European authorities have battered expectations for Pfizer's rheumatoid arthritis pill Xeljanz, spurning the drug giant's request for approval over concerns about the risk-benefit profile. The surprise rejection cools the company's ($PFE) run of regulatory success, which included 5 FDA approvals in 2012.
Xeljanz has also been a source of pride for the R&D folks at Pfizer because the compound came from the company's labs, which had been derided for lack of productivity in previous years.
In denying Pfizer its endorsement, the European Medicines Agency's Committee for Medicinal Products for Human Use (CHMP) stood apart from regulators at the FDA, which stamped an approval on Xeljanz (tofacitinib) in November 2012. The committee opined that the data failed to show enough reduction in structural damage to joints from the disease, and it harped on the infections, GI issues and cancer cases in patients tested in trials.
Pfizer plans to appeal the CHMP's opinion and request a reexamination of the data, yet convincing the committee to reverse its decision appears to be an uphill battle. At the very least, the committee's negative opinion slows Pfizer's advance on the multibillion-dollar RA market with Xeljanz in Europe. Bernstein analyst Timothy Anderson wrote that his $2.5 billion estimate for 2020 sales of the drug included a "modest" $518 million, or 21%, from European sales.
"This comes as a surprise, especially because Xeljanz has already been approved in the US… and certain other markets like Japan," Anderson said in his note. "More often than not, it is the US that does not approve products when Europe does, but not in this instance."
Pfizer's bad news might be good news for the company's rivals in the market for treatments against RA, which affects about 3 million patients in Europe. Many patients take injected TNF therapies such as AbbVie's ($ABBV) top-selling biologic Humira, Amgen's ($AMGN) Enbrel or Remicade from Johnson & Johnson's ($JNJ) Janssen.
Xeljanz, a JAK inhibitor, hit the U.S. market ahead of oral RA drugs from other companies. Eli Lilly ($LLY) and partner Incyte ($INCY), for example, have shown promising midstage data for a rival oral JAK inhibitor in RA called baricitinib, which has advanced to Phase III. Less impressive have been data from AstraZeneca ($AZN) on an oral contender called fostamatinib, which failed to match Humira in a Phase IIb study last year. Yet Astra is pushing ahead with late-stage development.
Pfizer shares were down 2.94% to $29.37 in pre-market trading as of 8:37 a.m. ET on Friday.