NEW YORK (TheStreet) -- Pharmacyclics (PCYC) has been an interesting bull/bear stock this year as investors debate the long term potential of Imbruvica in B-cell malignancies. Imbruvica is clearly a marked improvement from the standard of care but the question is how will it wrestle market share from well-established treatments and fend off competition from fast followers such as Gilead Sciences' (GILD - Get Report) Zydelig and Abbvie's (ABBV - Get Report) ABT-199.
Imbruvica sales to date have exceeded Wall Street consensus expectations, but the drug is competing against older and less effective therapies.
The recent FDA approval of Gilead's Zydelig was actually a positive for Pharmacyclics and Imbruvica. The Zydelig label contains a black box safety warning that is worse than expectations for severe diarrhea, pneumonitis and intestinal perforation. In contrast, Imbruvica's label is clean from a safety perspective and was recently expanded to include additional indications. Judging the labels side by side, Zydelig should have a tougher time competing against Imbruvica than previously expected.
Helping Pharmacyclics further: Imbruvica has a total cost advantage over Zydelig because it must be combined with Roche's Rituxan. Imbruvica is used on its own.
Looking a couple of years down the road, Imbruvica faces potentially formidable competition from Abbvie's ABT-199, which appears more potent but also carries added toxicity concerns. It is not clear at this point how the market will shake out between the two drugs (do you put a preference on efficacy with additional toxicity or prefer a clearly active agent that is more tolerable?) so this will continue to be a hot topic of debate and contention.
Of course, even if Imbruvica is able to keep an edge on ABT-199, coming next will be competition from a slew of CAR-T therapies, which might further raise the efficacy bar with perhaps even more acute toxicity issues than ABT-199. At this point, it is impossible to know exactly how the future treatment paradigms will develop but given its current usage and the toxicities highlighted in the Zydelig label, Imbruvica will be an important part of the treatment landscape for blood cancers.
Sobek is long Gilead, Abbvie, and Pharmacyclics.