Biotech Values

[DewDiligence]

Additional color on NVS’ Prexige withdrawal:

[In Europe, Prexige is in the unusual position of being approved in the U.K. but not in the rest of the EU. In light of the EMEA’s decision to review the safety of all Cox-2 inhibitors following the Vioxx withdrawal, NVS has withdrawn the Prexige application for EU-wide approval using the “mutual recognition” procedure.]

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Novartis withdraws EU approval request for Prexige

ZURICH, Nov 30 (Reuters) - Novartis AG (NOVN.VX: Quote, Profile, Research) has temporarily withdrawn its application for EU approval of its new-generation painkiller Prexige following safety fears over Merck & Co Inc's (MRK.N: Quote, Profile, Research) similar drug Vioxx.

The Swiss company's decision casts a further cloud over the prospects for the COX-2 class of painkillers in the wake of Merck's decision to pull its $2.55 billion-a-year product after tests showed it raised the risk of heart attacks and stroke.

COX-2 inhibitors, which also include Pfizer Inc's (PFE.N: Quote, Profile, Research) market-leading Celebrex, had been lauded for not having the same harmful effects on the stomach as their forerunners.

Novartis Chief Executive Daniel Vasella conceded in an interview with Reuters last month that winning approval for Prexige would be more difficult because of the Vioxx scare, but the firm said on Tuesday it remained committed to the drug and was continuing to work closely with regulatory authorities.

"We are in discussion with the agency and we will be sending more (data)," a spokesman said. "We are still working with the FDA on what we need to get the drug approved in the U.S."

Prexige has already been approved in Britain and 20 other countries -- but it has yet to win a green light in the United States or the wider European Union.

Novartis decided to temporarily withdraw the EU mutual recognition procedure application for Prexige following a decision by the European Medicines Agency in October to review the safety of the COX-2 class of drugs.

Shares in Novartis slipped 0.8 percent to trade at 55.40 Swiss francs in a weaker Swiss market and weighed on the DJ Stoxx healthcare index which was down 0.2 percent.

IMPROVING PICTURE?

Novartis had said in the past that Prexige was a potential blockbuster with peak annual sales of over $1 billion, but analysts said the latest news delayed a potential launch in key markets and reduced the drug's commercial potential.

"We think that the withdrawal could lead to a delay of at least half a year," ZKB analyst Hernani de Faria said in a note.

ABN AMRO's Ben Yeoh said the news was negative for sentiment but noted expectations for Prexige had already been low in the wake of Vioxx's withdrawal, with few analysts including sales for the drug in their estimates.

Despite this, he argued the bigger picture for Novartis was improving. ABN upgraded its recommendation on the stock to "buy" from "reduce" on expectations of better margins and likely positive news on experimental drugs in 2005.

The firm added that it would include more infomation on the drug's safety and efficacy profile in its regulatory dossiers.

Novartis said new data from two clinical trials demonstrating the efficacy and tolerability of Prexige in osteoarthritis patients would be presented at an Osteoarthritis Research Society International meeting in Chicago this weekend.

The EU mutual recognition procedure is one of two forms of regulatory approval open to drugmakers in Europe.
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