Good News for Novartis' Bexsero - Analyst Blog

Novartis NVS received encouraging news when the U.S. Food and Drug Administration (FDA) granted a Breakthrough Therapy designation to meningitis B vaccine Bexsero.

The Breakthrough Therapy designation from the FDA will expedite the development and review of Bexsero. Novartis also plans to file for FDA approval by the second quarter of 2014. We note that Bexsero is already approved in Europe to help protect against invasive meningococcal disease caused by serogroup B.

Novartis meningococcal franchise is expected to be the growth engine of the Vaccines Division. As per estimates by Novartis, meningococcal disease causes approximately 50,000 deaths every year on a global basis.

We note that Bexsero received approval in Europe in Jan 2013. Bexsero is one of the three meningococcal vaccines that Novartis has in its portfolio, the other two being Menjugate and Menveo.

Novartis continues to strengthen its Vaccines franchise. The company divested its blood transfusion diagnostics unit to Grifols S.A., for approximately $1.7 billion in cash in Jan 2014. Following this divestiture, the segment now consists of only Vaccines.

Novartis also has five influenza vaccines in its portfolio- Agrippal, Fluad, Fluvirin, Optaflu, and Flucelvax. The Vaccines and Diagnostics division generated revenues of $2.0 billion, accounting for 3% of total Novartis' sales in 2013.

We believe the divestment of the diagnostics unit is a step in the right direction as Novartis can invest resources to further strengthen its vaccines franchise.

Novartis currently carries a Zacks Rank #3 (Hold). Investors looking for better-ranked stocks may consider companies like Shire SHPG, Salix Pharmaceuticals SLXP, and Questcor Pharmaceuticals QCOR. All three carry a Zacks Rank #1 (Strong Buy).