AstraZeneca Falls in London; FDA Panel Rebuffs Diabetes Drug
July 20th, 2011 // 12:54 pm @ jmpickett
AstraZeneca Plc (AZN), the U.K.’s second- biggest drugmaker, fell as much as 1.4 percent in London trading after failing to win the backing of a U.S. panel to sell an experimental diabetes treatment.
The effectiveness of the medicine, dapagliflozin, in reducing blood sugar doesn’t outweigh risks of bladder and breast cancer, advisers to the Food and Drug Administration said yesterday. London-based AstraZeneca and partner Bristol-Myers Squibb Co. (BMY) will work closely with the FDA, which they expect will decide whether to approve the drug by Oct. 28, the companies said.
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An FDA request for more research on cancer risk “could delay the drug from reaching the market for several years,†Jeffrey Holford of Jefferies International Ltd. in London, wrote today in a report. Such a study may be difficult to justify, given the drug’s limited sales potential, he said.
Yesterday’s vote was the first of two FDA decisions that AstraZeneca faces this week. Today, the agency rules on whether the company can sell the potential blockbuster drug Brilinta. The agency rejected the blood thinner in December and sought more data on the treatment. Analysts predict Brilinta will have sales of $1.4 billion in 2016, based on the average of six estimates compiled by Bloomberg.
Stock Drop
AstraZeneca declined 30 pence, or 1 percent, to 2,988.5 pence at 11:40 a.m. That pared the stock’s gain this year to 2.1 percent, valuing the manufacturer at 40.7 billion pounds ($65.8 billion.)
The FDA is likely to delay a decision on dapagliflozin beyond Oct. 28 as the regulator seeks more data, Tim Anderson, an analyst with Sanford C. Bernstein Ltd. in New York, wrote in a report.
The panel of outside advisers voted 9-6 yesterday in Silver Spring, Maryland, to reject the drug. The companies said in June that more bladder and breast cancers occurred in patients taking dapagliflozin instead of a placebo in trials. FDA staff also cited possible liver risks among “unexpected safety issues†in a preliminary review on July 15.
Sales of the drug, if approved, may reach $616 million for Bristol-Myers and $287 million for AstraZeneca in 2015, Jefferies’ Holford said in notes to investors this week before the vote. He has an “underperform†recommendation on AstraZeneca’s stock.
Dapagliflozin would be the first in a new class of treatments called SGLT2-inhibitors that work by letting patients excrete excess blood sugar in their urine. Johnson & Johnson, Eli Lilly & Co. (LLY), Boehringer Ingelheim GmbH, and Astellas Pharma Inc. are among the companies pursuing similar drugs.
The vote yesterday increases the pressure on AstraZeneca to succeed with Brilinta, said Navid Malik, an analyst with Matrix Corporate Capital LLP in London. The company faces increasing competition from generic medicines as patents on two of its biggest-selling drugs, Nexium for ulcers and antipsychotic medication Seroquel, will expire by 2014.
“At the moment it looks like there’s a heavy weight on Brilinta’s shoulders,†said Malik, who forecasts the treatment will have $1.5 billion of sales by 2015. “If it doesn’t get approved, it would be catastrophic†in terms of confidence in the company and its ability to deliver new blockbusters.
AstraZeneca also needs to make a “transforming deal†to offset some of its generic exposure, said Malik, who has a “reduce†rating on the stock.
The company has said it needs to generate between $4 billion and $6 billion in revenue by 2014 to meet its sales target range of $28 billion to $34 billion. If approved, dapagliflozin and Brilinta would account for $1.8 billion in combined revenue in 2016, according to estimates compiled by Bloomberg.
“At a time when the company is facing significant headwinds in its top line, there clearly is a need to deliver products from its pipeline,†Alistair Campbell, an analyst at Berenberg Bank, said by phone today.
