With FDA panel vote, J&J diabetes threat looms for Merck's Januvia

Johnson & Johnson ($JNJ) nabbed an FDA committee's support for its new diabetes drug, canagliflozin. Now dubbed Invokana, the treatment comes with some concerns about cardiovascular safety and diminished benefits in patients with kidney problems. But with the advisory committee's backing, it's obviously one big step closer to approval.

That's good for J&J, of course. It's not so good for Merck ($MRK), whose Januvia franchise would be directly in Invokana's sights. At the American Diabetes Association meeting last June, J&J rolled out data that showed Invokana regulates blood sugar better than Januvia. It also beat Januvia on weight loss. And Januvia is one of Merck's biggest earners, with $3.3 billion in annual sales.

If the FDA does approve Invokana, it may also offer Januvia something of an edge over the new drug. The committee lodged its concerns about Invokana's heart safety with an 8-7 vote recognizing those risks. And as The Wall Street Journal reports, some panel members recommended that patients with impaired kidneys be advised not to use the drug.

So, the agency may put restrictions on Invokana's use, or at least cautionary language on its label. That sort of red flag could prompt some second thoughts among doctors, making them more likely to stick with Januvia, a drug they know, reserving Invokana for patients who don't respond to the Merck treatment. Some analysts have said they figure on slow growth for the J&J drug, because of the safety worries; Wells Fargo Securities' Larry Biegelsen has pegged first-year sales at $122 million, with $667 million in 2016.

After the Avandia debacle--when studies concluded that the now severely restricted drug increased the risk of heart attack and other cardiovascular problems--the FDA is even more sensitive about any safety risks of proposed diabetes treatments. It declined to approve dapaglifozin, from Bristol-Myers Squibb ($BMY) and AstraZeneca ($AZN), last year, asking the companies for more data. (An advisory committee had voted against it, on worries about cancer risks and efficacy, too.  European regulators have since approved it, under the brand name Forxiga.)

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