Allergan's Anti-Infective Drug Avycaz Receives Third FDA Nod

Allergan plc (NYSE:AGN) announced that the FDA has approved a label expansion of its anti-infective drug, Avycaz (ceftazidime and avibactam). With this nod, the drug is now approved for treatment of patients with hospital-acquired bacterial pneumonia and ventilator-associated bacterial pneumonia (HABP/VABP) due to gram-negative bacteria. This approval marks the third therapeutic indication for the drug in the United States.

Notably, Avycaz is marketed for treatment of complicated urinary tract infections (cUTI), including pyelonephritis, caused by designated susceptible pathogens consisting of certain Enterobacteriaceae and Pseudomonas aeruginosa. Avycaz is also indicated for curing adult patients with complicated intra-abdominal infections (cIAI) in combination with metronidazole.

We remind investors that the company’s supplemental New Drug Application (sNDA) for Avycaz was accepted by the FDA under priority review in October 2017 based on a preceding Qualified Infectious Disease Product designation for the aforementioned indication.

Importantly, Avycaz is the first gram-negative antibiotic approved in the United States to treat HABP/VABP in over 15 years.

Allergan’s shares have lost 22.2% in a year’s time, outperforming the industry’s decline of 24.4%.

The approval was based on non-inferiority data from a pivotal phase III REPROVE study, evaluating the safety and efficacy of Avycaz on adult patients with HABP/VABP. The trial met its primary endpoints and showed that the drug was non-inferior to meropenem, a broad-spectrum antibiotic, in reducing death risks irrespective of the cause.

The drug also showed in vitro (study in controlled environment outside human body) activity against certain gram-negative bacteria causing HABP/VABP.

Significantly, Avycaz is jointly marketed by Allergan and Pfizer (NYSE:PFE) . While Allergan has commercialization rights to Avycaz in North America, rights to the rest of the world are owned by Pfizer.

Avycaz raked in sales of $42.7 million in the nine months ending Sep 30, 2017, up 58.7% from the year-ago figure. The FDA approval for the expanded patient population should improve its commercial potential.

Per the company’s press release, HABP/VABP is the second most common type of nosocomial (hospital originated) infection in the United States, mainly in the intensive care unit. Hence, the potential market opportunity for Avycaz is huge in the country.

Apart from Avycaz, Allergan’s anti-infectives portfolio comprises antibiotics namely Teflaro and Dalvance.

Zacks Rank & Key Picks

Allergan carries a Zacks Rank #4 (Sell).

Two better-ranked stocks in the health care sector are XOMA Corporation (NASDAQ:XOMA) and Exelixis, Inc. (NASDAQ:EXEL) , both carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

XOMA’s loss per share estimates have narrowed from 99 cents to 42 cents for 2018 over the last 60 days. The company came up with an average beat of 47.92%. The stock has skyrocketed 624.9% in the last 12 months.

Exelixis’ earnings per share estimates have been revised upward from 72 cents to 77 cents for 2018 over the last 60 days. The company delivered a positive surprise in all the trailing four quarters with an average beat of 572.92%. Share price of the company has soared 64.1% in a year’s time.

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