Updated from 9:20 a.m. EDT
watched its shares drop sharply after U.S. regulators said they want another clinical trial for the menopause-symptoms treatment Pristiq.
The drugmaker said the Food and Drug Administration is asking for more information about Pristiq's potential risks of liver and cardiovascular side effects, adding that a clinical trial would take a year or more.
By late morning, the stock was down $4.36, or 7.8%, to $51.64 on trading that was already double the average daily volume for the past three months. The announcement provoked criticism from several analysts about a drug whose approval they had expected.
Wyeth was scheduled to hear from the FDA on Monday on Pristiq, one of seven drugs that the company had predicted would reach the market within the next 18 months. On Tuesday morning, Wyeth said the FDA had granted conditional approval for Pristiq, meaning it wasn't ready to fully sign off on the drug.
The company didn't provide an exact timetable for the new clinical trial. The FDA also asked Wyeth to answer questions about "certain chemistry, manufacturing and controls deficiencies" before it approves the drug. Wyeth didn't provide details.
A spokesman said Wyeth had no announcement on whether the FDA's decision would affect its 2007 earnings. If the drug had been approved, it would have been launched later in the year and would have had "little impact" on this year's revenue, he said.
Last week, Wyeth issued strong quarterly results
and raised its full-year earnings forecast.
"Wyeth remains committed to the development of Pristiq as a potential treatment for moderate-to-severe vasomotor symptoms associated with menopause," said Dr. Gary Stiles, executive vice president and chief medical officer for Wyeth's prescription drug business, in a prepared statement.
"We will work with the agency to satisfy its requests for additional data and move the medicine forward in the FDA review process."
Merrill Lynch analyst David Risinger cut his rating to hold from buy, telling clients that Pristiq probably wouldn't be available for treating menopause symptoms until the first quarter of 2010. He doesn't own shares, but his firm has had a noninvestment banking relationship.
"For all intents and purposes, this indication is dead," says Barbara Ryan, of Deutsche Bank Securities, in a note to clients.
She had sounded an early warning about Pristiq's prospects, saying before that the consensus view of Pristiq as a $1 billion- to $2 billion-a-year menopause drug was "highly unrealistic." Her peak annual forecast had been $650 million.
Ryan, who has a hold rating, doesn't own shares. Her firm does or seeks to do business with companies mentioned in research reports.
Pristiq has been viewed by Wyeth as a way to expand its women's health care offerings and to shore up sales for its Premarin and Prempro treatment for menopause. These drugs achieved sales of $1.05 billion last year and are among Wyeth's biggest products.
However, sales have slowed, gaining 3% year over year in the second quarter but declining 3% during the first half of 2007 compared with the same period last year.
Accompanying this has been
a growing number of lawsuits alleging that the drugs raise the risk of breast cancer, ovarian cancer, stroke or heart damage. As of March 31, Wyeth was a defendant in 5,200 personal injury cases in the U.S.
Unlike Premarin and Prempro, Pristiq isn't a hormone-based drug. In fact, it's the first nonhormone treatment for hot flashes and other symptoms of menopause.
The drug's main ingredient, desvenlafaxine succinate, is the same as that in the experimental depression drug also called Pristiq. The key ingredient is related to the ingredient in
the antidepressants Effexor and Effexor XR, Wyeth's bestsellers during the second quarter.
Wyeth has discussed Pristiq as a successor to Effexor XR, whose U.S. patent protection expires in June 2010 and which will begin facing generics in Europe in late 2008. The older Effexor already has lost U.S. patent protection.
"This blow to Pristiq will intensify the company's exposure to Effexor
XR generics in 2010," Ryan warns.
At one point in its development, Pristiq's depression indication appeared to be the closest for marketing, but Wyeth
has pulled back on its timetable. The FDA granted conditional approval in January for Pristiq as an antidepressant, and the agency said it didn't need extra clinical trials.
Wyeth has said it wants to test Pristiq at a lower dose before amending its depression application to the FDA. Test results for the lower-dose version will be sent to the FDA next month, and Wyeth executives said last week that they expect the agency to extend its review into the first quarter of 2008.
Merrill Lynch's Risinger said he worries that Pristiq's launch as an antidepressant could be delayed until early 2010, too.