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Glaxo Avandia FDA Adversity Fuels Doubts of Comeback (Update2)
By Andrea Gerlin
Aug. 1 (Bloomberg) -- GlaxoSmithKline Plc convinced a U.S. regulatory panel this week to keep its best-selling diabetes drug, Avandia, on the market. Now comes the hard part: persuading doctors to use a medicine linked to heart attacks.
The U.S. Food and Drug ['Trust us - we know whats good for you!'] Administration committee of advisers said this week that the diabetes pill should carry new warnings about cardiovascular risks. Glaxo shares had their biggest gain in two years yesterday after the advisory panel decided not to recommend the withdrawal of Avandia, which brought in $3.3 billion in 2006 for the London-based company, Europe's largest drugmaker.
To hold onto even a portion of that revenue, Glaxo will have to spend more on marketing a product that analysts had estimated would generate $6 billion by 2011. Glaxo shares may resume a two- month decline that began in May as the company struggles for enough Avandia sales to keep profit growing.
``Glaxo will probably receive a black-box warning and the sales will probably not recover to the previous level,'' Pascale Boyer Barresi, an analyst at Bordier & Cie in Geneva, said in an interview.
Avandia sales ``will probably recover 10 to 15 percent, but the decline was so far I think once doctors have changed their patients, they will not switch back,'' he said.
A black-box in the drug's prescribing information is the FDA's sternest. While some of the advisers called for the high alert, the committee didn't vote to recommend it. The agency usually follows advisory panel rulings.
Committee Vote
The FDA committee voted 22-1 to keep Avandia on the market and 20-3 that evidence shows the drug adds to the risks of heart attacks. The panel was seeking to resolve questions raised by a May 21 report in the New England Journal of Medicine that linked the medicine to a 43 percent increased risk of heart attacks.
Glaxo shares were unchanged at 1,255 pence in London, after closing at a two-year low of 1,215 pence on July 30, the day of the hearing. The share decline since the May report has cut 12.3 billion pounds ($25.1 billion) from Glaxo's market value.
Advisory committee members said they weren't convinced evidence from studies supported pulling the drug off the market, even if the pill increases a patient's chances of heart attacks. They said heightened warnings should help doctors.
Two FDA safety officials argued for removing Avandia from the market. They said the treatment raised cardiovascular risks for diabetics, whose chances of developing heart complications are already elevated. The officials also said continuing studies would probably never remove doubts about the product.
Takeda's Actos
Physicians are turning to a similar drug, Takeda Pharmaceutical Co.'s Actos, and newer medications from Merck & Co. and Eli Lilly & Co.
``Until that data comes in, it's going to be hard to start new people on Avandia,'' said Stuart Weiss, a New York University Medical Center endocrinologist. Weiss said he wouldn't stop prescribing Avandia for patients on the drug whose diabetes is controlled.
Glaxo has experience trying to revive sales of a tainted drug. Its Lotronex for chronic diarrhea was pulled in November 2000 after it was linked to patient deaths. The product was reintroduced at a lower dose and with restrictions two years later. It had sales of about $12 million last year, far below the $1 billion a year analysts initially estimated.
New prescriptions of Avandia plummeted 45 percent in the U.S. after the May report, according to data from Fairfield, Connecticut-based IMS Health Inc. and Citigroup Inc. in New York. Sales of Avandia fell 22 percent in the second quarter, Glaxo said in its earnings announcement on July 25.
Broad Portfolio
Glaxo Chief Executive Officer Jean-Pierre ['You can trust me, I'm your friendly GSK CEO and I'm earning a fortune regardless!'] Garnier told investors July 25 that Avandia's U.S. sales accounted for less than 5 percent of revenue and that the company has a ``broad'' portfolio of other drugs. Garnier pointed to six products the company has introduced this year and 25 experimental ones that have the potential to reach the market by 2009.
``There's a lot more to GSK than Avandia,'' Garnier said in a conference call with journalists.
Analysts said Glaxo will face challenges in keeping profit rising until it introduces new products. Asthma inhaler Advair, the company's biggest drug, faces new competition in the U.S. after London-based AstraZeneca Plc introduced the Symbicort inhaler last month.
Glaxo has said it doesn't consider Symbicort a threat because Advair has performed well against the rival in Europe. AstraZeneca said its product brought in $30 million in the first month and more than half of insured Americans now have access to the drug through their health plans.
Cervical Cancer
Glaxo is also trying to catch Merck & Co. and partner Sanofi-Aventis SA, which began selling a competing cervical- cancer vaccine, Gardasil, in the U.S., Europe and Australia in 2006. Analysts predict revenue from Gardasil will reach $1.5 billion this year for Whitehouse Station, New Jersey-based Merck,
Glaxo won approval for its vaccine, Cervarix, in Australia in May and preliminary clearance in Europe on July 18. The company expects a decision on Cervarix from the FDA by January 2008. Meanwhile, revenue from the antidepressant Wellbutrin XL and Zofran for nausea are declining because of generic rivals.
Glaxo is waiting for the FDA's final ruling on Avandia before deciding what to do next, company spokesman Philip Thomson said. The agency still needs to determine the label.
``We're trying to see how the dust settles with the FDA,'' Thomson said. ``In the meantime, we will continue the dialogue with doctors.''
To contact the reporter on this story: Andrea Gerlin in London agerlin@bloomberg.net
Last Updated: August 1, 2007 11:49 EDT "