Bayer AG (BAYN) fell in trading after U.S. regulators recommended that the blood thinner Xarelto it markets with Johnson & Johnson (JNJ) not be approved to prevent stroke in people with the most common abnormal heart rhythm.
The Food and Drug Administration said in a staff report released today that “there is insufficient information about the drug to determine whether it is safe for use with its proposed labeling.” An advisory panel of outside authorities will meet Sept. 8 to discuss the new use of the drug, chemically known as rivaroxaban. The FDA may decide by Nov. 5 and isn’t required to follow panel recommendations.
Bayer fell 3.08 euros, or 7.5 percent, to 37.75 euros at the 5:30 p.m. close of trading in Frankfurt. The decline was the biggest since March 17, 2009. J&J rose 57 cents, or 0.9 percent, to $64.64 at 4 p.m. in New York; the company is “confident in the effectiveness of rivaroxaban to prevent strokes in patients with atrial fibrillation,” Ernie Knewitz, a spokesman, said in an e-mail.
The irregular heart condition known as atrial fibrillation affects more than 2 million Americans, according to the American Heart Association. Bayer, based in Leverkusen, Germany, and New Brunswick, New Jersey-based J&J won approval July 1 to market the drug for prevention of blood clots after knee or hip replacement surgery.
Physicians for the past half-century have used the drug warfarin that requires constant monitoring and dose adjustments to prevent stroke in atrial fibrillation patients, according to the New England Journal of Medicine.
Xarelto would compete with Boehringer Ingelheim GmbH’s Pradaxa, approved by the FDA for the heart patients in October, and Pfizer Inc. (PFE) and Bristol-Myers Squibb Co. (BMY)’s apixaban, known as Eliquis, now being tested in clinical trials.
If the companies can overcome the FDA’s concerns, Xarelto would probably not be superior to warfarin, a step down from its potential competitors, and may be restricted to high-risk patients, Mark Purcell, an analyst with Barclays Capital Group in London, said in a note to clients today.
“Even if approved somehow, Xarelto would likely be a commercial failure” in the atrial fibrillation population in the U.S., he wrote.
Further study on Xarelto may take two years, said Richard Logan, an analyst with Goldman Sachs International in London.
“By this point, Boehringer-Ingelheim’s Pradaxa drug would likely be the standard of care, which could create a tougher hurdle rate for Bayer,” Logan wrote in a note to clients today.
The FDA staff said its first concern is that warfarin was not adequately used in the Xarelto study, potentially giving Xarelto an unfair advantage in comparison. Staff also cited concern with excess strokes in patients using Xarelto who transitioned to warfarin.
The FDA staff recommended J&J and Bayer conduct another trial to study a transition regimen.
“This is not the final FDA assessment,” Alexander Siedler, a spokesman for Bayer said in a telephone interview. “We still have time to work with the FDA to satisfy the information needs they have.”
The new compounds eliminate the need for routine blood tests. Eliquis probably will lead the market, analysts said, after researchers presented “best-in-class” study results Aug. 28 at the European Society of Cardiology’s conference in Paris.
The pill had a 31 percent lower risk of major bleeding, a safety concern with blood thinners, compared with warfarin and an 11 percent reduced risk of dying, the first time a warfarin replacement has saved lives in a clinical trial.
In a study of 14,264 patients, 188 patients taking Xarelto suffered a stroke or artery obstruction compared with 241 taking warfarin, according to results published in the New England Journal of Medicine. Rates of major bleeding were similar in the Xarelto and warfarin groups. Slightly more patients on Xarelto experienced non-major bleeding, 1,475 compared with 1,449 on warfarin.
The comparison group of patients given warfarin during the study was in the recommended treatment range just 55 percent of the time. In separate studies of Xarelto’s rivals, the comparison groups on warfarin did better, with patients remaining in the therapeutic window 64 percent of the time during the Pradaxa trial and 62 percent in the apixaban trial.
The journal said Xarelto was tested on higher-risk patients.
Pradaxa and apixaban are given twice daily while Xarelto is taken once a day. U.S. sales of Xarelto will reach $1.2 billion by 2015, Larry Biegelsen, a senior analyst with Wells Fargo Securities in New York, wrote in a Sept. 1 note to clients.
The advisory panel will probably discuss the percentage of time Xarelto was in the therapeutic range, as well as data that showed a high number of patients who stopped taking it and switched to warfarin suffered a stroke, said Seamus Fernandez, an analyst with Leerink Swan in Boston, in a Sept. 1 note to clients.
The questions the FDA presented today for the panel to discuss are less severe than the staff report and take into account the sicker patient population studied with Xarelto, Matthew Dodds, an analyst with Citigroup Global Markets Inc. in New York, said in a note to clients today.
Biegelsen didn’t expect the panel to recommend Xarelto be declared superior over warfarin.
J&J holds the rights to sell Xarelto in the U.S. Bayer sells the drug in Europe where it won approval in 2008 for use in knee- and hip-surgery patients.
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