WASHINGTON, July 31 (UPI) -- The recommendation from two Food and Drug Administration advisory panels that GlaxoSmithKline's diabetes drug Avandia should stay on the market despite its potential to cause heart problems sent the pharmaceutical giant's stock price up Tuesday.
The stock rise is an indication that Wall Street sees the panels' endorsement as a positive for the future of the drug and the company.
GSK, which has been waging an aggressive campaign to defend the safety profile of Avandia, welcomed the advisory panels' endorsement.
"The committee recognized the debilitating nature of this disease and the importance of multiple treatment options," said Ronald Krall, chief medical officer at GlaxoSmithKline. "Diabetes is a progressive disease that exacts a terrible toll on its victims, and it is important that Avandia remain a treatment option for patients."
The controversy over Avandia first emerged in May with the release of a meta-review in the New England Journal of Medicine that concluded the drug increased the risk of heart attacks and heart deaths. The FDA issued a safety alert about Avandia, and the agency's commissioner, Andrew von Eschenbach, testified before Congress that a black-box warning about heart failure would be added to labeling.
The FDA's Endocrinologic and Metabolic Drugs Advisory Committee and Drug Safety and Risk Management Advisory Committee in a joint session Monday voted 20 to 3 that Avandia increases cardiovascular risk but also recommended 22 to 1 that the drug should stay on the market.
However, it remains unclear what the FDA's final decision will be, because the agency was split on Avandia, with the Office of Drug Safety urging withdrawal and the Office of New Drugs/Endocrinology Division objecting.
Bear Stearns analyst Alexandra Hauber said she expects Avandia will ultimately be allowed to stay on the market, albeit with additional warnings included on labeling.
"We believe a black box warning for cardiovascular risk seems most likely, plus a warning for various subgroups," Hauber said.
Subgroup warnings could significantly reduce Avandia's market, particularly if the American Diabetes Association recommends the drug be limited to third-line therapy, Hauber said.
Either way, Avandia sales probably won't return to its levels before the controversy erupted.
"A recovery in prescription volumes seems unlikely to us as Glaxo now has to change the marketing message and acknowledge the cardiovascular risk," Hauber said.
Bear Stearns told United Press International Hauber does not speak to the press.
Morgan Stanley analyst Andrew Baum also thought it was likely Avandia would remain on the market, but with additional warnings.
"Panel tended to agree that stronger warnings should be added to the label with the current indication for combination use in insulin or nitrates being removed or contraindicated," Baum stated in a research report. "Additional studies and potential for a patient registry should also be considered by the FDA."
Baum foresees a limited negative impact to GSK, since Avandia sales of the drug appear to have stabilized after a significant drop-off.
"Given equilibrium in U.S. Avandia volumes and low probability of successful class suits, we see limited downside risk," he stated.
Baum acknowledged GSK could face lawsuits over the heart risks of the drug, but he anticipates the company will vigorously fight them, similar to how Merck has handled Vioxx lawsuits.
"Very unlikely Glaxo will look to settle any cases given current posturing," he stated.
Morgan Stanley did not respond to UPI's request for comment from Baum.
GSK shares were up 3.5 percent to $51.18 in late-day trade Tuesday.
