Pfizer: A Hot Stock With New Blockbuster Breast Cancer Drug

I have written extensively on Pfizer (PFE) with a buy recommendation based on the proposition that its vast pipeline and promising portfolio of marketed assets are compelling reasons to accumulate shares. I also factored in the underlying risk to a Pfizer investment since, after all, the company is one of many expected to suffer from patent expirations and lackluster performance.

Undoubtedly, these issues have continued to threaten Pfizer's top-line growth, warranting concern over its future prospects. As such, it is vital for Pfizer to expand its portfolio of marketed assets in order for it to grow during this difficult period. The FDA approval for palbociclib, which unexpectedly came only a month after Pfizer commenced labeling discussions with the agency, is a crucial step in securing this goal. Case in point, it is expected that palbociclib will generate annual sales as high as $3 billion-$4 billion by 2020.

I believe the FDA approval for palbociclib in advanced breast cancer is certainly encouraging, given the enormous opportunity that awaits it. In particular, the treatment costs $9,850 a month, or $118,200 per year, with 120,000 eligible patients. And if that market opportunity isn't enough to entice investors, consider the fact that the drug's revenue potential is not solely confined to one indication. Pfizer is currently conducting four breast cancer Phase 3 studies: one for first-line advanced, two for recurrent, and one in early. Two of these studies should be completed next year. In my opinion, the approval should, to some extent, validate these additional efforts. And if the clinical studies show similar potential to palbociclib in advanced breast cancer, we could see similar regulatory actions to accelerate the review process in these expanded therapeutic indications.

What is my takeaway? Go long on Pfizer and check back in five years. I'm confident that you'll like what you'll see.