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Janssen Research & Development, LLC, a Johnson & Johnson (JNJ - Analyst Report) company, recently announced that the FDA’s Endocrinologic and Metabolic Drugs Advisory Committee has voted 10 - 5 in favor of approving the company’s type II diabetes candidate, canagliflozin (proposed trade name: Invokana).

Johnson & Johnson is looking to get the oral, once-daily candidate approved for the treatment of adult type II diabetes patients. Although the FDA is not required to follow the panel’s advice, it usually does so. With the canagliflozin new drug application (NDA) being submitted in May 2012, a response from the FDA should be out by late Mar 2013.

FDA approval would make canagliflozin the first sodium glucose co-transporter 2 (SGLT-2) inhibitor to gain approval in the US.

Other SGLT-2 Inhibitors in Development

We note that Johnson & Johnson is not the only company looking to develop a SGLT-2 inhibitor. Bristol-Myers Squibb (BMY - Analyst Report) and AstraZeneca’s (AZN - Analyst Report) oral SGLT-2 inhibitor, Forxiga, gained EU approval in Nov 2012. However, Forxiga is yet to gain approval in the US. The companies, which received a complete response letter from the FDA for Forxiga, intend to resubmit their marketing application in mid-2013.

Meanwhile, Eli Lilly (LLY - Analyst Report) and Boehringer Ingelheim recently announced positive top-line results on their SGLT-2 inhibitor, empagliflozin, from four phase III trials are developing empagliflozin. The companies intend to seek approval for empagliflozin in the US, Europe and Japan this year.

We currently have a Neutral recommendation on Johnson & Johnson, which carries a Zacks Rank #2 (Buy). While we expect Johnson & Johnson 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.

Other large-cap pharma stocks that currently carry a Zacks Rank #2 include Eli Lilly and Novartis (NVS - Analyst Report).

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