Healthy Skepticism Library item: 7173

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Publication type: news

Novartis submits two new drugs to FDA: Swiss drug giant Novartis to hire 1,000 additional U.S. sales reps , says CEO.
CNN Money.com 2006 Nov 28
http://money.cnn.com/2006/11/28/news/companies/novartis.reut/index.htm?source=yahoo_quote

Abstract:

Novartis AG is accelerating development of a new wave of drugs designed to drive sales growth into the next decade, the Swiss healthcare giant said on Tuesday.

Both Tasigna, a new cancer drug to follow blockbuster Glivec, and Aclasta, a once-yearly infusion for women with osteoporosis, have been submitted for regulatory approval in the United States and Europe, Novartis (down $1.07 to $57.72, Charts) said at a research and development day in London.

Aclasta had originally only been planned for filing in 2007.

Novartis suffered a setback recently when United States approval of its Galvus diabetes drug was delayed, but the group said further clinical trial results backed the product’s efficacy and safety, and it was confident of a green light in the first half of 2007.

Galvus, however, narrowly missed proving it was not inferior to the older diabetes drug metformin in a two-year trial, although it was better tolerated, causing fewer stomach upsets.

“Overall, it is a net positive, with some drugs submitted earlier than expected. The bears are going to jump on the non-inferiority data, but that was no different from the 52-week data, so it is not really a surprise,” said Dresdner Kleinwort analyst Ben Yeoh, who rates the stock a “buy.”

Swiss broker Helvea said the failure of Galvus to match metformin in reducing blood sugar levels meant the drug would never reach the $3 billion a year predicted by some analysts.

Potential blockbusters Galvus, plus blood pressure treatments Tekturna and Exforge, are seen as key near-term sales drivers – though they are also the firm’s major risks in case of any delays in rollout. All three are expected to be launched in 2007.

Chief Executive Daniel Vasella said he planned to hire around 1,000 U.S. sales representatives to promote the new drugs, which would take a bite out of profits in 2007, before a likely recovery in 2008.

The new products face competition from rivals, with Galvus lagging Merck & Co Inc’s (down $0.16 to $43.46, Charts) similar product Januvia.

James Shannon, head of pharmaceutical development, told reporters Novartis planned to submit a combination of Galvus and metformin to regulators in the first quarter of 2007.

It also aims to combine Tekturna with existing top seller Diovan, following new data showing a significant additional reduction in blood pressure compared to Diovan alone.

Combination therapy is increasingly common for many chronic diseases. Exforge is a combination of Diovan and an older blood pressure medicine.

Birds and fear: a new bird flu flurry
Analysts at Swiss bank Vontobel said the combination data on Tekturna and Diovan was particularly encouraging and provided upside to long-term forecasts.

Novartis also said its H5N1 pre-pandemic flu vaccine had been filed for approval in the European Union after good Phase II trial results. Several companies are developing such vaccines, which may provide protection if bird flu mutates into a disease that spreads easily between people.

The group highlighted six compounds moving into pivotal late-stage trials, including multiple sclerosis drug FTY720, respiratory medicine QAB149 and antidepressant AGO178.

Novartis trades at about 17 times expected 2007 earnings according to Reuters data, roughly in line with the European drugs sector, but many analysts argue it is undervalued, given the relative strength of its pipeline.

The group now has 138 projects in clinical development, including 94 in Phase IIb, III or registration.

But the company said it was ending development of its XBD173 anxiety drug and AAE581 for osteoporosis. It is also delaying LIC477 for bipolar disorder.

Novartis has a wider range of businesses than its rivals, with operations including generics, and also the top baby food brand Gerber – a business analysts believe could be acquired by Nestle (Charts). Vasella declined to comment on possible bidders but told reporters that nutrition was not core.