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 The U.S. Food & Drug Administration (FDA) rejected
Lemtrada for launch in the world's biggest drug market on the
grounds that Genzyme had not shown its benefits outweighed its
"serious adverse effects", Sanofi said on Monday.
The FDA also demanded Sanofi carry out further clinical trials using
different designs and methods prior to approval, Sanofi said. The
company said it strongly disagreed with the decision and planned to
appeal.
Lemtrada is designed to treat relapsing remitting multiple
sclerosis, the most common form of the disease. It was approved in
September by European regulators in a market dominated by rivals
Biogen Idec, Novartis and Teva Pharmaceutical Industries.
The FDA ruling could impact the value of Sanofi's Genzyme takeover,
since the latter's shareholders had received so-called contingent
value rights (CVRs) entitling them to future payments of up to $14 a
share if certain goals were met.
Sanofi said on Monday it did not expect to meet the CVR milestone of
U.S. approval for Lemtrada by the end of March. Other milestones are
related to the drug's sales and would likely be hard to reach
without the U.S. market.
Analysts on average had expected Lemtrada to generate annual sales
of $707 million by 2018, according to forecasts compiled by Thomson
Reuters.
Shares in Sanofi were down 1.1 percent at 75.67 euros by 1019 GMT,
the biggest fallers in France's blue-chip CAC 40 index, which was
down 0.1 percent. Germany's Bayer, which has an option to co-promote
Lemtrada in the United States, saw its shares fall 0.5 percent.
"Genzyme's takeover was about catching up in biologics, having a
greater footprint in the United States, and also largely for
Lemtrada," said Eric Le Berrigaud, analyst at Bryan Garnier & Co.
"This is unquestionably a setback, as without a U.S. market such a
product doesn't have the same potential."
COSTLY PROCESS
The brokerage, which had forecast peak Lemtrada sales of $400
million in the United States, said it was scrapping the U.S. market
from its forecasts. It argued it would take Sanofi at least three
years to conduct the studies demanded by the FDA, and that, given an
increasingly crowded market for MS drugs, it could opt out of what
could be a lengthy and costly process.
But Renaud Murail, a fund manager at Barclays Bourse, said Monday's
development was no big surprise for investors who had already
factored in the risk of U.S. rejection. "Genzyme remains Sanofi's
gem and this is only a half-defeat," he said.
A Sanofi spokesman said it was reviewing the FDA letter and
evaluating its next steps, including the appeal timeline.
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Genzyme chief David Meeker said: "We strongly believe that the
clinical development program, which was designed to demonstrate how
Lemtrada compares against an active comparator as opposed to
placebo, provides robust evidence of efficacy and a favorable
benefit-risk profile."
The CVRs, which fell 7.6 percent to 82 cents on Friday, had slumped
as low as 46 cents in November following a review by an advisory
panel to the FDA which raised questions over the design of the
clinical trial and Lemtrada's potential to cause cancer and other
serious conditions.
A U.S. law firm acting on behalf of purchasers of the CVRs has
launched a class action alleging Sanofi misled investors over
Lemtrada's efficacy, safety and prospects.
Multiple sclerosis is a chronic, autoimmune condition which
affects more than 2 million people worldwide and up to 500,000 in
the U.S. It attacks the central nervous system and can cause muscle
weakness, pain and cognitive difficulties.
Lemtrada is given via an intravenous drip and designed to reprogram
the immune system, but can make the body more vulnerable to other
diseases. The multiple sclerosis market is increasingly moving away
from injectable treatments in favor of pills such as Novartis'
Gilenya and Biogen Idec's Tecfidera.
Some analysts expect Lemtrada, partly handicapped by its risk
profile and injectable form, will be reserved for patients for whom
other treatments are ineffective.
Sanofi also has an oral treatment, Aubagio, developed by Genzyme and
which has already been approved in the U.S. and Europe. Analysts on
average expect Aubagio sales to reach $854 million by 2018,
according to Thomson Reuters data.
($1 = 0.7258 euros)
(Additional reporting by Alexandre
Boksenbaum-Granier in Paris and Toni Clarke in Boston; editing by
John Stonestreet and David Holmes)
[© 2013 Thomson Reuters. All rights
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