In a huge blow to Pfizer, European regulators unexpectedly rejected approval of its new Xeljanz rheumatoid arthritis pill over concerns about both safety and efficacy. The surprise move means the drugmaker must now scramble to file an appeal, but the odds against overturning such a decision are generally now high, according to Wall Street analysts who quickly revised their forecasts.
The rejection by the Committee for Medicinal Products, or CHMP, was even more surprising because the decision comes just seven months after the FDA approved the pill to treat adults with moderately to severe rheumatoid arthritis who did not respond to, or cannot tolerate, methotrexate. Generally, the FDA is seen as more restrictive in issuing new approvals.
As noted previously, Xeljanz is the first in a class of medications known as JAK inhibitors and is positioned to compete against widely used injectables, such as Humira, that collectively generate some $13 billion in annual sales for treating rheumatoid arthritis. The pill is also the first new oral disease-modifying antirhematic drug, or DMARD, for treating the affliction in more than a decade.
For these reasons, Wall Street forecast Xeljanz will be a blockbuster. The US labeling also suggested a potentially wider market in that usage is not restricted only to patients who have failed to improve on anti-TNF inhibitors, including AbbVie’s Humira (ABBV). As a result, the pill has been seen as a lynchpin in helping Pfizer turn around after patents expired on big sellers, such as the Lipitor cholesterol drug (back story).
Now, though, analysts are redoing their math. In rejecting Xeljanz, the CHMP said five studies show improvement in signs and symptoms of rheumatoid arthritis, but were insufficient to demonstrate a consistent reduction in disease activity and structural damage to joints, particularly at the lowest 5 mg dose and in patients in whom treatment with at least two other DMARDs has failed.
Moreover, the CHMP had “major concerns about the overall safety profile. There were significant and unresolved concerns about the risk and type of serious infections,” which are related to the immunosuppressant action of the pill. These include certain cancers, holes in the wall of the gut, liver damage and increased lipid levels. “It was not clear these risks could be successfully managed in medical practice,” the CHMP wrote (here is the CHMP fact sheet).
Pfizer offered a muted response. “Each regulatory authority will review and interpret applications individually and different assessments are not uncommon,” says Yvonne Greenstreet, senior vp and head of the medicines development group, says in a statement. “The re-examination process will enable us to seek to address the CHMP’s questions, and we will continue to work closely with the EMA with the goal of making this medicine available to appropriate patients in Europe.”
But analysts offered some caution. For one thing, Pfizer (PFE) acknowledged that the filings submitted to the CHMP contained the same information that was provided to the FDA and that interim data from a trial called ORAL START were also included. Moreover, the drugmaker maintained that its European filing did not contain any new or unexpected findings.
The ORAL START trial was to have demonstrated “significant efficacy” when the pill was used on its own compared with methotrexate, including an ability to inhibit structural damage, according to Pfizer. The study was ongoing at the time the drugmaker submitted its Xeljanz filing to the FDA and was not included in the original application given to the agency.
“Pfizer expects the appeal process to take up to 120 days for a final decision, but overturning an opinion is unusual,” writes Leerink Swann analyst Seamus Fernandez in a research note. “While there is a chance that Pfizer could successfully appeal, most companies comment that this is an unusual outcome” (and here is a link to the appeals process).
He believes that Xeljanz will eventually be approved in the EU, but the language of the CHMP decision suggests that “it will be tough” for the ongoing ORAL START to “resolve critically important efficacy questions. In our opinion, one and two-year safety data are more likely to help Xeljanz for the requested indication than efficacy data would.” The upshot? He sees a three-year delay in EU approval.
Meanwhile, this undoubtedly offers rival drugmakers something of a boost. “The EU decision could have some indirect spill over to markets where the drug is approved, like the US, as sales reps from competing companies point out this development to prescribing physicians in an effort to paint Xeljanz as a potentially unsafe product,” writes Sanford Bernstein analyst Tim Anderson in his own note.
Consequently, analysts are ratcheting down their forecasts. For instance, Mark Schoenebaum of ISI Group is lowering his Pfizer earnings estimates by 1 percent to 3 percent between 2014 and 2017, assuming the drugmaker does not slash costs to compensate for the loss in expected Xeljanz revenue in Europe.