FDA rejects AstraZeneca drug as new treatment for diabetes Print E-mail
By Jon Mainwaring-Proactiveinvestors.com   
Wednesday, 20 July 2011 18:51
Analysts have mixed views of where shares in AstraZeneca (NYSE:AZN) (LON:AZN) are heading after a US Food and Drug Administration panel yesterday voted nine-to-six against approval of the FTSE-100 pharmaceuticals firm’s Dapaglifozin drug as a new treatment for diabetes.

Nomura International has a ‘reduce’ rating on the company’s shares, while Morgan Stanley is ‘overweight’ and J. P. Morgan is ‘neutral’.

Shares in AstraZeneca were down more than one per cent at 2,980 pence each before noon in London, while shares fell more than 0.6% in New York morning trading to $48.42.

Dapagliflozin is under joint development by Bristol-Myers Squibb and AstraZeneca.  The drug is being investigated as monotherapy in addition to diet and exercise, and also in combination with other anti-diabetic agents in addition to diet and exercise, to evaluate its effect on blood sugar levels (or HbA1c) in adults with type-2 diabetes. AstraZeneca believes Dapagliflozin, an inhibitor of SGLT2 (a target in the kidney) could potentially be the first in a new class of insulin-independent, oral type-2 diabetes agents.

Today, analysts have noted that the FDA panel was concerned about a lack of sufficient data (and increased risk of kidney failure) in restricted patient subgroups, including the elderly and those taking high blood pressure treatments. This, said investment bank Normura International, leaves “an unclear decision about which type of patient is best suited to use Dapa and how the drug would be prescribed”.

Meanwhile, Nomura added: “Despite uncertain evidence to support a risk of breast and bladder cancer the panel expressed concerns about the scale of post marketing studies required to rule out a risk of drug-related events.”

Morgan Stanley noted that the panel wanted more comfort on the bladder/breast cancer signal, as well as liver toxicity. “While the panel acknowledged that requesting a prospective trial to fully elucidate these risks is unrealistic, it is clear that Dapa faces at least a significant delay to market,” it added.

Meanwhile, J. P. Morgan Securities argued that the panel members voting ‘no’ had arguments which were a lot less solid than supporters of the drug. “For instance we are [sceptical] that ‘disappointment about the level of participation from minorities’ and ‘patients at risk of hypoglycaemia should be studied’ will resonate strongly with the FDA,” said the investment bank’s analysts. “We are uncertain whether the FDA will be able to be guided by this vote, hence either outcome – approval or complete response letter for Dapagliflozin – remains a possibility in our view. Potential safety issues could be addressed by gathering further data in the post marketing settings in patient registries, but also by monitoring and adjudicating cancer cases in the proposed cardiovascular safety study.”

Nomura and Morgan Stanley both believe the focus will now be on AstraZeneca’s blood-thinning treatment, Brilinta, as it comes up for its PDUFA date today. “We assume that the FDA grants approval for the treatment of acute coronary syndrome with a label similar to that seen in EU/Canada,” said Morgan Stanley.

Nomura said that AstraZeneca trades at a price-to-earnings rating of 6.7 times its forecast for 2011, which it says is a 32 per cent discount to the sector. The bank is bearish on the sector as a whole and has a 2,400 pence price target for the company’s shares.

By contrast, Morgan Stanley has a 3,570 pence target for the shares.

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