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Johnson & Johnson Setback Is Positive for Pfizer, Bristol-Myers

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FDA advisers say J&J's blood thinner Xarelto shouldn't be approved for additional use. Pfizer, Bristol-Myers await word on market clearance for rival drug Eliquis.

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MINYANVILLE ORIGINAL In a surprise setback, Johnson & Johnson (JNJ) failed to win the support of government advisers who were analyzing possible expanded use of blood thinner Xarelto, an important drug for the big company. The advisers felt there was incomplete study data to show the benefit of the treatment.

By a vote of 4-6, a panel of expert advisers to the Food and Drug Administration said Xarelto shouldn't be approved for prevention of heart attacks and strokes for people with a history of heart problems. The rejection comes despite a recommendation from FDA staff to approve the new indication. (See Johnson & Johnson's Xarelto Should Be Given to More Patients, FDA Staff Says.) Xarelto is approved to help prevent strokes in people with a history of irregular heartbeats and to stop blood clots in patients who have knee or hip replacements.

J&J shares rose less than 1% in morning trading Thursday. The stock is down 4% this year.

Bad news for J&J is good news for Pfizer (PFE) and Bristol-Myers Squibb (BMY). Those companies are developing a rival to Xarelto called Eliquis and a decision is expected on that product's first US approval late next month. Pfizer and Bristol-Myers are hoping Eliquis can be a blockbuster drug. The companies expect word from the FDA by June 28 for market clearance to sell Eliquis for stroke prevention in the US. The drug already is approved in Europe. (The FDA is supposed to decide by June 29 whether to approve Xarelto's new use.)

J&J, its development partner Bayer, Pfizer, and Bristol-Myers are chasing rival Boehringer Ingelheim, which began selling Pradaxa in the US last year. All these companies aim to replace the common standard of therapy, warfarin, which is a drug used for decades. Warfarin also has serious side effects, including life-threatening bleeding.

Even though it's not yet approved, there's sentiment in the medical and investor communities that Eliquis has a better risk-benefit profile than the other drugs, therefore making it a potential market leader.

"Eliquis will be a market leader, if it successfully positions itself as having the most attractive bleeding profile and superior mortality result," Credit Suisse analyst Catherine Arnold says in a recent note.

An Eliquis approval and launch will be one of the major catalysts for Pfizer's stock this year, says ISI Group analyst Mark Schoenebaum.

Pfizer needs to bring new drugs to market as it shrinks in size through divestitures to focus on its core pharmaceutical business. (See Pfizer Plan to Buy Stock, Raise Dividends Overshadows Growth Strategy.) Shares of Pfizer rose less than 1% to $22.16 Thursday morning. The stock is up 2% this year.

Likewise, Eliquis is an important product for Bristol-Myers, which like Pfizer and other big drug makers needs to find new medicines for aging blockbusters facing generic competition. In fact, Bristol-Myers' older blood-thinning drug Plavix is now subject to generic competition. Last week, the FDA signed off on new generic copies of the drug made by a number of companies, including Teva Pharmaceutical Industries (TEVA) and Mylan (MYL).

Shares of Bristol-Myers rose more than 1% to $32.93 Thursday morning. The shares are down 7% this year.

Wall Street analysts expect Eliquis will be approved and now that J&J has a negative vote from FDA advisers, the odds are that Xarelto's use won't be expanded next month. (Eliquis didn't face an FDA panel.) Assuming Eliquis is approved, the drug will likely gain some traction if the FDA does indeed reject the new use for Xarelto, Leerink Swann analyst Seamus Fernandez says.

Fernandez predicts that Xarelto will eventually be approved for the additional use but it may take a year to get the FDA clearance.

"Most panelists agreed that more complete follow-up would significantly enhance confidence in the data," Fernandez says.

Twitter: @brettchase

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