Gilead Sciences (NASDAQ:GILD) just can’t get it right. Earlier this year, the FDA inspected its San Dimas, California, facility, which yielded a so-called 483 inspectional report citing various problems with the agency’s Good Manufacturing Practices. The biotech responded but to no avail. The FDA has now issued a warning letter and Gilead may be forced to curtail exports of the AmBisome antifungal treatment.
The problems, which were noted in a filing with the US Securities and Exchange Commission, include control systems and monitoring, procedures to prevent microbiological contamination and preventative cleaning and equipment maintenance. Quality procedures and controls were also noted for certain lots of the Viread AIDS med and the overall “effectiveness” of the plant in carrying out its responsibilities. Not a good showing.
For its part, Gilead writes that it is “working diligently” with the FDA to resolve the issues. But if improvements aren’t made, the agency could withhold approval of pending drug applications listing the San Dimas facility and Gilead’s ability to supply aseptic products made at the San Dimas plant - Cayston and Macugen - outside the US could feel the sting.
Wall street analysts downplayed the impact. “We don’t think the letter is likely to materially affect supply of the drug. Ambisome represents about 4 percent of Gilead’s revenue and roughtly that much of earnings per share,” biotech analyst Marc Schoenebaum of ISI Group wrote in a note.
And RW Baird analyst Tom Russo says the warning letter was expected, since Gilead disclosed the possibility several months ago. “Regulatory commotion like this is obviously never positive, but it was not entirely unexpected, thus far looks narrower in scope and, based on our conversation with the company, appears manageable,” he writes in an investor note.
However, he also pointed out that Gilead execs “did talk down this risk to some extent,” since the FDA hadn’t issued any warning since the biotech replied to the agency in March. And the issues surrounding Viread appear to be a new wrinkle, suggesting that Gilead execs may have demonstrated a bit too much bluster.