Novartis will now probably accelerate plans to reduce its sales force in the U.S. to cut costs. Deutsche Bank, in a note to investors estimates that the Swiss drugmaker may reduce as many as 1,000 sales jobs as a direct result of the drug's failure. Novartis couldn't immediately be reached for comment on these expectations.
http://online.wsj.com/article/BT-CO-20111220-703361.html
UPDATE: Novartis Stops Key Trial Of Potential Blockbuster
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-- Termination of study is a major blow for Novartis
-- Company had high hopes in organ-protection benefits of Rasilez
-- Warns Rasilez sales will take a hit
-- Rasilez so far hasn't been profitable
-- Analysts surprised by findings of high unwanted side effects
-- Analysts expect cuts in US sales force
(Adds background, analyst comment in paragraph 6 to 10)
By Anita Greil
Of DOW JONES NEWSWIRES
ZURICH (Dow Jones)--Novartis AG (NVS) was dealt a major blow Tuesday when it was forced to halt development of its high-blood pressure treatment Rasilez for wider use, due to unwanted side effects and small prospects of the drug yielding long-term benefits when added to standard therapy.
Rasilez, which is selling under the brand name Tekturna in the U.S., was launched in 2007 for the treatment of high blood pressure, a condition for which many older effective treatments are already available, often as cheap generics. Seeking to expand the potential of the drug, Novartis launched several trials that examine if the drug -- which works differently from established products -- could protect key organs, such as kidneys and the heart, if taken over a longer period of time.
The trial that was now terminated included 8,606 patients with diabetes who are at a high risk of suffering from heart or kidney failure. In the study, Rasilez was given on top of standard heart treatment. A committee overseeing the study now identified higher unwanted side effects when Rasilez was added to standard therapy, prompting Novartis to terminate the trial.
The Basel-based drug maker also decided to cease promotion of Rasilez-based products for use in combination with certain other blood-pressure lowering drugs.
Rasilez generated sales of $449 million in the first months of 2011, representing 1% of the Swiss drug maker's total sales, but didn't achieve a profit, Novartis said.
The drug was seen as a blockbuster candidate, with potential sales of $1 billion or more, but only if Novartis had been able to prove that it has benefits beyond lowering blood pressure.
Sales "are likely to be negatively impacted by the study results going forward," the company added.
Novartis will now probably accelerate plans to reduce its sales force in the U.S. to cut costs. Deutsche Bank, in a note to investors estimates that the Swiss drugmaker may reduce as many as 1,000 sales jobs as a direct result of the drug's failure. Novartis couldn't immediately be reached for comment on these expectations.
The company is also looking at the data of other similar trials, which are currently still ongoing, spokesman Eric Althoff said.
Rasilez, generically known as aliskiren, is the first new type of medicine in more than a decade for treating high blood pressure. The drug inhibts a kidney enzyme called renin, which is being associated with the regulation of blood pressure. Rasilez acts at the beginning of the blood pressure regulation process, while other available high blood pressure medications act at later stages. This unique mechanism of action nurtured scientists's hopes that the drug could have benefits beyond lowering blood pressure.
Novartis shares slid on the unexpected bad news.
At 1025 GMT, the stock was down 0.8%, or CHF0.40, at CHF52.40, while the broader European healthcare market was 0.6% lower.
"The finding comes very unexpected," said Andrew Weiss, a pharmaceutical analyst in Zurich with Swiss private bank Vontobel. He had foreseen Rasilez generating as much as $2.9 billion in annual sales in its best year, assuming that the drug would have additional benefits for key organs if taken over a long period of time. He now plans to reduce his sales estimate.
-By Anita Greil, Dow Jones Newswires; +41 43 443 8044 ;
anita.greil@dowjones.com
