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How Far Can Alopecia Drug Success Pull Pfizer Through Patent Cliffs?

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Biopharmaceutical company Pfizer’s (PFE) sustainable pipeline includes multiple growth-driving late-stage programs. Moreover, Pfizer’s portfolio of a wide range of drugs and vaccines keeps the company at the top of its game.

Notably, Pfizer’s efforts toward the development of vaccines to treat cancer, rare diseases, immune disorders and inflammation have improved its Phase 3 success rate to 85% from 70% in 2020.  

The promising near to mid-term commercial potential of the company’s COVID-19 vaccine has made Pfizer the darling of investors, propelling the shares to reach all-time highs recently. (SeePfizer Dividend Date and History on TipRanks)

Nonetheless, patent expirations are a cause of concern among investors because it exposes a company to generic competition, which puts pressure on pricing and impacts gross margin. Investors are still wondering how Pfizer plans to handle its expected drop in sales of about $18-$20 billion between 2026 and 2029, upon the onset of the next phase of patent expirations.

Mizuho analyst Vamil Divan and his associates have received top-line data for Pfizer’s JAK3/TEC inhibitor, ritlecitinib, for the treatment of alopecia areata. Ritlecitinib has been deemed an FDA Breakthrough Therapy.

The data reveals that both the 30 mg and 50 mg doses of the ritlecitinib treatment hit the primary endpoint of the proportion of patients, who experience scalp hair regrowth. Pfizer expects ritlecitinib to achieve peak sales of more than $1 billion, and partially offset its 2026-2029 patent cliff.

The analyst noted, “While the efficacy data for the leading agents are numerically different, these differences are not necessarily large enough to be that meaningful on the market, in our view. Given the similar mechanism of action and likely similar efficacy profile, we believe a first-mover advantage, more convenient dosing frequency, and better safety/tolerability profile are likely to be more important drivers of market share gains.”

The safety of oral JAK inhibitors is a cause of concern and is thought to cause serious venous thromboembolic and cardiovascular events, infections and malignancies. However, Pfizer revealed that though the ritlecitinib treatment showed lesser efficacy than the JAK inhibitor, brepocitinib, the side effect profile of the former treatment is more favorable. Nonetheless, the details of the ritlecitinib trials are yet to be fully presented and will be able to add more colors to the risk profile of Pfizer’s alopecia treatment.

“There are currently no FDA-approved products to treat alopecia areata. The US adult prevalence is 3.5M adults with alopecia areata, and 1.1M of these patients have moderate-to-severe conditions,” said Divan. He believes that the alopecia treatment is a multi-million-dollar market, which has the potential to support multiple players.

Interestingly, Pfizer is also targeting patients from 12 years of age in the Allegro study. This is expected to help Pfizer face comparatively lesser competition.

The analyst reiterated a Hold rating on the stock with a price target of $43, implying 3.9% downside potential.

Consensus among Tipranks’ analysts for Pfizer is a Hold based on 2 Buys, 8 Holds and 1 Sell. The average Pfizer price target of $44.40 implies 1.2% downside potential from current levels.

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

The post How Far Can Alopecia Drug Success Pull Pfizer Through Patent Cliffs? appeared first on TipRanks Financial Blog.

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