business

Another Blockbuster Is Busted

Pfizer faces big trouble after confirming that Celebrex is linked to heightened cardiac risk. It can't win, says one analyst

By Amy Barrett

Pfizer (PFE ) is now feeling Merck's (MRK ) pain. On Dec. 17, the drug giant disclosed that a government-run study showed its $3 billion painkiller Celebrex is linked to an increased risk of heart attack. The finding comes just a few months after Merck pulled its similar painkiller Vioxx from the market following study results showing the drug doubled the risk of heart attack and stroke.

Although the data showing a link between Celebrex and heart attacks are less definitive than the Vioxx studies and the risk is lower, the latest news could well be the death knell for the so-called COX-2 class of painkillers.

Pfizer announced early the morning of Dec. 17 that a study conducted by the National Cancer Institute (NCI), to determine if Celebrex could lower the risk of colon cancer, found that when the drug was given at 400-milligram and 800-milligram doses, it increased the risk of heart attack or stroke by 2.5% over those on a placebo. The institute suspended the trial after discovering the increased risk. Pfizer pointed out that the dosage in the trial was two to four times higher than the recommended dose of 100 to 200 milligrams for osteoarthritis pain and the 200 to 400 milligrams for rheumatoid arthritis. Also, a second NCI study of the drug, at the 400 milligram dose, found no increased cardiovascular danger.

BEGINNING OF THE END?

  The stock market paid little heed to the conflicting results. Pfizer's stock price fell $3.46, or 11.9%, to $25.52. More than 246 million Pfizer shares traded hands by late afternoon, far outstripping the recent average daily volume of 33 million shares.

Analysts immediately began speculating that Celebrex, like Vioxx, may end up being pulled from the market. SG Cowen analyst Stephen M. Scala says he expects the drug either to be withdrawn or for sales to go to almost zero. That would knock 25 cents off Scala's earnings estimates for Pfizer over the next three years, putting earnings per share at about $2 for 2005 through 2007. Courtney Le Vine, analyst at Bernstein Research, concurs: "We think commercial prospects of Celebrex are done."

Physicians don't necessarily agree. Celebrex, which blocks a cell protein that's a key player in muscle pain, is an enormously popular drug. Although clinical trials have found it to be no more effective than ibuprofen, millions of patients swear by it -- and pain being a subjective condition, they may be right when they claim nothing else works.

NOT NECESSARILY VIOXX.

  "I don't believe it should be pulled," says Dr. Jacob Shani, chairman of the Cardiac Institute at Maimonides Medical Center in New York. These drugs "have a role to play for patients suffering from intractable pain, and as long as you understand the risks, and the Food & Drug Administration puts a stronger warning on the label, then doctors and patients should use their judgment."

Study results found Vioxx doubled the danger of heart attack, and safety concerns had been swirling around the drug for years. But an epidemiological study just published Dec. 6 by doctors at the University of Pennsylvania Medical School found a marked difference between Vioxx and Celebrex. Dr. Stephen Kimmel and colleagues found that the use of Vioxx was associated with a 2.72-higher chance of heart attack than use of Celebrex.

The COX-2s were originally developed to avoid the gastrointestinal bleeding often associated with more traditional pain relievers such as aspirin and ibuprofen. Kimmel, a cardiologist and associate professor of medicine at U-Penn, says although the new NCI studies suggest that some risk is associated with Celebrex, and probably all the COX-2s, the drug would still have benefits for patients with low cardiovascular risks and high risk of gastrointestinal bleeding. "But that does suggest a very narrow patient population," he added.

A CATCH-22.

  Still, Pfizer now confronts some tricky potential legal issues. Merck has already been hit with hundreds of lawsuits over Vioxx. Some analysts have estimated its legal tab could go as high as $25 billion. While there were numerous warning signs that Vioxx posed a cardiovascular risk, until now Celebrex studies had not shown a problem with this drug.

Some medical experts had contended all along that the problem with Vioxx extended to all COX-2 inhibitors, including Celebrex. If they're proven right, Pfizer could face massive legal liabilities. Trial lawyers are likely to argue that Pfizer should have known its drug might be dangerous as well. Sanford Bernstein analyst Richard Evans says the market's reaction on Dec. 17 indicates traders think Pfizer could be facing a legal problem comparable to Merck's. He figures both stocks now reflect a liability approaching $15 billion.

Pulling the drug may not help. Some industry experts say if Pfizer yanks Celebrex from the market, it'll look like an admission that it has been marketing a life-threatening product. That would certainly lead to an avalanche of lawsuits. But if Pfizer keeps selling the drug until more data come in, trial lawyers will argue that it continued to promote a drug that was shown to be dangerous. "Pfizer can't win," says SG Cowen's Scala.

HOPES IN THE PIPELINE.

  The bad news on Celebrex couldn't come at a worse time for Pfizer, with $52 billion in annual sales. It's facing patent expirations on some big drugs in the next few years, expirations that could affect $14 billion of revenues from 2005 to 2007. Pfizer is also in the midst of a legal battle with Indian drugmaker Ranbaxy over its $10 billion cholesterol-lowering drug Lipitor. Ranbaxy is seeking to knock down some key Lipitor patents. If the upstart is successful, generics of Lipitor could hit the market many years ahead of schedule -- a potentially crippling blow to Pfizer.

Pfizer's hopes for a rebound in the years ahead are tied to a promising drug in development. The company is developing a drug that raises HDL, or good cholesterol. Pfizer hopes to combine that drug in one pill with Lipitor. If successful, the combo product could be a megablockbuster. But that product is far from a sure thing -- and it's still many years away. That's why Pfizer's pain may just be starting.

With Catherine Arnst and Amy Tsao in New York

Barrett is BusinessWeek's Philadelphia bureau chief

Edited by Beth Belton

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