Update on Ligand/Glaxo's Promacta - Analyst Blog

Updates related to pipeline and label expansion efforts are eagerly awaited by investors in the biotech/pharma space as their investment decisions on a particular stock are often based on these. These updates provide an insight into the commercial potential of a drug/candidate.

Earlier this week, Ligand Pharmaceuticals Inc. (LGND) announced that the U.S. Food and Drug Administration (FDA) granted breakthrough therapy designation to Promacta (EU trade name: Revolade). Ligand and its partner GlaxoSmithKline (GSK) are looking to get Promacta approved for the treatment of cytopenias in patients suffering from severe aplastic anemia (SAA), who are unresponsive to immunosuppressive therapy.

The FDA granted breakthrough therapy designation to Promacta based on data from an open-label phase II National Institute of Health (NIH) study (n = 43) evaluating Promacta in treatment experienced SAA patients,  who showed insufficient response to immunosuppressive therapy.

The designation, which was enacted as part of the 2012 Food and Drug Administration Safety and Innovation Act, is granted to potential new treatments for serious or life-threatening diseases or conditions where the initial clinical data shows that the treatment has the potential to demonstrate substantial improvement on one or more clinically significant endpoints compared to existing treatments. The designation should help fasten the development and review process for the candidate.

We note that Promacta is already approved for the treatment of thrombocytopenia (reduced platelet count) in patients with chronic hepatitis C virus (HCV) infection to enable the initiation and maintenance of interferon-based therapy. Promacta is also approved for thrombocytopenia in patients with chronic idiopathic thrombocytopenia (ITP).

Our Take

Ligand receives royalties on the sales of the drug, under a licensing agreement with Glaxo, entered in 2008. Promacta royalties are one of the key contributors to Ligand's top line. Promacta sales have been showing significant year-over-year growth for some quarters now.

We believe that SAA is an untapped market with no treatments available for patients unresponsive to initial immunosuppressive therapy. Thus, we are pleased with the label expansion efforts for the drug, which could boost sales and in-turn royalties further.

Ligand carries a Zacks Rank #3 (Hold), while Glaxo carries a Zacks Rank #4 (Sell). Some better-ranked stocks include Actelion Ltd. (ALIOF) and Affymax, Inc. (AFFY). Both carry a Zacks Rank #1 (Strong Buy).