LOL! A "Just Say No To Drugs" policy at the FDA? Federal agencies, whether they are going wrong or not, require one of two things on a regular basis: Intensive scrutiny by Congress to ensure the agency is still adequately serving the public interest; or: abolition of the agency itself...
<<WRAPUP 2-FDA actions drag down health-care stocks
NEW YORK, July 10 — Numerous health-care stocks fell on Tuesday after the U.S. Food and Drug Administration dealt two setbacks to experimental treatments for asthma and heart failure.
The FDA asked Novartis AG (VX:NOVZn) (NYSE:NVS) and Genentech Inc. (NYSE:DNA) to provide additional information on their jointly developed asthma drug, Xolair, while an agency panel rejected Guidant Corp.'s (NYSE:GDT) request for approval of its Contak CD pacemaker for heart failure.
The two actions by the FDA are the latest in a series of scrutinizing letters and decisions issued by the agency on investigational treatments and devices.
On Monday, the agency rejected approval of a CardioGenesis Corp. (NASDAQ:CGCP) laser that blasts tiny holes in the heart to relieve severe, chronic chest pain, a decision that sent the company's stock plunging 70.6 percent to 85 cents on Tuesday. On June 18, the FDA requested more clinical data on Novartis' irritable bowel drug Zelnorm and issued a "not approvable" letter on the drug.
Shares of Genentech fell 15.85 percent, or $8.26, to $43.85, and shares of Novartis slipped 3.69 percent, or $1.27, to $33.13 on the New York Stock Exchange in afternoon trading. Guidant's stock slid 13.9 percent, or $5.07, to $31.34 on the Contak CD news.
Tanox Inc. (NASDAQ:TNOX), which also helped develop Xolair, saw its stock plummet $11.16, or 44.01 percent, to $14.20. Xolair is also expected to be used by some allergy sufferers.
AGENCY CRACKDOWN OR DISTINCT DECISIONS? Analyst Richard Stover of investment and research firm Arnold & S. Bleichroeder said he believes the FDA is generally becoming too critical of new medicines submitted by drug companies.
"I've been at this for 34 years and I have never, ever seen the FDA this dysfunctional. This reflects a totally dysfunctional FDA that has adopted the attitude, borrowing from Nancy Reagan, 'Just say 'no' to drugs,'" Stover said.
"The FDA has been criticized I think too harshly for approving some drugs that had side effect problems, but now the way they basically deal with that is they approve nothing," he said.
Analyst Robert Hazlett of Robertson Stephens said he believes the recent regulatory setbacks for drug and biotech companies represent a combination of a more scrutinizing FDA and the introduction of new classes of drugs that demand thorough reviews.
"Xolair is one of a new class of therapies with novel targets and the FDA wants to make sure it's getting things correct," Hazlett said.
Ira Loss, an analyst with research firm Washington Analysis, said the Xolair and the Contak CD reviews were separate decisions, as were the other setbacks recently issued by the FDA and its advisory panels.
"In both cases there was a data shortfall and the fact that they happened at the same time can lead people to conclude that suddenly there's a major sea change at the FDA and there's a great conspiracy underway to undermine American industry. But it's not true," Loss said.
"The requirements for approval are still the same today as they were a year ago and maybe, just maybe, the data being presented to the agency by the companies isn't measuring up as well as it used to."
ANTIBODY SHARES WOBBLE Other health-care stocks -- such as the issues of companies developing monoclonal antibodies like Xolair -- also fell as investors doubted the prospects for therapies similar to the ones recently reviewed by the FDA.
Antibodies are proteins the body makes in response to antigens -- or substances that trigger an immune reaction -- to ward off diseases and disorders.
ImClone Systems Inc. (NASDAQ:IMCL), which has filed for FDA approval of antibody drug IMC-C225 for colon cancer, saw its stock fall $3.97, or 8.11 percent, to $44.98. Shares of IDEC Pharmaceuticals Corp. (NASDAQ:IDPH), which is seeking approval for non-Hodgkins lymphoma treatment Zevalin, slumped $2.48, or 3.89 percent, to $61.30 on Nasdaq.
The FDA has already sought more information on Zevalin, a successor to non-Hodgkin's lymphoma cancer drug Rituxan, the company said on May 10.
And shares of Abgenix Inc. (NASDAQ:ABGX), which also develops humanized monoclonal antibodies, fell $3.65, or 9.6 percent, to $34.36.
Protein Design Labs Inc. (NASDAQ:PDLI), another developer of humanized monoclonal antibodies, fell $11.06, or 14.9 percent, to $63.19.
The American Stock Exchange Biotechnology index (BTK:), which tracks a range of biotechnology stocks, fell 5.59 percent on Tuesday.
"If you've got momentum in your current product line, that's a good thing," Stover said.
"But a new chemical entity or a new biological entity, if you were expecting it to be approved in the next six to nine months, you're going to put a much higher discount on those stocks.">> |
