German pharmaceutical company Boehringer Ingelheim is set to unveil much anticipated results from a pivotal clinical trial of its blood thinner Pradaxa, setting the stage for a showdown with German rival Bayer AG's (BAY.XE) competing drug Xarelto.

Both are seen as blockbuster drugs - with potential to earn the companies more than EUR1 billion each in peak sales. While both drugs are approved for short-term use in Europe, the holy grail they are competing for is approval for use in chronic conditions such as stroke prevention, which would mean steady streams of revenue.

Privately-owned Boehringer Ingelheim will present the results of its stroke prevention study on Sunday afternoon at the European Society of Cardiology in Barcelona. The RE-LY study compares patients with atrial fibrillation, a common heart rhythm disorder, on Pradaxa against those on the industry standard warfarin.

Commerzbank analyst Daniel Wendorff said a comparable study from Bayer isn't expected until the second quarter of 2010, so the Pradaxa study could be telling.

"If the data looks good then Pradaxa gets the advantage," Wendorff said.

But if the results don't meet expectations, Bayer would have time to play catch up to Boehringer's lead of around a year.

Warfarin, best known by its brand name Coumadin, has been widely prescribed for about 50 years. Its only competition has been heparin and Sanofi-Aventis' (SNY) Lovenox, both of which must be injected. Coumadin is made by Bristol-Myers Squibb Co. (BMY), while generic versions are made by companies including Teva Pharmaceutical Industries Ltd.'s (TEVA) Barr Pharmaceuticals Inc., Novartis AG's (NOVN.VX) Sandoz, Upsher-Smith Laboratories Inc. and Cadila Healthcare's unit Zydus Pharmaceuticals (USA) Inc.

Analysts say the first of the new generation of oral anticoagulants to make it to market have the potential to snare the lion's share from warfarin, so they are keen to see how Pradaxa fared in the study.

"It will probably have an effect on Bayer because Xarelto is its most important competitive drug," said Merck Finck & Co. analyst Carsten Kunold.

A Bayer spokeswoman declined to comment on Boehringer's upcoming results.

Wendorff estimates that Bayer has the potential to earn EUR2.2 billion in peak sales from Xarelto, of which EUR550 million would come from stroke prevention in patients with irregular heartbeats.

Both Xarelto and Pradaxa have been approved in Europe for the prevention of blood clots after total hip and knee replacements.

Other competitors farther behind in development include apixaban, being developed by Pfizer (PFE) and Bristol-Myers Squibb (BMY), and betrixaban from Merck & Co. (MRK)

Bayer and its U.S. marketing partner Johnson & Johnson (JNJ) have had some trouble getting swift U.S. approval for Xarelto from the Food and Drug Administration.

In May, the FDA declined to approve the treatment, saying that it needed more data, although it didn't ask for further clinical or non-clinical testing of the drug. Bayer said it would file a full response letter to the regulator, but not before the fourth quarter at the earliest.

Both good and bad news from the Pradaxa study on Sunday could hurt Bayer shares Monday, Merck Finck analyst Kunold said. Because the two drugs are so similar, Kunold said the market could interpret good results to mean Pradaxa is superior to Xarelto, while negative news about side effects could also read across to Xarelto.

Morgan Stanley analysts wrote in a note that Pradaxa may appear superior to Xarelto based on the way the RE-LY trial was designed. More than half of Boerhinger's test group were patients who had never received warfarin previously, Morgan Stanley said.

The brokerage points out that results from another warfarin trial published in The Lancet in 2006 showed patients who hadn't taken warfarin previously experienced more side effects when taking the drug for the first time compared with those who had taken it before.

Boehringer said it included first-time warfarin patients in the study for a sub-analysis and will present those findings at the conference on Wednesday.

-By Allison Connolly, Frankfurt Bureau; +49 69 29725513, allison.connolly@dowjones.com