Analysis: GSK's future may be looking up

WASHINGTON, June 19 (UPI) -- GlaxoSmithKline's Avandia prescriptions appear to be stabilizing after dropping by one-third, suggesting concerns about heart risks with the diabetes drug have leveled off.

The pharmaceutical giant also said Monday it plans to launch five new cancer drugs, including its cervical cancer vaccine, Cervarix, over the next few years.

Marietta Miemietz, an analyst with Dresdner Kleinwort, said U.S. prescription trends for the week ending June 8 -- the second full week after the release of a New England Journal of Medicine article that suggested Avandia increased the risk of heart attacks and heart deaths -- were down roughly one-third from last year but were at about the same level as the previous week.

"We think this may point to stabilization of Avandia's U.S. share, making loss of the full franchise highly unlikely," Miemietz stated in a research report.

"Safety concerns should be fully baked into scripts by now. The safety concerns have been widely publicized in the media," she added. "Hence, we think the approximately 33 percent decrease ... is representative of the maximum U.S. franchise loss."

Miemietz said data on international sales of Avandia aren't yet available, but she doesn't expect a significant impact on that front since safety concerns were less pronounced outside of the United States.

"Given that the worst case scenario for Avandia has been priced in our view, we suggest buying GSK shares at the current compelling entry levels," she stated.

GSK shares plunged after release of the NEJM article, and Food and Drug Administration Commissioner Andrew von Eschenbach subsequently testified before Congress that the agency planned to place a black box warning about heart failure on the labeling of both Avandia and competing drug, Takeda's Actos.

This could actually be good news for GSK, Miemietz said.

"A new class label warning will affect both Avandia and Actos, the main beneficiary of Avandia's share loss," she stated. "This should level the playing field. Other drug options look limited."

GSK held its Oncology Day Monday, and the company said it plans to file Tykerb for front-line breast cancer next year and also is getting close to filing for four other anti-cancer compounds over the next three years.

Miemietz said GSK's report increased her level of confidence in her projections for Tykerb's potential, which at $1.4 billion in 2010 is the highest on Wall Street.

However, GSK's oncology pipeline apparently did little to impress the rest of the Street. Shares of the stock were down in early trading Tuesday but edged up slightly to close at $52.60.

GSK, which said it plans a head-to-head trial between Tykerb and Genentech's Herceptin in breast cancer, said its oral medication is off to a strong start since it was launched in March for patients with metastatic disease who have failed on other therapies. Approximately 3,000 patients have been treated with Tykerb so far.

The company also is moving forward with Promacta for thrombocytopenia and expects to file later this year or early 2008.

Miemietz said she doesn't foresee Promacta reaching blockbuster levels for the next several years.

"Blockbuster status in this decade looks unlikely as other indications (chemo, hepatitis, liver) look much further behind," she stated.

Other drugs GSK is developing include pazopanib for renal cell carcinoma, Rezonic for emesis with filing planned in 2008, and ofatumumab (HuMax-CD20), for non-Hodgkin's lymphoma and chronic lymphocytic leukemia.

The company said last month the Food and Drug Administration declined its priority review request for Cervarix. This could delay the vaccine's approval and launch until 2008, putting it further behind Merck's vaccine Gardasil, which was launched last year.

GSK also is developing an immunotherapeutic cancer vaccine: MAGE-A3 ASCI for treating non-small cell lung cancer. This compound will enter phase 3 this year.

Moncef Slaoui, GSK's chairman of research and development, indicated the company plans to focus on the oncology sector.

"Moving deeper into the pipeline we believe that this productivity in oncology can be sustained as we have a significant number of promising new compounds in early-stage discovery," Slaoui said in a statement.

"We expect our oncology pipeline to be a key area of success for GSK for many years to come," he added.