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Avelumab Granted Priority Review: One Of The Many Milestones That Pfizer Needs

Pfizer ( PFE ) has been co-developing an anti-PD L1 cancer drug Avelumab with Merck KGaA, which has now been granted priority review status by the FDA. This puts the drug on track to hit the market somewhere in 2017, which is in line with our expectations. Avelumab is under review for the treatment of metastatic merkel cell carcinoma, which as an advanced and rare form of skin cancer. There are two things investors must be aware of. First , the drug's expected peak sales have been touted at around $3.8 billion, but we believe it is possible only if it gets approval for additional indications for which it is being tested, including gastric cancer, ovarian cancer and non-small cell lung cancer. All of these tests are currently in Phase 3 trials. Second, the number of cases diagnosed each year in the U.S. for merkel cell carcinoma stands at around 1500 , making it a relatively small market. However, Pfizer is likely to price the drug high considering the rare nature of the disease.

Our price estimate of $36 for Pfizer is nearly 15% above the market.

The big picture is that the development is one of the milestones in the company's broader strategy of strengthening its immuno-oncology business. The FDA had earlier granted Orphan Drug and Fast Track designation to avelumab. The company expects more anti-PD L1 drug launches in the next five years. Currently, Pfizer's oncology business constitutes

Do you think Pfizer can compete against oncology majors such as Roche? Please let us know your views by commenting in the box below.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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