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Update on Glaxo's Oncology Pipeline - Analyst Blog

Posted
1/13/2014 12:20:00 PM
By: Zacks.com
Referenced Stocks:AGN;BMY;GSK;RHHBY

Pipeline updates are eagerly awaited by investors in the biotech/pharma space. An insight into late-stage candidates (including regulatory approval) targeting lucrative markets often influence their investment decisions on a particular stock.

Last week, GlaxoSmithKline ( GSK ) announced that its Tafinlar-Mekinist combination has been approved by the U.S. Food and Drug Administration (FDA). The FDA approved Tafinlar plus Mekinist for BRAF V600 E or K mutation-positive unresectable or metastatic melanoma.

FDA approval came on the basis of data from a phase I/II study evaluating Tafinlar plus Mekinist versus Tafinlar alone in patients suffering from BRAF V600E or K mutation positive metastatic melanoma. The combination showed an impressive overall response rate/ORR (76%) and a median duration of response (10.5 months) as compared to Tafinlar alone (ORR 54%, median duration of response 5.6 months).

We remind investors that both drugs, Tafinlar and Mekinist, were approved as monotherapy in the U.S. for melanoma, last year.

In the third quarter of 2013, Tafinlar ($4 million) and Mekinist ($3 million) generated combined sales of $7 million. Currently approved melanoma drugs include Roche 's ( RHHBY ) Zelboraf and Bristol-Myers Squibb Co. 's ( BMY ) Yervoy.

Glaxo carries a Zacks Rank #3 (Hold). We are concerned about the loss of revenues in the third quarter due to investigation in China regarding fraudulent behavior and ethical misconduct. We are also disappointed with pipeline setbacks for two late stage candidates (drisapersen and darapladib). Moreover, Glaxo continues to face challenges in the form of EU pricing pressure and generic competition. We expect recent approvals, restructuring and cost-cutting efforts to offset some of the negatives.

Some better-ranked stocks include Allergan ( AGN ) carrying a Zacks Rank #2 (Buy).



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