not own shares of any companies mentioned here.
