Medical Supplies & Devices
`
`Quick Take
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`Johnson & Johnson — Outperform (1)
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`JNJ: $70.60
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`December 11, 2012
`Analysts
`Josh Jennings, M.D.
`(646) 562-1333
`josh.jennings
`@cowen.com
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`
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`Quick Take: Zytiga Gets FDA OK For Use In Pre-
`Chemo Setting On rPFS Data
`
`Christopher Hamblett,
`Ph.D.
`(617) 946-3950
`chris.hamblett
`@cowen.com
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`
`
`
`
`
`
`Denis Kelleher
`(646) 562-1389
`denis.kelleher
`@cowen.com
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`Yesterday afternoon, the FDA approved Zytiga (abiraterone acetate) for use in
`treating men with metastatic castration-resistance prostate cancer prior to receiving
`chemotherapy. The approval in the pre-chemo setting was based on Phase III data
`that showed a statistically significant improvement in radiographic progression-free
`survival (rPFS) in patients receiving Zytiga plus prednisone compared to the placebo
`plus prednisone (HR=0.43; <0.0001). Zytiga failed to achieve statistical significance
`on the pre-specified overall survival endpoint (p=0.0097 vs the pre-specified p-value
`of p=0.0008) in this setting, but we expected the drug to be approved on the rPFS
`data and strong hazard ratio for overall survival (HR = 0.75; 95% CI = [0.61, 0.93];
`p=0.0097). Median overall survival data in chemotherapy naïve patients receiving
`Zytiga was 35.3 months compared to 30.1 months in patients receiving placebo plus
`prednisone, a net improvement of 5.2 months. We view Zytiga’s label expansion
`based on rPFS data as a positive for JNJ.
`
`The approval comes a few days ahead of its scheduled mid-December PDUFA date.
`The pre-chemo CRPC market opportunity is estimated to be approximately three
`times the size of the post-chemo CRPC opportunity. Our global Zytiga sales
`estimates of $975MM in 2012, $1,120MM (+15%) in 2013, $1,165MM (+4%) in 2014,
`$1,220MM (+5%) in 2015, $1,300MM (+7%) in 2016, and $1,380MM (+6%) in 2017
`assume competitive pressures from Medivation’s Xtandi (enzalutamide) and assume
`Xtandi achieves regulatory approvals in both settings as well.
`
`Phase III interim data for Medivation/Astellas’ androgen receptor antagonist Xtandi
`in chemotherapy-naive prostate cancer are expected in 2013. Xtandi was approved
`for use in post-chemo CRPC patients in September 2012. Xtandi acts similarly to
`Zytiga and has roughly equivalent efficacy (based on overall survival data in the
`post-chemo setting), but offers potential convenience and tolerability advantages
`over Zytiga in being administered without prednisone. However, prior to today’s
`label expansion, Zytiga had already gained off-label use in the pre-chemo setting
`(likely among Medical Oncologists), which supports our clinical consultants’ views
`that co-administration with prednisone, while perceived as a potential disadvantage,
`is not a major barrier to Zytiga’s use.
`
`Please see addendum of this report for important disclosures.
`
`www.cowen.com
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` Johnson & Johnson
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`STOCKS MENTIONED IN IMPORTANT DISCLOSURES
`Company Name
`Johnson & Johnson
`
`
`Addendum
`
`
`Ticker
`JNJ
`
`
`
`ANALYST CERTIFICATION
`Each author of this research report hereby certifies that (i) the views expressed in the research report accurately reflect
`his or her personal views about any and all of the subject securities or issuers, and (ii) no part of his or her compensation
`was, is, or will be related, directly or indirectly, to the specific recommendations or views expressed in this report.
`
`
`
`IMPORTANT DISCLOSURES
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`
`Cowen and Company, LLC and or its affiliates make a market in the stock of JNJ securities.
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`December 11, 2012
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`Johnson & Johnson
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`COWEN AND COMPANY RATING DEFINITIONS (a)
`
`Rating
`Outperform (1)
`Neutral (2)
`Underperform (3)
`(a) Assumptions: Time horizon is 12 months; S&P 500 is flat over forecast period.
`
`Definition
`Stock expected to outperform the S&P 500
`Stock expected to perform in line with the S&P 500
`Stock expected to underperform the S&P 500
`
`
`
`COWEN AND COMPANY RATING ALLOCATION (a)
`Pct of companies under
`Pct for which Investment Banking services
`coverage with this rating
`have been provided within the past 12 months
`Rating
`55.7%
`9.2%
`Buy (b)
`41.9%
`1.7%
`Hold (c)
`2.4%
`0.0%
`Sell (d)
`(a) As of 09/30/2012. (b) Corresponds to "Outperform" rated stocks as defined in Cowen and Company, LLC's rating definitions (see above). (c)
`Corresponds to "Neutral" as defined in Cowen and Company, LLC's ratings definitions (see above). (d) Corresponds to "Underperform" as defined in
`Cowen and Company, LLC's ratings definitions (see above). Note: "Buy," "Hold" and "Sell" are not terms that Cowen and Company, LLC uses in its
`ratings system and should not be construed as investment options. Rather, these ratings terms are used illustratively to comply with NASD and NYSE
`regulations.
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`December 11, 2012
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