FDA’s Delay Cramps Wyeth

The delay in the US Food and Drug Administration’s (FDA) decision to approve Wyeth’s (WYE) Prevnar 13 (PV13) vaccine is a major blow to the company. Wyeth had filed for FDA approval of the pediatric vaccine PV13 on March 31, 2009.  In May 2009, the FDA granted the New Drug Application (NDA) priority review with an expected six-month review period.

During late July, as requested by the FDA, Wyeth submitted additional information regarding the vaccine. Though the FDA was initially expected to respond by Sept 30, 2009, the agency has now pushed back the approval date by 90 days. The agency stated that it will need the extra time to review the additional information, which it considers to be a major amendment.

Prevnar is one of the world’s best selling vaccines. It treats illness caused by 7 strains of pneumococcal bacteria.  The vaccine recorded sales of about $2.7 billion in 2008, and we expect $2.9 billion of sales in 2009. In an effort to build on the success of Prevnar, Wyeth has developed the PV13 for infants and toddlers. The new vaccine will block 13 strains including the original 7. Earlier in July, PV13 received its first marketing approval from the regulators of Chile. The company is currently seeking approval for PV13 in about 50 countries.

It is estimated that PV13 would cover 92% of invasive pneumococcal disease, compared to 81% covered by Prevnar. Wyeth filed for EU approval of PV13 for pediatric use in December 2008. Meanwhile, GlaxoSmithKline (GSK) received European approval for its pediatric 10-valent vaccine, Synflorix (meant for children aged 6 weeks to 2 years), in March 2009, which will compete with Prevnar and PV13. However, GlaxoSmithKline does not have plans to launch the vaccine in the U.S.

Prevnar has witnessed solid sales growth over the past few quarters based on a number of reasons. Due to a recommendation from the Centers for Disease Control (CDC), compliance on a fourth dose for all healthy children under 24 months is over 80%.  Wyeth has been expanding Prevnar growth internationally through National Immunization Programs (NIP) with the governments of several countries.

We expect the list of countries to grow further as a result of the recommendations by the World Health Organization (WHO) to include Prevnar in these programs. We have a Neutral recommendation on the stock.

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