Pharmacyclics Has Edge Over Blood Cancer Competitors

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) Zydelig and Abbvie's (ABBV) 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.

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