Bayer Drops as Rival’s Study Triggers Xarelto Estimate Cuts

Bayer AG (BAYN) fell the most in more than two years in Frankfurt trading after a rival to its Xarelto blood thinner outperformed in a study, prompting analysts to slash their sales estimates for the German drugmaker’s product.

Bayer dropped 6.3 percent, or 3.63 euros, the biggest decline since March 2009, and closed at 54.40 euros.

Pfizer Inc. (PFE) and Bristol-Myers Squibb Co. (BMY) yesterday published details of a study that positions their experimental drug apixaban, expected to lag Xarelto, as a potential leader in the $7 billion market for warding off strokes in patients with a condition known as atrial fibrillation. The research shifts the balance of power among the three competitors vying to replace warfarin, a 50-year-old medicine first used as rat poison.

“All is not lost for Xarelto,” Alistair Campbell, an analyst at Berenberg Bank in London, wrote today in a note to clients. “But it seems prudent to revisit our market share assumptions.” Campbell cut his peak annual sales estimate for the drug to $1.9 billion from $4.3 billion. He described Xarelto as “the most important pipeline drug and the main catalyst” for Bayer’s share price this year.

The Leverkusen, Germany-based company’s peak sales forecast of more than 2 billion euros ($2.85 billion) remains unchanged and Bayer is confident that the medicine will be “an effective option,” said spokesman Oliver Renner. Bayer markets the drug with New Brunswick, New Jersey-based Johnson & Johnson. (JNJ)

Merger Question

“Clearly this is not a good day for Bayer, but the debate now is about whether it becomes a very big product or merely a big product,” said Jack Scannell, a London-based analyst for Sanford C. Bernstein & Co. “It’s nothing like the kind of terrible situation where you have thousands of reps selling a product that suddenly turned out to be dangerous.”

It’s too early to say whether competition from apixaban will put pressure on Bayer to use acquisitions to build its pharmaceutical unit, Scannell said. He rates Bayer’s shares “market-perform.”

Bayer Chief Executive Officer Marijn Dekkers said in May the company would be open to a merger of equals to strengthen its health-care unit without paying a premium for a large acquisition. Bayer is relying on its two chemical units to drive growth this year, forecasting that revenue gains at the drug division will lag the market.

Bayer has declined 1.6 percent so far this year, trailing the 2.2 percent rise in the Bloomberg index that tracks 18 European drugmakers.

‘Ideal Drug Profile’

Pfizer and Bristol-Myers said that apixaban prevented more strokes with less major bleeding than traditional treatment in a study of patients with irregular heartbeats. Pfizer and Bristol- Myers plan to file for regulatory approval in the U.S. and Europe by year’s end, the New York-based companies said yesterday in a statement summarizing the data.

“As it stands today, we have to assume apixaban may well have come closest to the ideal drug profile,” Campbell said. He cut his recommendation on Bayer shares to “hold” from “buy.”

Both Xarelto and apixaban will compete for irregular heartbeat patients against Boehringer Ingelheim GmbH’s Pradaxa, approved last year, in the contest to replace warfarin, a sensitive medicine that requires regular laboratory tests to ensure patients get the proper dose.

Xarelto awaits U.S. and European approval in atrial fibrillation, an irregular heartbeat condition that puts patients at a higher risk for strokes. The Food and Drug Administration is expected to rule next month on the blood thinner for orthopedic surgery patients, a smaller market.

Aristotle Study

Apixaban has been shown effective in treating the minority of patients who aren’t candidates for warfarin, according to results published in the March 3 New England Journal of Medicine. It is better than aspirin in preventing strokes in these patients, the study found.

The new study, called Aristotle, compared twice-daily apixaban to warfarin in 18,206 patients with atrial fibrillation, according to a March 2010 description of the trial in American Heart Journal. The drug met its primary goal of showing apixaban wasn’t inferior to warfarin in preventing strokes and clots that cause blood-vessel blockages.

It also was successful in two secondary goals: the drug was more effective than warfarin and led to fewer cases of major bleeding, Pfizer and Bristol-Myers said in yesterday’s statement. Pradaxa, the rival from Boehringer, was more effective than warfarin with similar bleeding at a high dose and as effective as warfarin with less bleeding at a lower dose. Apixaban was more effective and safer, the companies said.

Spokesmen for Pfizer and Bristol-Myers declined to provide additional details about the study results. The findings will be presented at the European Society of Cardiology meeting in Paris in August.

To contact the reporters on this story: Naomi Kresge in Berlin at nkresge@bloomberg.net Michelle Fay Cortez in Minneapolis at mcortez@bloomberg.net

To contact the editor responsible for this story: Phil Serafino at pserafino@bloomberg.net

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