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Johnson & Johnson’s (JNJ - Analyst Report) Janssen Research and Development unit recently responded to the complete response letter (CRL) issued by the US Food and Drug Administration (FDA) for its supplemental new drug application (sNDA) for blood-thinner Xarelto (2.5 mg twice daily). The company is looking to get Xarelto’s label expanded for the reduction of the risk of secondary cardiovascular events 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. Johnson & Johnson has co-developed Xarelto with the HealthCare unit of Bayer (BAYRY - Analyst Report). The FDA had issued a CRL for the indication in June 2012. The response includes the information requested by the US regulatory authority while issuing the CRL.

Furthermore, Bayer/ Johnson & Johnson announced that the sNDA seeking approval to market Xarelto for reducing the risk of stent thrombosis in ACS patients has been resubmitted. In July 2012, the companies withdrew the sNDA for the indication.

We note that Bayer/ Johnson & Johnson are seeking to expand the label of Xarelto, already approved for multiple indications, into other indications as well apart from the above two indications.

In July 2012, the companies announced that the FDA will review their marketing application for Xarelto for treating patients suffering from deep vein thrombosis (DVT) or pulmonary embolism (PE) and the prevention of recurrent DVT and PE on a priority basis. Thrombosis refers to the formation of a blood clot inside a blood vessel thereby blocking a vein (venous thrombosis) or artery (arterial thrombosis).

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 sNDA was filed on May 2, 2012. Consequently, a response should be out in the fourth quarter of 2012. Approval of Xarelto for new indications would further boost the sales potential of the drug.

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. The stock carries a Zacks #4 Rank (Sell rating) in the short run.
 

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