Zacks_Analysts' Blog : Bristol-Myers/AstraZeneca get CRL - Analyst Blog

Recently, Bristol-Myers Squibb (BMY) and partner AstraZeneca (AZN) suffered a pipeline setback when the US Food and Drug Administration (FDA) declined to approve their type II diabetes candidate, dapagliflozin, on the basis of the submitted data. Bristol-Myers and Astra Zeneca are seeking approval of the drug as an adjunct to diet and exercise for improving glycemic control in adults suffering from type II diabetes.

The US regulatory body issued a complete response letter (CRL) to the companies asking for additional data to better asses the candidate’s risk-benefit profile. The agency said that the additional data may come from ongoing or new studies. If the companies have to conduct new trials then not only would it push up their research and development costs but also mean significant delay in getting dapagliflozin approved. Bristol-Myers and Astra Zeneca intend to work closely with the FDA regarding the future of the candidate.

US approval path bumpy for dapagliflozin

We note that the US regulatory path for dapagliflozin has been anything but smooth. In July 2011, the Endocrinologic and Metabolic Drugs Advisory Committee of the FDA recommended against approving dapagliflozin. The panel voted 9-6 against approving the candidate due to safety concerns, after reviewing the new drug application (NDA) filed by the companies in 2010. Moreover, the original target date of October 28, 2011 was pushed back by the FDA by three months. However, the FDA came to a conclusion and issued a CRL to the companies a few days before the new target date (January 28, 2012).

Even if dapagliflozin ultimately manages to get FDA approval then it would target the highly crowded type II diabetes market. The diabetes market has players like Merck & Co. (MRK) and Novo Nordisk (NVO) among others.

Our Recommendation

We have a Neutral stance on Bristol-Myers, which carries a Zacks #4 Rank (Hold rating) in the short run. Our long-term stance is the same on AstraZeneca. However, AstraZeneca carries a Zacks #3 Rank (Hold rating) in the short run.