Label Change for Glaxo's Zofran

Recently, GlaxoSmithKline ( GSK - Analyst Report ) announced that it will update intravenous Zofran’s (ondansetron) label to exclude the 32 mg single dose for the prevention of chemotherapy-induced nausea and vomiting. Intravenous Zofran will continue to be available at a lower dose of 0.15 mg/kg, three doses administered at a gap of four hours. As per the changed label, no single dose of intravenous Zofran should exceed 16 mg.

Zofran’s label change was announced after the US Food and Drug Administration (FDA) issued a Drug Safety Communication disclosing preliminary results from a Zofran study. It was found that the use of the 32 mg dose of Zofran or generic versions of the drug can cause prolongation of QT interval. We note that prolongation of QT interval can even lead to Torsades de Pointes, a fatal heart rhythm.

Since a lower dose of intravenous Zofran is recommended for preventing post-surgical nausea and vomiting, Zofran’s use in this indication remains unaffected by the exclusion of higher dose.

Once the final results from the study are available, Glaxo will work with the FDA towards developing a safe and effective single intravenous dose regime.

Our Recommendation

We currently have a Neutral recommendation on Glaxo. The stock carries a Zacks #3 Rank (Hold rating) in the short run. A major part of Glaxo’s revenues will be exposed to generic competition as multiple drugs are scheduled to lose exclusivity in the next few years.

We expect the company’s top line as well as gross margins to remain under pressure in the coming quarters. In addition to generic competition, EU pricing pressure will continue to affect sales.