When Pfizer (NYSE:PFE) won its first approval for cancer drug Ibrance back in February 2015, as a treatment for ER+/HER2- breast cancer, investors were cautiously optimistic. PFE stock holders knew it worked well enough for a narrow subset of breast cancer patients, but expectations for the then-nascent therapy were clearly high.
Source: Maciek Lulko (Modified)
The drug hasn’t disappointed. Since early 2015, Ibrance has been approved for three more indications, with the most recent one taking shape just this month. As it turns out, the treatment has proven effective as a therapy for some of the rare cases where men develop breast cancer.
It’s a testament to the drug’s incredible versatility and efficacy.
And yet, while Ibrance is still in trials looking for even more approved uses, the company’s future hardly hinges on what’s quickly turning into a blockbuster drug. The market is largely overlooking much of Pfizer’s pipeline.
Bank of America Merrill Lynch analyst Jason Gerberry made the point of making the call three weeks ago, upping the brokerage firm’s price target on PFE stock from $45 to $48 on upcoming catalysts related to the development of two orphan drugs.
Orphan drugs, in short, take aim at underserved areas of the pharmaceutical market. In many cases there are so few cases of a particular illness that no pharmaceutical company bothers developing an option, so when one does, the FDA facilitates an easier path to approval; something is better than nothing.
One such drug in Pfizer’s pipeline is Vyndaqel.
It’s not a new drug. In fact, it was first approved back in 2011. Its potential use as a treatment for cardiomyopathy, however, is in the works, and is expected to launch later this year to a receptive caregiver environment.
All told, BofA-ML’s Gerberry sees peak sales of $2 billion for Vyndaqel.
Gerberry also notes that a Pfizer gene therapy candidate — PF-06939926 for Duchenne muscular dystrophy — is closer to the endzone than many current and would-be owners of PFE stock may realize. Though in Phase 1 testing right now, should the R&D update slated for the middle of the year go as well as expected, the drugmaker may be able to leap straight to Phase 3 trials and catch up with a similar development from DMD rival Sarepta Therapeutics (NASDAQ:SRPT).
Again, it’s not only another catalyst that could draw a bullish crowd, but it’s also a development that could put real revenue growth on the table real soon. The Duchenne muscular dystrophy market could be worth more than $4 billion by 2023.
Outside of Gerberry’s discussion, Pfizer’s Vizimpro was approved earlier this month in Europe as a first-line treatment of locally advanced or metastatic non-small cell lung cancer.
Pfizer’s still got its R&D, or at least its therapy-acquiring, chops.
Though PF-06939926 and Vyndaqel should prove to be solid bolt-on revenue and profit centers, there’s still little doubt that Ibrance will be the company’s heavy hitter — and growth driver — for the foreseeable future.
As of the company’s most recent quarterly report, 12-month revenue for the wonder drug reached $4.1 billion, up 32% from the trailing-12-month figure reported a year earlier. New approvals and expanded usage for previously approved indications both helped.
The drug, though, has still only scratched the surface. Some analysts are calling for peak revenue of around $8 billion before Ibrance runs out of room to grow and is crimped by rival drugs.
Again, that potential is a testament to the drug’s flexibility.
Ibrance isn’t the only heavy-hitter still in growth mode in Pfizer’s lineup though. While Enbrel (sold by Pfizer in Europe), Sutent and Celebrex may all be major names with declining revenue, sales of fibromyalgia treatment Lyrica appear to have stabilized around an annual pace of $4.6 billion. Ditto for pneumococcal bacteria treatment Prevnar, which has driven more than $5 billion in sales over the course of the past four reported quarters.
In the meantime, Pfizer has started to shine in an area that had quietly gnawed at PFE stock owners… biosimilars. The company has sold $642 million worth of ulcerative colitis, arthritis and plaque psoriasis drug Inflectra/Remsima over the past year, up 50% year-over-year, and suggesting it doesn’t have to yield to the pharmaceutical industry’s biosimilar powerhouses like Novartis (NYSE:NVS) and Amgen (NASDAQ:AMGN).
Bottom Line for PFE Stock
PFE stock is down 15% from its November peak, never really rebounding with the rest of the market beginning in January. Shares are down 10% just since early April, as the future of U.S. health care has become blurred by political rhetoric. Indeed, Pfizer stock hasn’t made net progress since the middle of last year. Clearly there’s something wrong with the company.
Or, maybe there isn’t.
Though the headlines and sentiment seem dire, that pessimism is largely rooted in investors’ collective view that sees a glass as half-empty rather than half-full. Pfizer’s got a quietly potent pipeline, though, with a mix of already-approved and new drugs closer to wrapping up clinical trials than many investors might realize.
That may not be enough to stave off headline-driven headwinds in the short run. But, there’s a reason a streak of downgrades late last year has been countered this year with a couple of upgrades to an “Outperform'” rating.
One of those upgrades came from Credit Suisse, with analyst Vamil Divan noting that patent woes working against aforementioned therapies like Enbrel and Celebrex are starting to abate at the same time new therapies are reaching their full stride.
It’s just a story not many investors are paying attention to right now.
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