Bristol-Myers/Pfizer get CRL

Recently, Bristol-Myers Squibb (BMY - Analyst Report) and partner, Pfizer Inc. (PFE - Analyst Report), suffered a setback when the US Food and Drug Administration (FDA) declined to approve their anti-clotting drug Eliquis (apixaban) on the basis of the submitted data. The news had a negative impact on the companies’ shares.

We note that Bristol-Myers and Pfizer are looking to get the blood thinner approved in the US for preventing strokes and systemic embolism in patients suffering from nonvalvular atrial fibrillation (AF). AF refers to a cardiac rhythm disorder characterized by an erratic heartbeat.

The US regulatory body issued a complete response letter (CRL) to the companies after reviewing the new drug application (NDA) for Eliquis submitted last year. The NDA included data from two phase III studies, ARISTOTLE and AVERROES.

While issuing the CRL, the FDA asked for additional information on data management and verification from the ARISTOTLE study. However, the US regulatory body did not ask the companies to conduct additional studies with Eliquis. The requirement of additional trials would have pushed up their research and development costs.

In February 2012, the FDA pushed back its originally assigned target date of March 28, 2012 by three months to June 28. However, the FDA came to a conclusion and issued a CRL to the companies a few days ahead of the newly assigned target date. Bristol-Myers and Pfizer intend to work closely with the FDA regarding the future of Eliquis. Eliquis is under review for the AF indication in ex-US markets such as the EU and Japan.

Even if Eliquis ultimately manages to gain FDA approval, it would face intense competition in the anti-coagulant market on approval. Eliquis will have to compete with Bayer /Johnson & Johnson’s (BAYRY - Analyst Report) /(JNJ - Analyst Report) blood-thinner Xarelto. Moreover, the arrival of Boehringer Ingelheim’s Pradaxa has intensified competition in the market.

We remind investors that Eliquis was cleared in the EU last year for preventing venous thromboembolic events (VTE) in adults who have undergone elective hip or knee replacement surgery. However, the AF market is more lucrative.

Neutral on Bristol-Myers/Pfizer

Currently, we have long-term Neutral recommendations on both Bristol-Myers and Pfizer. However, the companies carry different ranks in the short-term. While Bristol-Myers carries a Zacks #4 Rank (Sell rating), Pfizer carries a Zacks #3 Rank (Hold rating).