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By Ransdell Pierson
NEW YORK, July 24 (Reuters) - Wyeth said on Tuesday U.S. regulators would not approve its drug Pristiq for hot flashes until the company completes a lengthy new trial to resolve concerns about potential heart and liver risks, sending Wyeth shares down more than 9 percent.
Wyeth WYE.N said the U.S. Food and Drug Administration has requested a new safety trial for one of its most important experimental medicines, that could take a year or longer to complete.
Analysts said the safety concerns could doom the drug -- which is also awaiting approval as a treatment for depression -- and its potential to ensure earnings growth when Wyeth’s Effexor antidepressant and Protonix ulcer drug face generic competition in coming years.
Credit Suisse analyst Catherine Arnold said she is no longer counting on any sales from Pristiq, given the FDA’s cautionary stance.
“The effect is negative in the longer term and we see a $2.6 billion revenue shortfall and a 31 cent (per share) hit” to Wyeth’s 2011 results, Arnold said in a research note.
The FDA’s concerns stem from elevated liver enzymes seen in a few women taking Pristiq in trials studying it to fight hot flashes, and cardiovascular events seen in one hot-flashes study, Wyeth said.
The company has been counting on Pristiq, a derivative of Wyeth’s $3.5-billion-a-year Effexor, to ease the sting when Effexor’s U.S. patent lapses in 2010 and cheaper generics hit the market.
Revenue from Pristiq, which analysts have said could top $2 billion a year, would also help prevent a sharp earnings decline in 2011, when Protonix loses patent protection.
Wyeth said FDA safety concerns on Pristiq’s use for hot flashes are unlikely to hurt the drug’s pending separate U.S. application as a treatment for depression, which Wall Street considers its biggest potential indication.
But Linda Bannister, an analyst with Edward Jones, said the FDA concerns create serious doubts about the drug’s overall future, including its approvability as a depression medicine.
“It leads me to be definitely more cautious on the depression indication because the FDA is very focused on safety, and anything like this will raise red safety flags, regardless of the indication,” Bannister said.
Moreover, she said publicity over the perceived heart and liver risks could deter doctors from prescribing the medicine, even if it were approved for one or both indications.
“It’s a big setback for Wyeth,” said Bannister, who noted Pristiq was unlikely to be approved until 2009 or 2010 -- too late to sufficiently ramp up its sales before Effexor’s patent lapses.
Other industry analysts, including Deutsche Bank analyst Barbara Ryan, had previously questioned Pristiq’s medical value, especially in light of nausea seen in a high percentage of patients taking it in clinical trials.
Gary Stiles, chief medical officer of Wyeth, told reporters on a conference call that the FDA requested the new hot-flashes trial due to elevated liver enzymes seen in three women among 2,000 tested in Wyeth-sponsored trials of the drug for the common symptom of menopause.
“(Elevated) liver enzymes are not an uncommon phenomenon” in drug trials, Stiles said. He said higher levels of the enzymes -- which are considered to be a marker of potential damage to the liver -- returned to normal levels when patients stopped taking Pristiq.
Moreover, Stiles said the FDA was also concerned about some cardiovascular events seen in one of four studies.
“We have looked at the events, and concluded we do not believe they were in any way caused by this,” he said, referring to Pristiq.
He said eight times more women in the trial were taking Pristiq than placebos, to which the drug was compared.
Shares of Wyeth fell $5.04 to $50.96 in afternoon trading on the New York Stock Exchange.