Genzyme’s Woes Piling Up as FDA Panel Says Data on Leukemia Drug are Lacking

9/1/09Follow @xconomy

The bad news just keeps flowing for Genzyme. Today, an FDA advisory panel recommended against approving the company’s application to start marketing a leukemia drug to patients over 60, saying the Cambridge, MA-based biotech giant hadn’t produced enough evidence that the drug is safe and effective for those patients. The agency isn’t required to follow such recommendations, but it usually does.

The FDA’s panel of cancer drug experts voted 9-3 that Genzyme (NASDAQ: GENZ) ought to run a larger clinical trial that randomly assigns patients in the targeted age group with acute myeloid leukemia to take clofarabine (Clolar) or another drug, according to this Reuters report.

The Genzyme drug is already approved for a smaller population, children with leukemia. But Genzyme was hoping to grow the market for the drug to include elderly patients when it paid $345 million to get clofarabine through the acquisition of Bioenvision. The drug isn’t one of Genzyme’s biggest sellers, but it has strategic importance as part of a portfolio the company is putting together to become a bigger player in the field of cancer drug development. After the panel vote, Genzyme indicated in a statement that it “remains committed” to developing clofarabine for elderly patients.

For those following the news in this summer of Genzyme’s discontent, this is part of a pattern of painful setbacks at Genzyme. The company’s Allston, MA, biotech drug factory, was struck in June with a viral contamination, which caused a shortage of Genzyme’s top-selling drug, imiglucerase (Cerezyme) for Gaucher’s disease. That’s prompted two serious competitors, U.K.-based Shire and Israel-based Protalix BioTherapeutics, to speed up their alternative drugs to the market. Protalix has now gotten FDA clearance to offer its drug to a larger number of patients in clinical trials, and today Shire said it formally filed its application with the FDA to start marketing its Gaucher’s treatment.

And as the competitors attempt to pounce during this vulnerable moment, regulators are scrutinizing the company’s every move. Genzyme is getting ready to see if it can pass an FDA inspection at the Allston factory, but European regulators have already reported they found a “major” deficiency and several other shortcomings when they visited the factory during the week of Aug. 17. This means investors can’t blame the Allston problems on “an overzealous FDA,” said Christopher Raymond, an analyst with Robert W. Baird in Chicago, in a note to clients.

“It’s very surprising Allston still has deficiencies,” Raymond said in a note yesterday. “While we have urged patience until now, we are surprised that there are still significant deficiencies at Allston this late in the game.” He downgraded his rating on the stock to “neutral.”

What’s even worse for Genzyme is that this harsh critique is coming from regulators who were previously seen as friendlier to the company than the FDA. European regulators, after all, allowed Genzyme to manufacture a drug for Pompe disease at a larger scale to meet demand. The FDA has held up that request for many months by saying Genzyme needed to show more evidence the drug is equivalent to the same product made in smaller batches.

Could things get much worse? They could, according to Raymond. Genzyme recently disclosed that the FDA could withdraw the company’s orphan drug designation for agalsidase beta (Fabrazyme) and alglucosidase alfa (Myozyme). That status is important because it grants the company monopoly status for treatment of those rare diseases. Those two drugs, when added to imiglucerase, accounted for $511.7 million in second quarter sales—almost exactly half of the company’s total revenue.

Shares of Genzyme weren’t actually hurt that badly by today’s FDA panel vote. The stock dropped 32 cents to close at $55.39. The shares have dropped 16 percent year-to-date.

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