* FDA staff: safety concerns remain, but Xarelto effective
* Bayer shares fall 9 pct; J&J down 2 pct
* Companies say they can address FDA's concerns
* Analysts expect drug to win eventual FDA approval (Recasts 1st paragraph, adds product details, FDA comment)
By Susan Heavey
WASHINGTON, March 17 (Reuters) - U.S. Food and Drug Administration staff expressed concern over bleeding and other risks with Bayer AG's (BAYG.DE: Quote, Profile, Research, Stock Buzz) and Johnson & Johnson's (JNJ.N: Quote, Profile, Research, Stock Buzz) blood-thinning drug Xarelto in documents released on Tuesday, sending the companies' shares lower.
"The evidence that administration of rivaroxaban (Xarelto) could lead to bleeding events in significantly more patients relative to enoxaparin amplifies this safety concern for rivaroxaban," the staff wrote in one review.
The documents were released ahead of an FDA advisory panel meeting on Thursday to discuss whether to recommend approval of the once-a-day pill to prevent blood clots after hip or knee replacement surgery. It would compete against enoxaparin, the widely used bloodthinner sold as an injectable drug by Sanofi-Aventis SA (SASY.PA: Quote, Profile, Research, Stock Buzz) (SNY.N: Quote, Profile, Research, Stock Buzz) under the name Lovenox.
The rate for bleeding with Xarelto, also known as rivaroxaban, was about twice that of enoxaparin, although the overall rate of bleeding risk was low, the staff added.
FDA reviewers also said long-term safety data is needed to fully weigh the potential for liver damage with the drug. They noted that several company-funded studies were under way that should provide that information.
Despite the risks, FDA staff said the companies' data showed the drug was effective in preventing dangerous blood clots in patients undergoing such surgeries.
In other documents released on Tuesday, Johnson & Johnson said the benefits of Xarelto outweighed its risks, adding that it would take steps to monitor potential problems after approval. Bayer spokesman Alexander Siedler separately said the company was confident it could address FDA's concerns.
OUTSIDE EXPERTS
On Thursday, the FDA will seek advice from its panel of outside experts before making its decision. It usually follows the panel's recommendations, but not always.
Many analysts said they expect the FDA to eventually approve the drug, which already is used in Europe and Canada.
"The concerns raised by the FDA reviewers were generally in line with our expectations," Larry Biegelsen, a senior analyst at Wachovia Capital Markets LLC, said in a research note.
Still, the FDA staff review was somewhat harsher than expected and other analysts noted the potential liver damage would be a top issue at the panel.
Shares of Bayer were down 9 percent in Germany after the FDA documents were released, while J&J stock was off 2 percent at $49.71 on the New York Stock Exchange.
The initial market for Xarelto is somewhat small -- the company estimates just 800,000 people receive replacement hips or knees each year in the United States.
Analysts said its greater potential is as a future therapy to prevent stroke, which according to the U.S. Centers for Disease Control and Prevention affects more than 5 million Americans and is the third-leading cause of death.
Bayer and J&J have said they are studying such use as well as the possible prevention of acute coronary syndrome.
Sales for hip or knee surgeries are expected to peak at $200 million, Morgan Stanley analysts said in a recent note. Bayer has estimated eventual global peak sales of Xarelto of 2 billion euros ($2.6 billion) a year for all uses.
Market Data 
Markets 
AI
