Hypertension At Bristol Myers

Withdrawal of a crucial new drug rocks the company

To Wall Street, it looked like a sure bet. A Food & Drug Administration panel was set to meet on May 1 to decide whether to recommend approval of Bristol-Myers Squibb Co.'s new super-powerful hypertension drug Vanlev. The FDA had already granted the drug an accelerated review, giving investors confidence that it would get the agency's O.K. and be on the market later this year. And analysts such as SG Cowen Securities Corp.'s Stephen M. Scala were expecting Vanlev to be a blockbuster, racking up sales of $2 billion by 2003.

On Apr. 19, however, that sure thing became a big question mark. Just one day after taking out a full-page ad on hypertension in The New York Times, Bristol made a stunning announcement: it was pulling the FDA filing for Vanlev in light of questions about a potentially life-threatening side effect. While the company says it plans to refile early next year, there is no guarantee that the drug will win approval. Even if it does, analysts say side-effect fears may put Bristol at a major disadvantage to such competitors as Merck & Co. and Pfizer Inc., which sell competing drugs. And that could eventually prompt the weakened company to seek a merger. Bristol's stock dove 22.6%, to close Apr. 19 at $50.44.

The slide reflects worries that the Vanlev debacle could clamp Bristol revenues. Cowen's Scala figures a one-year delay in Vanlev's rollout could cut earnings-per-share growth from 13% a year to 11% over the next four years. If the drug fails altogether, that growth rate could slip to 9%. The setback comes as some of the company's key drugs, including the $1.5 billion anticancer treatment Taxol, could face greater competitive pressure.

What's more, Bristol last month withdrew its application for FDA approval of a new colon cancer drug, UFT, to allow for more FDA data review. The latest setback may force Bristol Chairman and Chief Executive Officer Charles A. Heimbold Jr., to consider a merger with a rival such as Eli Lilly & Co. or Schering-Plough Corp. "But their attractiveness just dropped quite a bit," says Dr. John Borzilleri, an analyst at State Street Research & Management Co. His firm recently sold Bristol stock, partly on fears of its dependence on Vanlev.

A Bristol spokesperson says the company would consider a merger. But she maintains that the Vanlev situation doesn't affect the likelihood of a deal.

The side effect that derailed Vanlev is called angioedema. It's a rare but potentially dangerous condition--involving swelling of the face, throat, and tongue--that has been seen in some patients taking a class of blood-pressure drugs that includes Merck's $2.3 billion-in-sales Vasotec. The FDA worried that the side effect might be more frequent and severe in patients taking Vanlev. Dr. Andrew G. Bodnar, a Bristol vice-president of corporate development, says data show that angioedema may be less of a problem when patients start on low doses of Vanlev and gradually move to higher levels. "We will do the definitive trial to confirm that," Bodnar says.

Hypertension at Bristol-Myers

The bad news on Vanlev comes after months of mounting excitement about the drug and expectations of a fierce marketing war. Vanlev works by blocking two enzymes, neutral endopeptidase and angiotensin converting enzyme, both of which contribute to the narrowing of blood vessels. That dual action seems to give Vanlev its power. Studies show that it lowers blood pressure about 40% more than some competing drugs. Physicians note that Vanlev is particularly effective at lowering systolic blood pressure--the top number in a blood pressure reading, which measures pressure when the heart is contracting. Research has shown high systolic blood pressure to be more dangerous than previously thought.

The bad news on Vanlev is good news for Merck and Pfizer. In addition to Vasotec, Merck also sells the $1.4 billion hypertension drug Cozaar, while Pfizer markets the $3 billion Norvasc. Even if Vanlev does ultimately win FDA approval, Merck and Pfizer may try to exploit fears of side effects. Forget the plans for a marketing battle. Bristol is now in for a fight over Vanlev's life.

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