Johnson & Johnson's Xarelto Loss is AstraZeneca PLC (ADR)'s Gain

AstraZeneca (NYSE: AZN  ) can breathe a sigh of relief for its anticoagulant Brilinta, again. About 3 years ago, partners Bristol-Myers Squibb (NYSE: BMY  ) , and Pfizer (NYSE: PFE  ) halted an acute coronary syndrome (ACS) trial with blood thinner Eliquis due to increased bleeding risks. More recently, the FDA refused Johnson & Johnson's (NYSE: JNJ  ) Xarelto for the same indication, for the third time. With these big names out of the way, there's an even better chance that Brilinta can become a significant growth driver for AstraZeneca in the years ahead.

A tale of two markets
Since its approval, AstraZeneca's Brilinta has steadily gained ACS market share, but growth has been somewhat lopsided in favor of the EU. Some of the lopsidedness can be explained by timing. Brilinta won EU approval for prevention of thrombotic events in patients with acute coronary syndrome in March 2010. The FDA approved it for the same indication a year and four months later. Sales of the blood thinner more than doubled during 2013 to $283 million, with the lion's share coming from the EU.

In the US sales were just $73 million or about 26% of the year's total. During the company's latest earnings call, management attributed the lower US sales figures to an ongoing investigation by the Department of Justice. There are some concerns about data from the Plato trial that was largely responsible for the drug's approval. You'll want to keep your eyes open for more news about the investigation.

Expansion opportunities
The ACS indication represents roughly 20% of the total market for an anti-coagulant. While Brilinta might be able to reach blockbuster status with just the one indication, there is a huge incentive to expand. Prior to losing patent exclusivity, Bristol-Myers sold a whopping $7 billion worth of Plavix in 2011. With a bit of luck, AstraZeneca could reach those heights as well.

Brilinta is currently in several phase 3 outcomes studies that could more than triple its available market. An acute ischemic stroke study that compares it to asprin should be finished next year. For peripheral artery disease (PAD), it is going up against Plavix. Data from this three year Euclid study should be ready in early 2016. Brilinta caused bleeding events at nearly the same rate as Plavix in the ACS study that led to its approval. It stands to reason that bleeding events should occur at about the same frequency during this trial. With safety data out of the way it seems an expansion into PAD is up to efficacy data.

A strong foothold
For now it seems that Brilinta has the ACS market for next-generation blood thinners sewn up. Pfizer and Bristol-Myers' blood thinner Eliquis took a shot at the stroke prevention indication and missed. The Appraise-2 trial was terminated early due to safety concerns based on bleeding events among patients with ACS.

Earlier this month, Johnson & Johnson received a complete response letter from the FDA for Xarelto. This was the third rejection for the otherwise successful blood thinner with regard to the ACS indication. In January, an advisory committee citing a lack of sufficient trial data, voted unanimously against its approval. It is possible, but to my mind highly unlikely, that Johnson & Johnson will decide to generate more data and take a fourth shot. In the meantime it looks like AstraZeneca can take a breather.

Slow going
Despite having a lack of other next-generation anticoagulants cleared for ACS, Brilinta's uptake has been curiously slow. For now it seems Plavix, or clopidogrel, is still the go-to drug for ACS. Generic versions of the superstar hit the market in the first half of 2012. Although Brilinta was significantly better than Plavix at reducing cardiovascular events, it wasn't a giant leap forward. During the Plato trial, the Brilinta group showed a 9.8% incidence rate versus Plavix's 11.7%. That might be statistically significant, but probably not enough of an improvement to motivate health care providers to quickly switch to a more expensive branded drug.

Final thoughts
With competition from Xarelto and Eliquis out of the way, it looks like AstraZeneca could be the only next generation blood thinner in the US market approved for ACS for a while. Unfortunately, the DoJ investigation into the Plato trial could bring it all crashing down. Investigations aside, acceptable safety data from Brilinta is encouraging, and leads me to believe more indications, and billions in revenue, for this anticoagulant are on the way.

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