Novartis AG (NOVN) failed to win backing from European regulators for its serelaxin treatment for acute heart failure, a product the company still says has the potential for $1 billion in annual sales.
It wasn’t clear whether the drug’s effects would be of clinical importance, the European Medicines Agency’s Committee for Medicinal Products for Human Use said in a statement today. The committee also cited concerns about how a patient trial was run and how data was analyzed. Novartis said it will file a new application seeking approval to begin marketing the drug on the condition that it undergo another review once a bigger trial begun in September is finished.
The panel’s decision slows Novartis’s plan to build a portfolio of heart-failure drugs around serelaxin, a man-made version of a hormone found in pregnant women, and the experimental compound LCZ696. The Basel, Switzerland-based drugmaker needs to replenish its product line-up as the heart medicine Diovan and cancer treatment Gleevec, its biggest sellers, start to lose patent protection. The two made up about $9.1 billion of Novartis’s $56.7 billion in 2012 revenue.
“The setback in Europe is only a modest negative,” Tim Anderson, a New York-based analyst for Sanford C. Bernstein & Co., wrote in a note to investors today. “The company has generally been more bullish than investors on this drug’s prospects, and while EU regulators may have issued a negative opinion, in the U.S. approval seems more likely.”
Seventy percent of the $1.1 billion in sales Anderson predicted for the drug in 2020 may come from the U.S., the analyst wrote. He rates Novartis’s shares “outperform.”
Novartis fell 1.5 percent to 72.60 Swiss francs at 2:01 p.m. in Zurich trading.
The drug won “breakthrough” status from U.S. regulators in June, raising the prospect of an expedited approval from the Food and Drug Administration.
Today’s delay means regulatory reviews could conclude in May in both the European Union and the U.S., Novartis said.
CHMP members told Novartis a conditional approval would have a much greater likelihood of success, David Epstein, division head of Novartis Pharmaceuticals, said in a conference call with reporters. The board may see a “clear value of bringing such a therapy to market” under a conditional agreement, he said in a presentation to investors and analysts.
The company will provide new data analysis when it files the next application with the London-based agency, something Epstein said will happen within weeks. The delay is “not particularly meaningful,” he said.
Serelaxin still has the potential to generate sales of more than $1 billion a year, Epstein said. That’s the threshold for what’s known in the industry as a blockbuster drug. Had the drug been successful today, it would have been sold under the brand name Reasanz.
“We would expect the sales to initially be modest and then really take off after the second clinical trial confirms the mortality benefit,” Epstein said.
Pfizer Inc. (PFE)’s kidney cancer drug Sutent may provide a model for the short-term potential of serelaxin if it gets conditional approval, Bloomberg Industries analysts Asthika Goonewardene and Sam Fazeli wrote in a report. Sutent won conditional approval in Europe in 2006 and full approval the following year.
The EMA committee also recommended that Novartis be allowed to market the drug Xolair as an add-on therapy for the treatment of chronic spontaneous urticaria, a skin condition, for patients who don’t respond to another medicine. The European Commission usually follows the committee’s recommendations.
For Related News and Information: Novartis Pregnancy Hormone Seen Lessening Heart Failures: Health
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