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Pfizer Shares Plunge After Cholesterol Drug Fails
Posted on 2006-12-04 12:22:00
Pfizer Inc. shares tumbled as much as 15.6 percent on Monday, wiping out nearly $30 billion of market value, after the world's biggest drug maker unexpectedly ended development of its most important experimental medicine.
Pfizer halted work on torcetrapib, which was designed to raise levels of “good” HDL cholesterol, because of increased deaths and heart problems among patients given the product in a late-stage trial.
Torcetrapib had been expected to fill a gap left when Pfizer's patent on Lipitor, the world's biggest-selling drug with annual sales of about $13 billion, expires in 2010 or 2011.
Drugs like Lipitor, which lower “bad” LDL cholesterol, cut the risk of heart attack by about 30 percent. Experts hope drugs that raise HDL ¬¬––which removes excess LDL from the bloodstream––could drive heart attack risk much lower.
Pfizer shares fell as low as $23.52 in early trade but later recovered to $24.60, down 11.7 percent, on the New York Stock Exchange. The stock's 12-month low is $20.27.
Shares of rival companies in the cholesterol market, including Schering-Plough Corp., Abbott Laboratories Inc., and AstraZeneca Plc, rose on the news that a formidable competitor had been eliminated.
Analysts expect Pfizer to move to shore up investor confidence by raising its dividend and accelerating its cost-cutting plans. New Chief Executive Jeffrey Kindler already had said he will announce Pfizer's long-term strategic plans in January.
The decision to scrap torcetrapib, announced on Saturday, took investors by surprise, although there had been concerns that the drug caused elevations in blood pressure, itself a major risk of heart disease.
In the 15,000-patient clinical trial, 82 patients taking the combination of torcetrapib and Lipitor died, compared to 51 taking Lipitor alone.
Pfizer said it stopped the trial only because of the torcetrapib results and that the data had no impact on the safety or efficacy of Lipitor, which has been on the market since 1997 and widely studied.
Just last week, at a meeting with industry analysts and money managers, Pfizer executives hailed the drug as potentially one of the most important medicines in a generation and that they hoped to seek U.S. approval for it next year.
Although torcetrapib is its biggest setback, Pfizer has seen other promising experimental drugs disappear from its pipeline in recent months.
Product disappointments have led Pfizer to end a joint development program with Akzo Nobel for the schizophrenia drug asenapine and drop out of a deal to develop a sleep drug with Neurocrine Biosciences Inc.
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