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Janssen Research & Development, LLC, a part of the Johnson & Johnson (JNJ - Analyst Report) family of companies, recently presented encouraging phase III data on type II diabetes candidate, canagliflozin, at the annual meeting of the European Association for the Study of Diabetes (EASD).

Janssen presented results from CANVAS (CANagliflozin cardioVascular Assessment Study) - a prospective, double blind, placebo-controlled trial evaluating the efficacy, tolerability and cardiovascular safety of canagliflozin. The study involves 4,330 type II diabetes patients (adults) who are at higher risk for cardiovascular disease.

The data was presented from an 18-week sub-study involving 1,718 patients who had been under insulin therapy for an average of 7.1 years. Janssen said that two doses of canagliflozin were evaluated in the study – 100 mg and 300 mg. Patients were randomized to receive either canagliflozin dosage or placebo.

Janssen reported a significant decline in blood glucose levels when canagliflozin was used in addition to insulin therapy compared to placebo. Moreover, patients in the canagliflozin arms experienced a reduction in body weight compared to placebo.

While the occurrence of treatment-emergent adverse events (AEs) was similar across all treatment arms, discontinuations due to adverse events were higher in the 300 mg canagliflozin arm (5.3%) compared to the canagliflozin 100 mg and placebo arms (1.9% each).

Janssen also presented results from another phase III study which showed that canagliflozin significantly reduced A1C levels compared to placebo, when used in addition to antihyperglycemic therapy in older type II diabetes patients with inadequate glycemic control.

Janssen has submitted marketing applications in the US and the EU for canagliflozin. The diabetes market, while crowded, represents significant commercial potential. Players in the diabetes market include Merck (MRK - Analyst Report), Eli Lilly (LLY - Analyst Report), and Novo Nordisk (NVO - Analyst Report) among others.

We currently have a Neutral recommendation on Johnson & Johnson, which carries a Zacks #2 Rank (short-term ‘Buy’ rating). While we expect the company to continue facing headwinds in the form of pricing pressure, currency fluctuation, manufacturing issues and healthcare reform, we believe the company’s diversified business model, lack of cyclicality, and strong financial position will continue helping it pave its way through tough situations.

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