Shares of Abbott Laboratories to come under pressure after federal health officials challenged the benefits of one of the company's cholesterol drugs for the second time in two weeks, analysts said Friday.
On Thursday federal scientists halted a large study of its Niaspan drug, a prescription form of niacin, after preliminary results showed the pill failed to prevent heart attacks or strokes. Niacin is a form of vitamin B that boosts good cholesterol, which has been shown to fight artery build-up. But that benefit didn't translate into fewer heart attacks among patients with a history of heart disease.
A week earlier a panel of health advisers said another Abbott drug, Trilipix, should be re-labeled to indicate that it failed to lower heart attacks in a study of diabetics. Trilipix is a fibrate, a drug that lowers blood fats called triglycerides while boosting "good cholesterol."
Wedbush analyst Philip Nalbone said in a note that the negative news would pressure company shares as investors assess the impact on Abbott's cholesterol drugs, which account for about $2.6 billion, or 7 percent, of company revenue.
"In the near-term investors are going to be worried about the sales outlook for cholesterol drugs in general, and Abbott's franchise in particular, and we think Abbott's stock will be under some pressure until there is clarity on the financial implications," Nalbone states in a note to investors.
Wells Fargo analyst Larry Biegelsen estimates the disappointing results for Niaspan will lower revenue by $440 million next year. He added that Abbott would likely offset the weak sales with cost-cutting measures and lowered his 2012 earnings estimate by six cents to $4.90 per share.
North Chicago-based Abbott said Thursday it would add new labeling about the government findings to Niaspan's label. Meanwhile the Food and Drug Administration is likely to conduct its own review of the drug, but Biegelsen said that would likely take a year or more.
Abbott shares fell 46 cents Friday to $51.68 in midday trading.