Shares of Pfizer fell Monday after the drug giants disclosure that New York Attorney General Eliot Spitzer has asked for information relating to its clinical trials and marketing of certain unnamed drugs.
In addition, Pfizer said it is in negotiations with the Food and Drug Administration for toughening the label on one of its arthritis drugs, Bextra, which has been linked to a rare, aggressive and sometimes fatal skin rash.
Both disclosures came in a third-quarter financial statement filed late Friday afternoon with the Securities and Exchange Commission. The stock was off 77 cents, or 2.7%, to $28.02 and close to the 52-week low of $27.20.
Analysts had cautious responses to the latest disclosures. James Kelly, of Goldman Sachs, told clients that the new label raises potential questions about the commercial potential of the drug. We now have Bextra falling 8% globally instead of growing 20% next year, said Kelly, who has an outperform rating on Pfizers stock. (He doesn’t own shares; his firm has an investment banking relationship).
Some analysts said the new information wasn’t enough to merit a change in ratings or price targets; but they added that they will keep a close watch on prescription trends. No change in our forecasts, said Barbara Ryan, of Deutsche Bank Securities, in a brief note to clients on Monday, as she maintained a buy rating on Pfizer.
Ryan said she already had assumed that Pfizer would put all of its marketing muscle behind Celebrex and de-emphasize Bextra anyway. Celebrex and Bextra belong to the same class of drugs known as COX-2 inhibitors. Test results show Celebrex has a better cardiovascular safety profile, said Ryan. (She doesn’t own shares; her firm says it does and seeks to do business with companies mentioned in research reports.)
Pfizer is the fourth major drug company in recent months to receive a request for information or be sued by Spitzer over the publication of clinical trials or marketing of drugs for so-called off-label uses. Federal law allows doctors to prescribe a drug for any disease once the FDA has approved a product for a single use. But companies cant promote drugs for treating diseases that the FDA hasn’t approved.
Spitzer is seeking information about testing and possible promotion of drugs for uses that haven’t been approved by the FDA, the SEC filing says. Connecticut’s attorney general also has requested similar materials concerning the antidepressant Zoloft, the SEC document says.
In mid-May, the federal government said Pfizer had agreed to plead guilty and pay fines and charges totaling $430 million regarding the allegations of off-label marketing of the epilepsy drug Neurontin. The drug was the subject of federal and state investigations triggered by an employee of Warner-Lambert, who sued Warner-Lambert and its Parke-Davis division in 1996 alleging that they had promoted Neurontin for diseases that hadn’t been approved by the FDA. Pfizer bought Warner-Lambert in 2000.
However, Pfizers Neurontin marketing problem isn’t over. Pfizer said it is still the subject of many civil suits filed in state and federal courts alleging claims arising from the promotion and the sale of Neurontin. The SEC filing says that on Oct. 26 many of the pending federal court suits had been consolidated in a federal district court in Massachusetts.