Bayer gains as U.S. hopes revive for stroke drug

Bayer gains as U.S. hopes revive for stroke drug

Stock Market Predictions

FRANKFURT/LONDON (Global Markets) - Bayer (BAYGn.DE) shares rose 2.5 percent on Friday after its stroke-prevention drug Xarelto was recommended by a U.S. panel, moving it a step closer to approval in the world's biggest market.

But analysts said the drug, being developed with Johnson & Johnson (J&J) (JNJ.N), was only likely to carry a claim of non-inferiority, rather than superiority, over the established product warfarin and there may be a need for further studies.

"(The vote) should aid recovery in the stock although investors should be aware that Xarelto could still be delayed in the United States for stroke prevention," JP Morgan analysts said in a note.

Xarelto's place in the global stroke-fighting market, which could top $10 billion annually, had looked in serious jeopardy just three days ago.

On Tuesday, Food and Drug Administration (FDA) reviewers called for the agency to delay approval in an initial assessment, sending Bayer shares on a one-day slump of 7.5 percent.

They recovered on Friday to be up 2.2 percent at 1114 GMT.

Now, with the backing of the advisory panel, the medicine seems likely to get to the U.S. market, though it could face delays and may well end up with labeling that puts it at a disadvantage to rivals.

WestLB analyst Norbert Barth said Xarelto's commercial potential appeared limited, even if it was approved in the U.S. by the target date of early November.

Other analysts were not convinced approval would come so quickly.

Jeffrey Holford of Jefferies said it seemed likely the FDA would require a further small clinical study to assess risks for patients when they come off the drug, delaying its launch by around 12 months.

A delay for Xarelto could give a further edge to a rival treatment, Eliquis, being developed by Bristol-Myers Squibb (BMY.N) and Pfizer Inc (PFE.N), which is considered to have the strongest profile among the new rivals to warfarin.

Another blood clot preventer, Boehringer Ingelheim's Pradaxa, was approved last year and is already available in the U.S. as an alternative to decades-old warfarin.

All three drugs are designed for patients with atrial fibrillation, an irregular heartbeat mainly affecting the elderly that can cause blood to pool, increasing their risk of blood clots and strokes.

Tim Race of Deutsche Bank said it seemed likely Xarelto's label would disadvantage the drug relative to Pradaxa and Eliquis, denting commercial expectations.

That could cut Deutsche's 2015 U.S. Xarelto sales forecasts to 300-400 million euros from a current assumption of 900 million, he added.

Bayer said in a statement it continued to see worldwide peak sales of Xarelto at more than 2 billion euros ($2.8 billion), "irrespective of the decision by the FDA in early November."

The German chemicals-and-drugs group sold exclusive U.S. rights for Xarelto to J&J in 2005. As part of that pact, Bayer stands to receive royalty payments of up to 30 percent on U.S. sales, while retaining exclusive rights outside the U.S.

In Europe, Bayer expects approval of Xarelto in the third or fourth quarter of this year.

($1 = 0.714 Euros)

(Editing by Hans-Juergen Peters, Sophie Walker and David Hulmes)