Bloomberg News

Shire Drops After Pulling U.S. Application for Replagal

March 15, 2012

Shire Plc (SHP) fell in London trading after withdrawing a U.S. application for approval of its Replagal drug for a rare genetic disorder.

The Food and Drug Administration, which was scheduled to make a decision on the drug in May, will probably now require additional trials of Replagal before approving it as a treatment for Fabry disease, the Dublin-based company said in a statement late yesterday.

“An approval of Replagal for U.S. patients would only be possible in the distant future,” Shire said in the statement. The decision won’t affect financial forecasts for this year, the company said.

The decision may allow Sanofi’s (SAN) competing treatment, Fabrazyme, to gain market share, said Peter Welford, an analyst at Jefferies International Ltd. in London, who cut his peak sales forecast for Replagal by $95 million. He has a “hold” recommendation on Shire’s stock.

A 2009 virus contamination at Genzyme Corp.’s plant in Allston, Massachusetts, led to shortages of Fabrazyme and Cerezyme for Gaucher disease. Genzyme repeatedly missed its own targets for fixing the manufacturing snags, which sent the share price tumbling and opened the door for Sanofi to acquire Genzyme last year for at least $20.1 billion.

Shire and Sanofi make the majority of treatments for Fabry disease. Shire took some market share from Sanofi, helped by the FDA’s allowing Shire to give Replagal away for free pending U.S. approval. The supply constraints helped double Shire’s share of the European market for Replagal, which has been available in Europe for more than a decade.

‘Surprise Setback’

The withdrawal is “a surprise setback for Shire,” Welford wrote in a report to clients today. A new trial “would take at least two years and is probably not economically justifiable.”

Shire fell 3.1 percent to close at 2,158 pence in London. The stock has returned 23 percent in the past year including reinvested dividends, giving the company a market value of 12.1 billion pounds ($19.1 billion). Sanofi rose 0.1 percent to 59.33 euros.

“Shire has had a close partnership with the global Fabry patient community for over 10 years, and we are extremely disappointed that we feel compelled to make this decision,” said Sylvie Gregoire, president of the company’s Human Genetic Therapies unit.

Sanofi’s Outlook

Shire sought approval in the U.S. at the encouragement of the FDA amid the Fabrazyme supply shortage and the agency didn’t raise concerns over Replagal’s safety, the company said. The drugmaker will wind down its program to supply doses for U.S. patients at no charge, said Jessica Cotrone, a spokeswoman.

“Sanofi believes this situation will provide an upside to Fabryzyme growth as production recovers,” Jean-Marc Podvin, a spokesman, said by e-mail. The Paris-based company won approval from the FDA and the EU’s European Medicines Agency for a new manufacturing plant in Framingham, Massachusetts, that will allow increased production of Fabrazyme.

“With the January approvals from both FDA and EMA of our Framingham manufacturing facility, we have returned patients in the U.S. to normal dosing,” Podvin wrote. “We are pleased that our manufacturing recovery is very much on track, and we are focusing our efforts on returning all patients to normal, optimal dosing.”

Fabry and Gaucher diseases, called lysomal storage disorders, are caused by a low levels of certain enzymes needed to break down fatty substances that can build up in the body’s organs. Patients rely on bi-monthly, intravenous infusions of the drugs to maintain organ function.

For Shire, “it’s a slight disappointment,” Mark Clark, an analyst at Deutsche Bank in London, said in a report to clients. “But Sanofi/Genzyme has won the U.S. race.”

To contact the reporters on this story: Trista Kelley in London at tkelley2@bloomberg.net

To contact the editor responsible for this story: Phil Serafino at pserafino@bloomberg.net


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