Glaxo shares fall on FDA Advair proposal
Monday November 21, 5:20 am ET
By Ben Hirschler, European Pharmaceuticals Correspondent
LONDON (Reuters) - Shares in GlaxoSmithKline Plc fell 5 percent on Monday after the U.S. Food and Drug and Administration proposed restrictions on its top-selling asthma drug Advair, threatening future sales.
The agency said Advair, which is sold as Seretide in Europe, should not be given as a first-line treatment but only after other medicines had failed to control asthma.
The move followed evidence from one clinical study showing that drugs containing long-acting beta agonists (LABAs), such as Advair, can sometimes paradoxically trigger severe asthma attacks and death.
Credit Suisse First Boston, which acts as broker to Glaxo, cut its rating on the stock to "neutral" from "outperform" following the news.
The investment bank said the new restrictions and labeling could compromise a significant proportion of the future growth of Advair in the United States.
It now expected U.S. Advair sales to reach only 2.247 billion pounds by 2010, instead of 2.931 billion forecast previously.
Worldwide sales of Advair totaled 3.43 billion pounds last year, making it Glaxo's biggest-selling product. The U.S. accounted for 1.71 billion pounds.
Advair is viewed as a key driver of Glaxo's business for the next few years -- at least until its pipeline of experimental drugs prove themselves in tests and reach the market.
Analysts at Morgan Stanley said more than 25 percent of current U.S. Advair use was in the front-line setting -- despite an existing "black box" warning on the medicine -- so the FDA move theoretically threatened a significant portion of business.
In practice, however, the bank believes many doctors may disregard the new advice, given their positive experience with the drug.
Advair combines a LABA with a steroid in a single inhaled medicine and has proved a popular choice for controlling asthma and fighting chronic obstructive pulmonary disease (COPD), or smoker's lung.
DOUBTS OVER OTHER DRUGS
Glaxo, Europe's biggest drug maker, said disagreed with the proposed labeling changes, which were inconsistent with the standard of care for asthma treatment. Current U.S. guidelines recommend steroids and LABAs as initial therapy for moderate to severe persistent asthma.
The new FDA warnings also cover Glaxo's Serevent -- the LABA component of Advair, which is sold as a separate medicine -- as well as Novartis AG's Foradil.
The FDA stance also casts a shadow over prospects for two other drugs that have yet to be approved in the U.S. market.
AstraZeneca Plc's Symbicort was recently filed for U.S. approval, while Novartis's product QAB is still in development. Both drugs contain a LABA and could meet a similar labeling fate as Advair, analysts said.
But some drug companies may benefit from the tougher FDA position on LABAs.
Tim Anderson of Prudential Equity said that while there were no other combination inhaler products like Advair on the U.S. market there were several other asthma drugs which would now be positioned as alternatives.
These include Merck & Co. Inc.'s oral treatment Singulair, Schering-Plough Corp.'s long-acting inhaled steroid Asmanex and Sepracor Inc.'s short-acting beta agonist Xopenex.
Glaxo shares were 4.9 percent lower at 14.24 pounds by 0955 GMT after a low of 14.18 pounds, the biggest losers in a broadly flat London stock market.
(With additional reporting by Louise Heavens)
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