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Bayer (BAYRY - Analyst Report) and partner, Johnson & Johnson’s (JNJ - Analyst Report) Janssen Research and Development unit, recently announced that the US Food and Drug Administration (FDA) will review their marketing application for blood thinner Xarelto for an additional indication on a priority basis.

We note that the US regulatory authority generally reviews those drugs on a priority basis, which offer major advances in treating diseases that do not have adequate therapy. Applications for priority review designated drugs are reviewed by the FDA within six months of submission as against the usual ten months.

The supplemental new drug application (sNDA) was filed on May 2, 2012. Consequently, a response should be out in the fourth quarter of 2012.

The partners are looking to expand Xarelto’s label for the treatment of patients suffering from deep vein thrombosis (DVT) or pulmonary embolism (PE) and the prevention of recurrent DVT and PE. We note that thrombosis refers to the formation of a blood clot inside a blood vessel thereby blocking a vein (venous thrombosis) or artery (arterial thrombosis).

Bayer/Johnson & Johnson submitted the sNDA to the FDA on the basis of data from a phase III program (EINSTEIN, n~10,000) which consisted of three studies. The studies evaluated the safety and efficacy of Xarelto for treating DVT and PE and the prevention of recurrent venous thromboembolism (VTE).

We are encouraged by Bayer/Johnson & Johnson’s label expansion efforts for Xarelto, which is already approved for multiple indications. Successful label expansion should boost the sales potential of the drug.

Marketing Application Withdrawn

Meanwhile, Bayer/Johnson & Johnson announced the withdrawal of their sNDA seeking US approval of Xarelto for reducing the risk of stent thrombosis in patients suffering from acute coronary syndrome (ACS). ACS refers to a heart disease, which results in the blockage of a coronary artery via a blood clot.

The decision to withdraw the sNDA follows the complete response letter (CRL) issued by the FDA last month to the companies.

Bayer/Johnson & Johnson are working on the queries raised by the FDA in the CRL. The companies intend to re-submit the sNDA to the FDA in the stent thrombosis indication at the time of filing their response to the CRL.

Our Recommendation

Currently, we have a Neutral stance on Bayer in the long run. The company carries a Zacks #3 Rank (Hold rating) in the short run. Our long-term recommendation is similar on Johnson & Johnson. However, the stock carries a Zacks #2 Rank (Buy rating) in the short run.

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