(JNJ) Boost for Bayer and Johnson & Johnson

Recently, the US Food and Drug Administration (FDA) delivered a huge boost for Bayer (BAYRY) and partner Johnson & Johnson (JNJ) by clearing their blood-thinner (anticoagulant) Xarelto (rivaroxaban). The US regulatory body cleared the drug, which has blockbuster potential, for the prevention of deep vein thrombosis (DVT) which may cause pulmonary embolism (PE) in patients undergoing knee or hip replacement surgery.  The blood-thinner is already available in Europe for the indication.

The current approval will allow Xarelto to be marketed in the US as a once-daily tablet (10 mg). The tablet is to be taken for 35 days after hip replacement and for 12 days after knee replacement.

The US approval was based on late-stage studies which showed that Xarelto was more effective than Sanofi-Aventis’ (SNY) Lovenox (enoxaparin). Moreover, Xarelto was found to be as safe as Lovenox.

While DVT refers to a blood clot in a major vein and usually develops in the legs, PE refers to an obstruction of a blood vessel in the lungs, mostly because of a blood clot. The clot causes the blockage of a coronary artery.

Xarelto is the only oral anticoagulant to be approved by the FDA for the prevention of VTE in patients undergoing operation for knee or hip replacement. The approval of Xarelto for the indication will boost the partners’ top line. Moreover, it will prevent the development of blood clots post operation in patients undergoing knee or hip replacement surgery.

According to data from the American Academy of Orthopedic Surgeons more than 800,000 patients in the US undergo such operations annually. However these exercises involve the risk of patients developing DVT which may result in a PE, thereby blocking blood flow which may lead to serious consequences.

Our Recommendation

Currently, we have a Neutral stance on Bayer in the long run. The company carries a Zacks #3 Rank (Hold rating) in the short run. Our position is similar on Johnson & Johnson for the short and long-term.

BAYER A G -ADR (BAYRY): Free Stock Analysis Report

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