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Centocor's Avakine Gets Warm Reception From FDA
By Jesse Eisinger
Senior Writer
BETHESDA, Md -- Centocor (CNTO:Nasdaq) received a modestly
stronger-than-expected endorsement for its Crohn's disease drug, Avakine,
surprising even some bulls who attended the Food and Drug Administration
advisory committee meeting here.
The FDA's Gastrointestinal Drugs Advisory Committee unanimously voted (8 to
0) to recommend approval of the drug for patients with the chronic,
incurable inflammatory bowel disease that afflicts somewhere between
200,000 to a quarter of a million people in the U.S. The panel recommended
restrictions, but the recommended strictures weren't nearly as tough as
some analysts had expected. If approved -- which it should be since the FDA
generally follows the advice of its panels -- Avakine will be the second
drug approved for the disease and the first biotechnology product developed
for the illness.
"They got everything that reasonably, without smoking dope, they could have
hoped to get," said Jon Alsenas, a Centocor bull from Furman Selz.
Avakine is the second Centocor drug approved in the U.S., and Wall Street
expects it to be a major contributor to the company's sales and earnings.
The FDA should act on the approval by the end of June, and the company
anticipates launching the drug in September with a sales force of 45. David
Holveck, Centocor's chief executive officer, endorsed Wall Street's
estimates for sales of about $35 million this year. Mike King, an analyst
for Vector, said he thinks the drug will sell $75 million in 1999,
including sales overseas. The company had sales of $196.4 million in 1997
(up from $132.1 million in 1996), largely from sales of its heart drug
ReoPro.
"This is a first step for Crohn's patients. People have very little," said
Holveck. "We came away with the label that we looked for."
Holveck's goal has been to transform Centocor from a niche biotech company
into a fully integrated, first-tier drug company. He declared proudly that,
with the recommendation, "We can start to be a biopharmaceutical company."
Going into the meeting, Wall Street expected approval of the drug, but the
investment community was watching closely to see what kind of restrictions
the panel recommended. In addition, analysts wanted to test the depth of
concern about potential side effects. In the end, the panel decided that
the benefits outweighed the side effects, which included serious
infections, possibly an increase in malignancies and immune responses that
make long-term use ineffective in some users.
The panel recommended two restrictions on Avakine, which is a monoclonal
antibody to a key immune system protein called tumor necrosis factor. After
a discussion that ended with the panel members correcting the language to
make the subject and verb agree, the panel ended up voting unanimously to
recommend the drug for patients with "moderate to severe Crohn's, in whom
conventional therapies are inadequate." The panel also guided the FDA to
put into the eventual label on Avakine some language about the drug's
efficacy in closing "draining fistulae," which are tunneling wounds that
burst out to the skin from the bowels and leak intestinal fluids, like
feces. About 30% of Crohn's patients have fistulae, but it isn't clear how
many tunnel out to the skin.
Wall Street investors and analysts said the panel's recommendation to make
the drug available to patients who had previously received "inadequate"
treatment rather than to those who had previously received treatment that
had "failed" opened up the potential for more widespread use of the drug.
Centocor bulls were heartened that the panel didn't restrict the drug to
simply patients with fistulae.
Despite a pop in the stock at the end of trading on Wednesday (the stock
was halted all day Thursday), Centocor shares are expected to rise Friday,
perhaps by as much as five bucks. The stock closed Wednesday at 41 3/8.
There are concerns about the drug that couldn't be answered by the small
number of patients tested in Centocor's four Crohn's trials. For instance,
the effectiveness of the drug over the long-term is not yet known. From the
way the panel was leaning, use of Avakine as a "first-line" drug -- in
other words, before other therapies like steroids -- remains unlikely. "If
I were a clinician, I would not use it first-line for Crohn's," said
Alsenas, pointing out that competing treatments for the disease were
cheaper. However, he indicated that the broad wording of the label -- if
the FDA agrees to it -- should prevent any insurers from not reimbursing
patients for the cost of the drug.
Safety issues were a concern for the panel as well. But all drugs that
Crohn's disease patients take have serious side effects. The incidence of
serious infections in Avakine has been 3.3% compared with 1.8% in the
placebo. One panel member in particular was concerned with the immune
responses seen. These responses could make chronic use ineffective, which
would severely diminish how much Centocor sells of this medicine.
The panel was not so concerned about malignancies and decided that the nine
found in patients treated with Avakine in all trials were not a major
concern, but needed monitoring.
Centocor has completed a 420-patient Phase III trial of the drug in
rheumatoid arthritis, an autoimmune inflammatory disease. Results should be
out in the fourth quarter, said Holveck. The company plans to conduct
another Crohn's disease trial that looks at chronic use of the drug.
Alsenas, who foresees some penetration in the multibillion-dollar market
for RA, expects the drug to sell annually at peak between $400 million and
$500 million.
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Thursday Evening Update: FDA Recommends Approval for Centocor Drug
By Heather Moore
Staff Reporter
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