Glaxo tries to expand top-selling drug

FDA experts to vote on whether to approve allergy drug Advair for life-saving label change, but potential benefit to drugmaker is slight.

By Aaron Smith, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) -- The British drugmaker GlaxoSmithKline is trying wean just a little more revenue from its top-selling blockbuster Advair, and its ability to do so depends on whether FDA experts believe the allergy drug merits a larger patient population.

Advair is approved by the Food and Drug Administration as an inhalable treatment for asthma and chronic obstructive pulmonary disease (COPD). Advair is a big player in the $25 billion market for respiratory treatment, with $6.6 billion in sales last year for the group that includes Advair and the similar drug Seretide.

If the FDA approves Advair for additional uses, the boost in sales would be relatively small, said Irina Stratan, analyst for the banking and investment research firm WestLB. Stratan said additional sales, if any, would amount to no more than $200 million a year.

The analyst also said sales are hard to project, because the use of allergy and COPD drugs are heavily dependent on weather conditions.

Glaxo (down $0.03 to $57.91, Charts) is trying to get the highest dose of the drug approved for two additional COPD uses: reducing "exacerbations," which would apply to more patients than its current indication, and improving survival.

Members of an FDA advisory panel on Tuesday will cast their nonbinding vote as to whether Advair should be approved for the extra uses, based on study results provided by Glaxo. FDA regulators will decide at a later date whether to approve the drug for the uses and they follow the panel's advice most of the time.

"This was the largest study ever for COPD patients and the first to look at the potential for a medicine to improve survival," said Glaxo spokeswoman Mary Anne Rhyne.

Glaxo achieved its "endpoint," an important FDA goal in measuring a drug's effectiveness, in clinical trials for treating COPD exasperations, which affects more people than the current COPD indication.

But Advair failed, just barely, to make the endpoint in reducing mortality. This means that Advair might be able reduce death in some patients, but not at a level that the FDA considers statistically significant.

COPD, which includes chronic bronchitis and emphysema, is the fourth-leading cause of death in America, killing 122,000 Americans in 2003, according to the most recent figures available from American Lung Association. The association said there were 11.4 million COPD patients in the U.S. in 2004, and smoking causes more than 80 percent of all cases.

Gbola Amusa, analyst for the research firm Sanford C. Bernstein, projects that annual Advair sales will exceed $11 billion by 2011. Amusa said Glaxo could charge more for the higher dose, if it's approved for COPD, helping to drive sales, but a revenue projection is hard to quantify.

Amusa said achieving a mortality claim would be the ultimate achievement for expanding sales, but Glaxo is "not likely" to get it.

"The Holy Grail is market penetration," said Amusa, meaning that a survival benefit would give Advair a competitive edge.

Advair competes with Spiriva from Pfizer (up $0.05 to $26.66, Charts, Fortune 500) and Boehringer Ingelheim, as well as Foradil from Schering-Plough (Charts, Fortune 500) and Novartis (Charts). Advair also competes with the generic drug albuterol.

The analysts interviewed for this story do not own Glaxo stock. WestLB does not conduct business with the company, but Bernstein provided non-investment banking securities-related services to Glaxo in the past 12 months. Top of page

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.