Pharmacyclics’s Imbruvica Continues to Set the Bar High for Cancer Drugs

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The annual ASCO meeting is one of a drug company’s best chances to show off data in treating cancer to a wide array of medical professionals, media, analysts, and hedge fund managers. Essentially, it’s the biggest meeting in oncology every year. Last year, Merck (NYSE:MRK) and Bristol-Myers (NYSE:BMY) stole the show with their anti-PD1 agents in treating melanoma. This year, there were several smaller companies to shine, but perhaps none more than Pharmacyclics (NASDAQ:PCYC) with its drug Imbruvica.

Imbruvica is an FDA-approved oral drug that inhibits certain proteins, called a BTK inhibitor. Currently, it is FDA approved to treat two forms of blood cancer, those with mantle cell lymphoma (MCL) and chronic lymphocytic leukemia (CLL) who have received at least one prior therapy. The company is also testing Imbruvica in four additional late-stage trials, treating different indications, along with studying it further on FDA-approved indications.

At ASCO, data were presented on 391 patients that compared Imbruvica to another highly promising drug from GlaxoSmithKline (NASDAQ:GSK) called Arzerra. After six months of treatment, 88 percent of patients who took Imbruvica had not seen their cancer worsen in comparison to just 65 percent for Arzerra.

The director of Hematology at Ohio State, John Boyd, put these findings into words: “This is the first randomized study that demonstrates ibrutinib improves progression free survival and overall survival compared to a standard therapy.” He added, “It establishes ibrutinib as the most appropriate and probably the best therapy.”

Clearly, this is a big win for Pharmacyclics, a company whose entire $6.6 billion market capitalization is tied to Imbruvica. In the last six months, shares of Pharmacyclics have fallen nearly 30 percent amid concerns of competition coupled with slightly disappointing full-year net product revenue guidance of $300 million. Yet, according to the data presented, those fears might be overblown if you’re a long-term shareholder.

With that said, Imbruvica might be the most celebrated oncology drug in history, having more Breakthrough designations than any other drug. It is also highly controversial. The drug’s outlook remains highly connected to its ability to be proven efficient in treating various blood cancers and controlling the space. As a result, peak sales estimates range from $4 billion all the way to $9 billion.

As it appears, Imbruvica looks like a best-in-class drug and will undoubtedly create blockbuster revenue. Albeit Pharmacyclics does partner with Johnson & Johnson (NYSE:JNJ) in developing Imbruvica. In that deal, Pharmacyclics receives 50 percent of the revenue but is only responsible for 40 percent of the costs.

Conclusion

The pressure on Pharmacyclics’s stock has left many wandering where in that $4 billion to $9 billion range Imruvica will fall at its peak. Given the drug’s data at ASCO, showing it’s head-and-shoulders above Arzerra, investors have to feel good that Imbruvica has a real shot to produce peak sales towards the top-end of the range. Consequently, Pharmacyclics’s stock could soar higher, as its ASCO data was meaningful, to say the least.

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