Weak Xtandi sales spur questions on Pfizer's $14B Medivation takeover
- Pfizer reported unexpectedly weak sales of its newly acquired prostate cancer drug Xtandi (enzalutamide), which was picked up in the pharma giant's $14 billion takeover of Medivation last fall.
- When asked if the decline was expected, Anthony Bourla, head of Pfizer Innovation Health, admitted it wasn't. "This was not anticipated. Today, Xtandi is performing below our expectations in the U.S.," he said on a call with analysts Tuesday. Net sales of the drug slid 11% to $131 million in the first quarter.
- Pfizer attributed the decline to a sharp uptake in utilization of its patient assistance programs, claiming government scrutiny of so-called "co-pay charities" reduced support for patients who could not afford their co-pay for Xtandi.
While Medivation successfully bid up its price by touting its oncology-focused pipeline, Xtandi was the chief commercial asset picked up in Pfizer's takeover of the biotech.
Analysts were quick to jump on the weak sales figures reported Tuesday, questioning whether Pfizer had overpaid for Medivation.
Yet even though sales fell by 11%, demand rose by 13%, Pfizer's Bourla noted.
"The inconsistency of 24 points observed in demand versus revenue continues to reflect significant increase in utilization of our patient assistance programs," Bourla explained.
Bourla and Pfizer CEO Ian Read attributed this unexpected uptick in demand for patient assistance to a complex shift in the availability of co-pay support to lower-income patients, such as those on Medicare.
The U.S. government has been investigating certain third-party foundations, typically supported by donations from drugmakers, which help pay co-pays for those patients that cannot afford the out-of-pocket cost. Pfizer's Read doesn't expect these "co-pay charities" to be shut down, but believes the scrutiny had a "chilling effect" on the amount of support coming from these foundations for patients who need financial assistance.
"However, we believe that the demand for patient assistance as a percentage of total demand will stabilize, moderate gradually through 2017, and over time resolve," Bourla said.
Apart from issues with reimbursement, Pfizer is focused on expanding Xtandi's indication towards use in treatment of earlier, non-metastatic prostate cancer. Two Phase 3 studies, EMBARK and PROSPER in that setting are currently ongoing.
"The real critical pivot point for that deal is the non-metastatic, the earlier stage prostate cancer. We remain confident in our ability to get approval for those indications," said Frank D'Amelio, Pfizer's CFO, on Tuesday's call.
Pfizer also hopes to drive more prescriptions to urologists, considered a potential area of growth for the drug.
As for that $14 billion purchase price for Medivation?
"We continue to expect our return on capital for that transaction to exceed our cost of capital," D'Amelio said.
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