The Zacks Analyst Blog Highlights: Bayer, Johnson & Johnson, Enterprise Products Partners, Kinder Morgan Energy Partners and Enbridge Energy Partners

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Jul 12, 2012, 09:30 ET

CHICAGO, July 12, 2012 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Bayer (OTC:BAYRY), Johnson & Johnson (NYSE:JNJ), Enterprise Products Partners LP (NYSE:EPD), Kinder Morgan Energy Partners L.P. (NYSE:KMP) and Enbridge Energy Partners (NYSE:EEP).

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Here are highlights from Wednesday's Analyst Blog:

Speedy Review for Bayer/J&J Drug

Bayer (OTC:BAYRY) and partner, Johnson & Johnson's (NYSE:JNJ) Janssen Research and Development unit, recently announced that the US Food and Drug Administration (FDA) will review their marketing application for blood thinner Xarelto for an additional indication on a priority basis.

We note that the US regulatory authority generally reviews those drugs on a priority basis, which offer major advances in treating diseases that do not have adequate therapy. Applications for priority review designated drugs are reviewed by the FDA within six months of submission as against the usual ten months.

The supplemental new drug application (sNDA) was filed on May 2, 2012. Consequently, a response should be out in the fourth quarter of 2012.

The partners are looking to expand Xarelto's label for the treatment of patients suffering from deep vein thrombosis (DVT) or pulmonary embolism (PE) and the prevention of recurrent DVT and PE. We note that thrombosis refers to the formation of a blood clot inside a blood vessel thereby blocking a vein (venous thrombosis) or artery (arterial thrombosis).

Bayer/Johnson & Johnson submitted the sNDA to the FDA on the basis of data from a phase III program (EINSTEIN, n~10,000) which consisted of three studies. The studies evaluated the safety and efficacy of Xarelto for treating DVT and PE and the prevention of recurrent venous thromboembolism (VTE).

We are encouraged by Bayer/Johnson & Johnson's label expansion efforts for Xarelto, which is already approved for multiple indications. Successful label expansion should boost the sales potential of the drug.

Marketing Application Withdrawn

Meanwhile, Bayer/Johnson & Johnson announced the withdrawal of their sNDA seeking US approval of Xarelto for reducing the risk of stent thrombosis in patients suffering from acute coronary syndrome (ACS). ACS refers to a heart disease, which results in the blockage of a coronary artery via a blood clot.

The decision to withdraw the sNDA follows the complete response letter (CRL) issued by the FDA last month to the companies.

Bayer/Johnson & Johnson are working on the queries raised by the FDA in the CRL. The companies intend to re-submit the sNDA to the FDA in the stent thrombosis indication at the time of filing their response to the CRL.

Our Recommendation

Currently, we have a Neutral stance on Bayer in the long run. The company carries a Zacks #3 Rank (Hold rating) in the short run. Our long-term recommendation is similar on Johnson & Johnson. However, the stock carries a Zacks #2 Rank (Buy rating) in the short run.

EPCO, Hines in Shell Plaza Deal

Houston-based Enterprise Products Company ("EPCO") and Hines, an international real estate firm, have inked a definitive agreement. Per the deal, an affiliate of EPCO will purchase Shell Plaza in the central business district of Houston from the Hines U.S. Core Office Fund.

EPCO and its affiliates are known to hold major interests in energy partnership Enterprise Products Partners LP (NYSE:EPD), along with real estate holdings in the Houston area, including the 1100 Louisiana office building.

Shell Plaza, spanning 1.8 million square feet, is an office complex comprising two buildings — One Shell Plaza and Two Shell Plaza. The construction of Shell Plaza concluded in 1970. The North American headquarters of Shell Oil Company and the law firm Baker Botts LLP – Shell Plaza, was developed and designed by Hines and Skidmore, Owings & Merrill, respectively.

The acquisition news was first reported in an industry trade journal released last week that estimated the purchase price at $550 million. However, the cost detail was not revealed by the concerned parties.

The deal is expected to be closed in August 2012 and is subject to usual due diligence. Upon closure, Hines will remain responsible for the management as well as lease of Shell Plaza.

EPCO was established in 1968 by the late billionaire Dan Duncan. Currently, the affiliate acquiring Shell Plaza is under the management of Duncan's daughter Randa Duncan Williams, Ralph Cunningham and Richard H. Bachmann.

EPCO considers Houston an emerging hub for global finance, which offers desirable environment for business growth and development. The company's long-term investment in the region supports this view.

Enterprise Products Partners holds a Zacks #3 Rank, which translates to a Hold rating for a period of one to three months. Longer term, we maintain a Neutral recommendation on the stock. The partnership faces competition from its peers Kinder Morgan Energy Partners L.P. (NYSE:KMP) and Enbridge Energy Partners (NYSE:EEP).

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