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JAK Inhibitors' Prospects Strong: 4 Stocks Ruling the Space

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There is no approved therapy that can completely cure autoimmune or inflammatory diseases. The development of new treatment technologies is ongoing. Meanwhile, it is difficult to control autoimmune diseases in the majority of patients. The newest class of medications to treat these diseases is janus kinase (“JAK”) inhibitors, which are providing patients a better treatment option. This class of therapies has generated significant interest due to their better efficacy compared to tumor necrosis factor (“TNF”) inhibitor therapies.

Autoimmune Diseases

In patients with autoimmune diseases, the body’s immune system mistakenly attacks the healthy cells. Scientists are yet to find the reason behind this abnormality. However, the incidence of autoimmune diseases is on the rise. There are multiple types of autoimmune diseases including rheumatoid arthritis (“RA”), psoriasis, multiple sclerosis (“MS”), inflammatory bowel disease (“IBD”), etc. Several companies are dedicated to bringing better drugs for the treatment of these diseases. The symptoms include fatigue, muscle aches, swelling, and redness in the affected body parts.

The most common and first-line treatment for autoimmune disease is disease modifying anti-rheumatic drugs (DMARDs), especially methotrexate. Apart from methotrexate, there are several classes of DMARDs including TNF inhibitor therapies approved for these diseases that are performing well. AbbVie’s (ABBV - Free Report) Humira and Amgen’s (AMGN - Free Report) Enbrel are blockbuster TNF inhibitor drugs among others. However, these treatments have serious safety issues which include increased risk tuberculosis and lymphoma among others.

JAK Inhibitors

Several pharma companies are developing JAK inhibitors, which work by blocking a particular signal of a body’s immune response, cytokines, instead of suppressing the immune system as done by DMARDs. Patients treated with JAK-inhibitors in clinical studies have shown faster and better response to the disease. However, the safety concern still looms large. The segment is attractive for companies as there are only two JAK inhibitors, presently approved for the treatment of autoimmune diseases, especially RA. However, several companies are developing their candidates, which is likely to increase competition going forward.

The segment was in news recently as Eli Lilly’s (LLY - Free Report) Olumiant, a JAK inhibitor, received approval in the United States and AbbVie (ABBV - Free Report) announced top-line data from a late-stage study evaluating its JAK inhibitor candidate,upadacitinib.

4 Pharma/Biotech Companies in Focus

Given the growing interest in JAK inhibitors, let’s take a look at some pharma and biotech companies that are looking to change the way autoimmune diseases are treated.

Pfizer’s (PFE - Free Report) Xeljanz (tofacitinib) is the first approved JAK-inhibitor in the United States for the treatment of RA. It has been available in the market since 2012. The drug is also approved for psoriatic arthritis. It generated sales of $326 million in the first quarter of 2018, up 30.4% year over year. A regulatory application seeking line extension of the drug in ulcerative colitis was approved late last month in the United States. Regulatory applications seeking approval in the above three indications are under review in Europe.

The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Eli Lilly’s JAK-inhibitor, Olumiant (baricitinib), is the second drug to receive approval for treating RA in the United States. The drug was approved early this month. However, it was launched in certain European countries in 2017. We note that the FDA rejected the company’s new drug application seeking approval of Olumiant in April 2017 citing safety concerns. Lilly develops and commercializes the drug in partnership with Incyte Corporation. The drug generated sales of $32.2 million in the first quarter, sequentially up 40%. Lilly is currently evaluating the drug in another autoimmune indication, atopic dermatitis (eczema), in a late-stage study.

The company currently carries a Zacks Rank #2 (Buy).

AbbVie is another company, which is focused on developing JAK inhibitor based treatments. The company’s JAK inhibitor, upadacitinib, showed promising results in late-stage studies evaluating the candidate in RA patients. It is also being developed for atopic dermatitis in a late-stage study for which it enjoys breakthrough therapy status in the United States. Another late-stage study is evaluating the candidate in Crohn’s disease.

The company currently carries a Zacks Rank #3.

Galapagos NV (GLPG - Free Report) is developing its JAK inhibitor candidate, filgotinib, in collaboration with Gilead Sciences, Inc. (GILD - Free Report) . Separate late-stage studies are evaluating the candidate in RA, Crohn's disease and ulcerative colitis. Moreover, several mid-stage studies are evaluating the candidate in multiple autoimmune indications including ankylosing spondylitis, psoriatic arthritis and cutaneous lupus erythematosus among others. Data from a mid-stageI study evaluating filgotinib in psoriatic arthritis showed significant improvement in patients.

The company currently carries a Zacks Rank #3.

Prospects of JAK Inhibitors

With several blockbuster DMARDs nearing patent expiration, this new class of drugs holds potential to replace the existing treatments. This boosts the prospects of the companies that have these drugs/candidates in their pipeline or commercial portfolio.

However, JAK inhibitors also have several side effects, which may delay their approval. We note that a lower dose of Lilly’s Olumiant was approved along with a boxed warning stating risk of serious infections, malignancies and thrombosis.

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