Even if FDA approves Xarelto, Pradaxa could still gain

Boehringer Ingelheim may well have started celebrating earlier this week when the FDA gave a black eye to Bayer ($BAYN) and Johnson & Johnson's ($JNJ) potential competitor to its anticoagulant Pradaxa. And no wonder: The FDA review, in advance of yesterday's advisory committee meeting, raked Xarelto over the coals and questioned data on both its safety and efficacy in preventing stroke in atrial fibrillation patients. And as the first in a wave of warfarin-alternative drugs to hit the market--but perhaps not the best, given recent data on Pfizer ($PFE) and Bristol-Myers Squibb's ($BMY) version, Eliquis--Pradaxa can use all the alone time it can get.

But BI has no doubt stopped the party--or at least taken it down a few notches. The FDA's expert panel voted 9-2 to recommend approval for Xarelto in spite of their reservations about the Rocket-AF trial. The panelists took issue with the trial's warfarin arm, for instance, saying patients on the old-standard blood thinner might not have been managed well enough, which in turn would have exaggerated Xarelto's comparative effect. Some panelists questioned Xarelto's proposed dosing. Others want the companies to generate more data on the safety of switching Xarelto patients to warfarin, if necessary. And the entire panel voted against allowing Xarelto to be marketed as superior to warfarin.

Now, the FDA doesn't have to follow its advisory committee's advice, although it usually does. And even if the agency decides to approve Xarelto, it could heed the advice of some panelists--and its own reviewers--who said the drug might be best used as a second- or even third-line treatment. "The recommendation for approval is potentially a Pyrrhic victory," Barclays Capital analyst Mark Purcell wrote in a note to clients (as quoted by Bloomberg). "The FDA may very well opt for a label that restricts Xarelto to a small part of the market."

If that's the case, then BI's Pradaxa would maintain its solo advantage, at least for awhile. The company said 300,000 people have been prescribed the drug so far. And in the long term, even if Xarelto gets the FDA nod, Pradaxa may keep a bigger share than it otherwise might; Morningstar is now predicting Xarelto would get only 10% of the warfarin-alternative market, rather than the 15% previously expected. Meanwhile, Bayer said it could meet its $2.8 billion peak-sales target without the U.S. atrial fibrillation market if necessary because it expects such strong sales outside the country. J&J has marketing rights in the U.S., with a 30% royalty to Bayer.

- see the Bloomberg story
- read the Reuters news