Baxter International Inc. (BAX) recently disclosed additional efficacy and safety data from its Phase III pivotal study evaluating BAX 855. The latest findings from the study were presented by the company at the 8th Annual Congress of the European Association for Hemophilia and Allied Disorders held at Helsinki, Finland.
Developed in partnership with Nektar Therapeutics (NKTR), BAX 855 is an extended half-life, recombinant factor VIII (rFVIII) protein used for the treatment of hemophilia A and is built on the same protein used in ADVATE.
The latest information gathered from the Phase III study expands on the previous findings from the trial which established that BAX 855 met its primary endpoint in the control and prevention of bleeding episodes and routine prophylaxis (a measure taken to maintain health and prevent the spread of disease) for hemophilia patients.
The study data also support Baxter’s biologics license application (BLA) filed with the FDA in Dec 2014, for the approval of BAX 855. Notably, Baxter expects an approval from the federal agency in 2015. We believe that the FDA clearance should help the company improve its competitive position in the hemophilia therapy market over the long term.
Currently, Baxter is continuing with its pediatric studies on BAX 855, upon completion of which, it expects to file for marketing authorization with the European Medicines Agency in 2016.
We note that Baxter has an impressive product pipeline with improved existing products and new product development. The company also continues to expand its product portfolio by winning approvals for new drugs and products.
Although an innovative product pipeline is the key growth catalyst for Baxter, we believe that intense competition in the hemophilia space and lackluster hospital spending are major concerns. Additionally, lower reimbursements for medical products and services could result in pricing pressure and decreased demand for the company’s products.
Foreign currency volatility is another factor which is expected to significantly hurt the company’s overall results, particularly in 2015. Moreover, with the Baxalta spin-off scheduled in mid-2015, we expect operating margins to remain under pressure for an extended period. This is expected to ultimately hurt the company’s profitability in the near term.
Furthermore, competition for its hemophilia franchise is intensifying as other hemophilia drugs, currently undergoing clinical trials, are expected to be launched soon. Reportedly, Biogen Idec (BIIB) is making considerable progress with its long-acting product –Eloctate – which is already approved in the U.S. for the control and prevention of bleeding episodes, perioperative management and routine prophylaxis in adults and children with hemophilia A.
Additionally Novo Nordisk (NVO) is expected to launch its hemophilia drug – NovoEight – in the U.S. in Apr 2015. Once launched, these products will intensify competition for Baxter. We believe that this may negatively impact Baxter’s top- and bottom-line growth in the long run.
Currently, Baxter carries a Zacks Rank #5 (Strong Sell).
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