Pfizer Pulls the Pin on Bextra

The request for strict labels applies to prescription drugs, but the FDA also is asking manufacturers of over-the-counter NSAIDs to add more information about cardiovascular risks and gastrointestinal bleeding. The FDA says they also should add to their drug labels a warning about potential skin reactions; labels of prescription NSAIDs already include such warnings.

Bextra has a black box warning for a rare but potentially lethal skin infection known as Stevens-Johnson Syndrome. This side effect has been linked to other pain medications; but Pfizer has noted previously that this syndrome has been reported at a greater rate for Bextra vs. other Cox-2 drugs.

According to Pfizer's statement Thursday, the FDA told the company that "Bextra's cardiovascular risk could not be differentiated from other NSAIDs." Pfizer added that the FDA "has concluded that the additional, increased risk of [Stevens-Johnson syndrome, which is] already described in its label, warrants its withdrawal from the market."

Pfizer also said it will suspend sales of Bextra in the European Union at the request of European health regulators Thursday. "The company is in contact with other regulatory agencies around the world about appropriate treatment options," Pfizer said.

European regulators in February announced restrictions on all Cox-2 drugs, saying the whole class poses an increased risk of heart-related injury. Pfizer has frequently said that each Cox-2 drug is different.

Pfizer said it received notice from the FDA Wednesday afternoon following its Tuesday meeting with financial analysts, when it offered lower guidance for 2005 and outlined a target of $4 billion in annualized cost savings by 2008.

Pfizer also said Thursday it will "work closely with the FDA to develop a guide to assist patients and their health care professionals in making the best decisions for treating their arthritis pain."

Financial Impact

The FDA's announcement didn't immediately affect any ratings on Wall Street, where analysts give Pfizer's stock 19 buy recommendations and 12 hold ratings, according to Thomson First Call.

Although the suspension of Bextra might knock a few cents from 2005 EPS predictions, analysts say the FDA's action could prompt Pfizer to do more cost-cutting that the company indicated during a Tuesday meeting with investors.

"In light of this development and in contrast with our perception of Tuesday's investor meeting, we would now expect Pfizer to consider more substantive cost-cutting measures," says Winton Gibbons, of William Blair & Co., in a Thursday report to clients.

Pfizer executives said Tuesday that any job cuts would come through attrition. Gibbons says there may be a greater need to cut payroll, especially among sales representatives, "thus mitigating some of the revenue lost."

If the company cuts jobs aggressively, Gibbons, who has an outperform rating, might raise his newly-revised estimates. Right now, he has cut his 2005 EPS from $2 - the figure Pfizer predicted on Tuesday - to $1.98. He cut his previous 2006 EPS estimate by 3 cents to $2.20. (He doesn't own shares; his firm doesn't have an investment banking relationship).

The latest Cox-2 news "is at odds" with Pfizer's comments Tuesday that Cox-2 sales would accelerate, from currently depressed levels, in late 2005, says David R. Risinger of Merrill Lynch. "This will raise questions regarding the company's earnings guidance."

Risinger told clients in a Thursday research report that investors must beware of potential liability claims against Bextra because "trial lawyers usually pursue product liability cases more aggressively when products are withdrawn from the market." Risinger adds that the legal risk might be mitigated because the FDA cited the rare skin infection rather than cardiovascular risk as the reason for recommending Bextra's suspension.

The good news for Pfizer, says Risinger, is that all prescription and nonprescription arthritis drugs and pain relievers will carry the same new warnings about cardiovascular safety. "Adding this warning to traditional NSAIDs may help Celebrex's relative profile," says Risinger, who has a neutral rating on Pfizer. (His firm has had an investment banking relationship; his research report says 'one or more analysts' covering Pfizer owns shares.)

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