Sanofi (SAN) failed to win U.S. regulatory approval for its multiple sclerosis drug Lemtrada, denting the company’s ambitions of capturing a larger share of the $20 billion market for the disease.
The U.S. Food and Drug Administration said Sanofi’s Genzyme unit didn’t submit evidence from “adequate and well-controlled studies” showing that the benefits of Lemtrada outweigh its side effects, the Paris-based company said in a statement today. Sanofi disagrees with the conclusion and said it will appeal.
Lemtrada, which was approved in the European Union in September, was a key part of Sanofi’s $20.1 billion acquisition of Genzyme in 2011. The FDA indicated one or more additional trials comparing Lemtrada with another drug are needed for approval, Sanofi said. That would delay the product’s entry to a market dominated by Teva Pharmaceutical Industries Ltd. (TEVA:US)’s Copaxone, Biogen Idec Inc. (BIIB:US)’s Tecfidera, Avonex and Tysabri, Novartis AGâs (NOVN) Gilenya and Merck KGaA’s Rebif.
“This was a big blow for Sanofi, as Lemtrada would have provided a significant growth engine for the company as early as 2014,” said Eric Le Berrigaud, an analyst at Bryan Garnier in Paris. “The key question now is whether they will commit to financing new trials in a scenario in which they would be delayed by three years in entering a very crowded market in 2018 to 2019. I’m not very optimistic about the appeal of the FDA decision.”
Sanofi fell 0.3 percent to 76.28 euros in Paris. German partner Bayer AG (BAYN), which has the right to co-promote Lemtrada in the U.S. if it’s approved and would receive payments based on sales, declined 1.1 percent to 101.95 euros in Frankfurt.
The market for MS drugs will grow to $20.2 billion a year by 2017, according to a 2011 report by GlobalData, a London-based research company. Treatments against the disease totaled $11.6 billion last year, according to data compiled by Bloomberg Industries.
Sanofi submitted two late-stage clinical trials comparing treatment with Lemtrada to Rebif. An FDA advisory panel last month said Lemtrada was effective for preventing flare-ups, even as it said the trials weren’t conducted well enough to assess it. FDA staff determined in a Nov. 8 report that Lemtrada has “serious and potentially fatal safety issues” including risk of cancer and autoimmune and thyroid diseases.
“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,” Genzyme President David Meeker said in the statement. “This evidence was also the basis for the approvals of Lemtrada by other regulatory agencies around the world” such as Australia and Canada, where the drug was approved this month.
The drugmaker, which “does not believe further studies to evaluate the efficacy of Lemtrada are required,” is studying the FDA’s letter and considering further steps, including any appeal time frame, Jack Cox, a Sanofi spokesman, said by e-mail. The company “can’t speculate” on whether an appeal would succeed.
Multiple sclerosis is a debilitating disease in which the immune system attacks the central nervous system, causing symptoms such as coordination problems and spasticity, according to the National MS Society. Relapses, or flare-ups, are episodes of worsening neurological function.
Lemtrada is given in two annual courses of infusions that targets a protein on the surface of immune-system cells thought to cause the disease. Sanofi also sells Aubagio, which like Tecfidera and Gilenya is an oral medicine for MS.
As part of its acquisition of Genzyme, Sanofi issued so-called contingent value rights, or CVRs, to the U.S. company’s investors. Holders of the rights, which are publicly traded, stood to receive payments of as much as $14 a share by the end of 2020 if Sanofi met certain goals, most of them tied to the approval and sale of Lemtrada. Sanofi said in 2011 it missed the first of the goals.
The rights plunged 62 percent on Nov. 8 after the FDA published a report saying the drug may not offer enough benefit to patients to outweigh risks including cancer. The CVRs fell 61 percent to 32 cents at the close in New York.
Sanofi said it doesn’t expect that one of the milestones that will trigger a payment, Lemtrada approval in the U.S. by March 31, will be met.
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