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Bayer (BAYRY - Analyst Report) received favorable news from the European Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) when it provided a positive opinion on the approval of radium Ra 223 dichloride (radium-223) last week.

Bayer is looking to get radium-223 approved for treating adults suffering from castration-resistant prostate cancer (CRPC), symptomatic bone metastases and no known visceral metastases.

A final verdict from the European Commission on the approval of radium-223 is expected by year end. We note that though the European Commission is not bound to follow the CHMP’s decision, it generally does so.

The positive CHMP recommendation on the approval of radium-223 was based on positive results from the phase III ALSYMPCA (ALpharadin in SYMptomatic Prostate CAncer) study. Results from the study revealed that treatment with radium-223 resulted in a significant improvement in overall survival and also caused a reduction in the risk of death compared to patients in the placebo arm.

We remind investors that the U.S. Food and Drug Administration (FDA) approved the drug in May 2013 for the above indications, based on the positive results from the ALSYMPCA study. Following the approval, the drug is marketed in the U.S. under the trade name Xofigo. Xofigo is co-promoted by Bayer and Algeta U.S., LLC in the U.S. as per a 2009 agreement. Bayer however has the rights to commercialize the product worldwide.

We are encouraged by Bayer’s progress on radium-223. However, the prostate cancer market looks extremely crowded with the presence of companies like Johnson & Johnson (JNJ - Analyst Report) and Medivation Inc. (MDVN - Analyst Report).

Bayer, a large-cap pharma company, presently carries a Zacks Rank #2 (Buy). Roche (RHHBY - Analyst Report) looks more attractive in the large-cap space with a Zacks Rank #1 (Strong Buy).

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