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Analyst Blog

Most companies in the pharma/biotech space spend heavily in developing their pipelines. Successful development and subsequent commercialization of pipeline candidates augment their top line. Positive pipeline related news have the potential to cause stock price appreciation. Similarly, pipeline setbacks can deflate a stock.

Earlier in the week, GlaxoSmithKline (GSK - Analyst Report) suffered a pipeline setback when its cardiovascular candidate darapladib performed disappointingly in a phase III study (SOLID-TIMI 52: n>13,000). The study evaluated the efficacy of the candidate (as a combination therapy) versus placebo in adults after an acute coronary syndrome. Top-line results from the study revealed that darapladib failed to attain the study’s primary objective of reducing major coronary events compared to placebo on being added to the standard of care. Glaxo will present detailed data from the study at a medical conference later.

We note that this is the second event-driven phase III study on darapladib in coronary heart disease. We remind investors that in Nov 2013, Glaxo had announced disappointing top-line data from the first study (STABILITY) as well.

Data from that study had revealed that treatment with darapladib did not cause a statistically significant reduction in major adverse cardiovascular events (comprised of cardiovascular death, myocardial infarction and stroke) versus placebo in CHD patients, thus failing to meet the study’s primary endpoint. Darapladib became a part of Glaxo’s portfolio through its Aug 2012 acquisition of Human Genome.

Glaxo’s top line is under pressure with sales of many of its key products dwindling due to generic competition. In such a scenario, pipeline setbacks like the one on darapladib further add to the woes of the company.

Glaxo carries a Zacks Rank #3 (Hold). Stocks like Allergan (AGN - Analyst Report), Gilead Sciences (GILD - Analyst Report) and Alexion Pharmaceuticals (ALXN - Analyst Report) are better ranked in the health care space. While Allergan and Gilead are Zacks Rank #1 (Strong Buy) stocks, Alexion holds a Zacks Rank #2 (Buy).

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