Analyst - Zacks Analyst Blog Highlights: Bristol-Myers Squibb Co., AstraZeneca Plc, Merck, Novartis and Medarex

Zacks Analyst Blog Highlights: Bristol-Myers Squibb Co., AstraZeneca Plc, Merck, Novartis and MedarexCHICAGOIL-ZACKS.COM

Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Bristol-Myers Squibb Co. (NYSE: BMY), AstraZeneca Plc (NYSE: AZN), Merck (NYSE: MRK), Novartis (NYSE: NVS) and Medarex (Nasdaq: MEDX).

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Here are highlights from Monday?s Analyst Blog:

FDA Approves Bristol?s Diabetes Drug

We are pleased with the FDA?s approval of Bristol-Myers Squibb Co.?s (NYSE: BMY) diabetes drug Onglyza that the company distributes with AstraZeneca Plc (NYSE: AZN). The drug regulates blood-sugar levels in Type 2 diabetes that affects about 24 million people in the U.S. The approval is a major milestone for Bristol-Myers for penetrating the diabetes market, which has grown to more than $5 billion in the US.

The FDA approval comes against the backdrop of controversy on cardiovascular safety of diabetes drugs. Though data from clinical trials conducted by Bristol-Myers did not show any evidence of cardiovascular risk, the FDA has asked for a post-approval study to evaluate the drug?s safety in higher-risk patients including the elderly and those with existing heart problems. Onglyza has side effects of upper-respiratory-tract and urinary-tract infections and headaches along with certain allergic reactions such as rashes.

Being structurally similar to Merck?s (NYSE: MRK) Januvia (sales of $1.4 billion in 2008), Onglyza is expected to compete with it directly. The struggle will intensify further if Takeda?s Alogliptin, under review at present, gets FDA approval. While the US approval of Novartis? (NYSE: NVS) Galvus may now be in jeopardy, it is available in other countries.

We expect Onglyza to record sales of about $300 million per year with the potential of peak sales of up to $1 billion in future. Since the drug received European approval in June, we expect its launch in the near future.

We continue to believe that Bristol-Myers shares are attractive at the current price based on valuation, strong expected EPS growth and progress in reinvesting in higher-growth opportunities. The company has taken several steps to compensate for the loss of exclusivity of Plavix (in 2011). These include the recently announced $1 billion extension in cost cuts in 2012-2013, the extension of the Abilify agreement with Otsuka, and the announced acquisition of Medarex (Nasdaq: MEDX).

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