Pfizer's Viagra Makes for Crowded PAH Market

Smaller firms developing pulmonary arterial hypertension drugs are hearing the industry giant's footsteps.
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Pfizer's

(PFE) - Get Report

impotence drug Viagra also appears to help patients suffering from pulmonary arterial hypertension, according to data from a phase III study presented Wednesday at a scientific meeting.

Patients with pulmonary arterial hypertension, or PAH, who took Viagra were able to improve the distance they walked in six minutes by 46 meters compared with patients given a placebo -- a statistically significant improvement, according to data presented at the CHEST 2004 Congress medical meeting in Seattle.

PAH is a

serious medical condition caused by high blood pressure in the arteries connecting the lungs with the heart, resulting in shortness of breath, fatigue and eventually weakening of the heart.

As an impotence treatment, Viagra racked up 2003 U.S. sales of $1.1 billion. Given Pfizer's size, the addition of potentially hundreds of millions of dollars in PAH sales isn't likely to have a big impact on the company's bottom line.

But PAH is believed to be a relatively undertreated condition, so the entry of a marketing goliath like Pfizer will likely have an outsized impact -- both positive and negative -- on smaller biotech firms developing their own PAH drugs.

Wachovia analyst Martin Auster believes Swiss biotech firm

Acetelion

, which makes Tracleer, the only oral PAH drug currently approved in the U.S., could be hurt by Viagra's entry into the market. In Actelion's registration study, Tracleer patients showed an approximate 40-meter improvement in a six-minute walk.

"With Viagra's comparable efficacy to that of Tracleer, its safer toxicity profile and roughly half the cost of Tracleer, we expect Viagra will assume Tracleer's spot as front-line monotherapy in treating Class II

PAH patients and many Class III PAH patients and also serve to significantly expand the addressable PAH patient base," Auster wrote in a flash note released after the Viagra data were presented. Auster doesn't cover Pfizer or Actelion.

In addition,

Encysive Pharmaceuticals

(ENCY)

is developing its own PAH drug called Thelin, which is in the process of completing two phase III clinical trials. CEO Bruce Given, reached at the CHEST meeting, says Viagra appears to have comparable efficacy in PAH to the so-called endothelial receptor antagonists (ETRA), a class of drugs that includes Tracleer and Thelin.

"I don't really consider Viagra a competitor to Thelin because I think the PAH market is moving toward combination therapy," says Given. A small percentage of PAH patients are currently treated with a combination of Viagra and Tracleer. Given believes that the use of combination therapy will increase as new ETRA drugs are approved and clinical studies testing various combinations are conducted.

Wachovia's Auster, in his research note, reiterated his outperform rating on Encysive, believing the stock's current price accurately reflected positive Viagra data. Auster's firm has a banking relationship with the company.

But Tuesday, Brean Murray analyst Jon Aschoff downgraded Encysive to hold from buy on concerns that positive Viagra data would undercut Thelin's peak market potential, or at least slow its sales ramp once the drug launches. Aschoff's firm doesn't have a banking relationship with the company.

Encysive shares were up 74 cents, or 10%, to $8.23 in recent trading.

Myogen

(MYOG)

, which is also developing its own PAH drug called ambrisentan, was up 44 cents, or 5%, to $8.64.