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Glaxo's Promacta Label Expanded - Analyst Blog

By: Zacks.com
Posted: 11/20/2012 11:20:00 AM
Referenced Stocks: FOLD;GSK;LGND;RHHBY;THRX

GlaxoSmithKline ( GSK ) recently announced that the US Food and Drug Administration (FDA) has approved an additional indication for Promacta (eltrombopag), also known as Revolade in the EU and other countries. The FDA approved the product for the treatment of thrombocytopenia in patients with chronic hepatitis C virus (HCV) infection to enable the initiation of interferon-based therapy and to achieve optimum results with interferon-based therapy.

We note that interferon-based therapies are commonly prescribed treatments for chronic HCV infection.

The Promacta label expansion however came with certain restrictions - it should not be used to normalize platelet counts and should only be used when interferon therapy cannot be initiated or maintained by HCV patients due to thrombocytopenia. Additionally, the efficacy and safety profile of Promacta in combination with antiviral agents for HCV infection has not been established yet.

In November 2011, Glaxo had presented positive results from phase III trials evaluating the use of Promacta for thrombocytopenia in patients with chronic HCV infection. Full results from the ENABLE 1 trial and initial data from ENABLE 2 were reported. Both trials met the primary endpoint. It was found that patients who received Promacta along with Roche Holding's ( RHHBY ) Pegasys (peginterferon alfa-2a) and ribavirin antiviral therapy achieved a statistically significant improvement over patients receiving placebo.

Promacta is approved for the treatment of idiopathic thrombocytopenic purpura (ITP), a condition which causes increased risk of bruising and bleeding. Glaxo has a research collaboration agreement with Ligand Pharmaceuticals Inc. ( LGND ) for this drug. Promacta sales increased 59% from the year-ago quarter to £35 million in the third quarter of 2012.

Our Recommendation

We currently have a Neutral recommendation on Glaxo. The stock carries a Zacks #3 Rank (Hold rating) in the short run.

Several products in Glaxo's portfolio including Valtrex, Arixtra, Evoclin, Lamictal, Imitrex, Requip, Combivir and Epivir are facing declining sales due to intense generic competition. We expect the company's top line and gross margins to remain under pressure in the coming quarters. EU pricing pressure will continue to affect sales as well.

Glaxo is aiming to maximize the potential return from its pipeline. The company is looking toward deals and acquisitions to drive growth. Further, the company is focusing on increasing the rights on its partnered products and promising pipeline candidates, so that it stands to benefit more from their success.

Glaxo's acquisition of Cellzome and Human Genome Sciences, increasing investment in Theravance Inc. ( THRX ) and Amicus Therapeutics ( FOLD ) and amended agreement between ViiV Healthcare and Shionogi indicate its efforts to expand the pipeline.

Apart from this, Glaxo continues to progress on its cost-cutting initiative, which should help reduce the impact of increasing generic competition over the next few years and boost earnings.



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