Novartis pulls IBS drug

NEW YORK (CNNMoney.com) -- Novartis pulled its irritable bowel syndrome drug Zelnorm off the U.S. market at the FDA's request because of a possible stroke risk to patients, the company said Friday.

Novartis (down $2.34 to $54.55, Charts)' stock price fell nearly 4 percent following the news.

Novartis said an analysis of more than 18,000 patients showed a "statistically significant" incidence of stroke risk in Zelnorm patients, compared to those who took placebo.

The data showed that 13 "events" of heart attack, stroke or unstable angina pectoris occurred in 11,614 patients, compared to 1 case in 7,031 placebo patients, said Novartis in a press release.

Novartis Chief Executive Daniel Vesella said, in a teleconference with analysts, that the Food and Drug Administration intends to discuss Zelnorm - which had 500,000 patients in the U.S. - at a panel meeting of advisers.

Novartis executives also said that the data did not prove Zelnorm caused heart attacks, and that the patients who suffered heart problems were considered high-risk, even without the drug. Also, the placebo group had an abnormally low occurrence of cardiovascular events, according to the company.

The FDA said a "causal link" between the heart attacks and the drug has not been proven but added that patients were not screened for heart risks before the studies.

Canadian regulators have also asked Novartis to take Zelnorm off the market, according to the company, but its status in other countries is yet to be determined.

Zelnorm is the only FDA-approved treatment for IBS with constipation. Zelnorm sales accounted for $560 million in 2006, according to the company, with most of that revenue coming from the U.S. market. This represents a relatively small slice of Novartis' total sales of $37 billion in 2006, but Novartis revised its outlook for sales growth down to 5 percent for 2007.

The Zelnorm situation might open up Novartis to lawsuits from former patients. But Les Funtleyder, analyst for Miller Tabak, said it won't be anywhere near as bad as Merck's withdrawal of the arthritis painkiller Vioxx in 2004, which led to the filing of more than 20,000 lawsuits against that company.

This is the second bit of bad news to hit Novartis in the last few weeks. On Feb. 26, the company said it received an "approvable" letter from the FDA for its experimental diabetes drug Galvus. This delays its possible approval and causes the company to miss out on hundreds of millions of dollars in potential sales.

"For a while, Novartis was the company that could do no wrong, but they're starting to have some hiccups," said Funtleyder.

Novartis, a Swiss-based maker of name-brand and generic pharmaceuticals, is one of the biggest drugmakers in Europe, along with the French company Sanofi-Aventis (up $0.03 to $43.44, Charts) and the British company GlaxoSmithKline (up $0.64 to $55.19, Charts).

Funtleyder does not own shares of Novartis stock and Miller Tabak does not conduct business with the company.

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