Additional details provided. "The news surprised investors, many of whom believed the drug would be
approved based on strong clinical trial results."
" Although it is unclear exactly what issues the FDA has raised,
Hearle of Leerink Swann said, they are related to preclinical testing, which
suggests that regulators are either concerned about side effects seen in
animals or seeking more information about Alkermes' drug-delivery
technology."
July 02, 2002 03:12
Shares of Cambridge, Mass., Pharmaceutical Firm
Drop after FDA Rejects Drug
By Naomi Aoki, The Boston Globe
Jul. 2--Shares of Alkermes Inc. plunged nearly 70 percent after the
Cambridge company and its partner Johnson & Johnson said regulators
rejected their twice-a-month form of the schizophrenia drug Risperdal.
The news surprised investors, many of whom believed the drug would be
approved based on strong clinical trial results. Although the companies did
not detail what issues the Food and Drug Administration raised, they said
they will work with the regulatory agency to address its concerns.
Analysts said the FDA's decision to deem the drug "nonapprovable" would
delay its introduction by at least a year. The setback is troubling for Alkermes
because the drug represents its next major revenue driver, and casts doubt
on another late-stage product based on the same drug delivery technology.
"As soon as it is clear what the FDA wants or needs, then you can make a
determination about the rest of the pipeline," said Michael Hearle, an analyst
with Leerink Swann & Co. in Boston. "Until that happens, there's some
ambiguity."
Shares of Alkermes, which specializes in developing longer-lasting versions
of existing medicines, fell $10.86 to $5.15 on the Nasdaq Stock Market.
Shares of New Jersey's J&J fell $1.76 to $50.50 on the New York Stock
Exchange.
In a year rife with setbacks and failures for drugmakers, investors are wary of
any ambiguity. Industry observers say the FDA has become increasingly
cautious in approving new drugs, repeatedly asking companies for additional
information, delaying their approval, or keeping them off the market
altogether.
The setbacks, such as those of ImClone System Inc.'s cancer drug Erbitux,
Sepracor Corp.'s allergy medication Soltara, and Eli Lilly & Co.'s impotence
treatment Cialis, have driven investors from the biotech and pharmaceutical
sectors.
"In this environment, you can't say it's just another delay because investors
are afraid of what they don't know," said Linda Miller, manager of the John
Hancock Health Sciences fund.
Risperdal had about $1.8 billion in sales last year. The new formulation,
which would be given by injection once every two weeks, was expected to
add 10 percent to the drug's annual revenue, Miller said.
Currently Risperdal is a once-a-day oral medication. J&J had hoped the
longer-lasting version would help schizophrenia patients better comply with
their medication regimens and give it a competitive edge over rivals, such as
Eli Lilly's top-selling Zyprexa.
J&J filed for regulatory approval of the longer-lasting form of Risperdal on
Aug. 31. Analysts had expected the drug to be introduced late this year or
early next. Although it is unclear exactly what issues the FDA has raised,
Hearle of Leerink Swann said, they are related to preclinical testing, which
suggests that regulators are either concerned about side effects seen in
animals or seeking more information about Alkermes' drug-delivery
technology.
Under the companies' agreement, Alkermes used its Medisorb technology to
make a longer-lasting version of J&J's Risperdal. Alkermes will manufacture
the new version of Risperdal and collect fees and royalties from J&J.
-----
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