Never mind a consent decree. Genzyme (GENZ) continues to have manufacturing problems at its Allston Landing, Massachusetts facility. The biotech Wednesday disclosed that a lot of its Fabrazyme med, which is used to treat Fabry disease, was rejected for failing to meet quality standards and the move will further limit supplies to patients who are already suffering from rationing.
“As you know, we have been operating with very limited inventory of Fabrazyme. Because inventory is so limited, loss of this specific lot of Fabrazyme will have an impact on some patients in the coming months. For some patients, this may mean delaying scheduled infusions immediately; for some patients, it may mean missing one or more infusions altogether over the next few months. All regions will share the impact of this reduction in supply,” Genzyme wrote on its web site.
However, Genzyme refused to say how much medicine one lots represents, but did say that there are plans to fill and finish all future lots at a contract manufacturing facility that is already handling a large portion of Fabrazyme production. Despite the setback, Genzyme maintains Fabrazyme should return to normal supplies in the second half of 2011, after a new facility in Framingham, Ma., is approved by the FDA. Until then inventor will remain low and availability of existing supplies, meanwhile, will vary from region to region.
The ongoing shortage has not only made life difficult for patients, but caused controversy. A half dozen people who suffer from Fabry disease have filed a lawsuit against Genzyme and Mt. Sinai Medical School for the way ongoing shortages of the Fabrazyme treatment is being handled. The med is the only treatment approved by the FDA for the rare, but life-threatening genetic disease, but Genzyme is rationing due to long-running production problems.
Last year, Genzyme agreed to a consent decree (pdf) and to pay $175 million for its many manufacturing sins. These include a remediation plan that will take up to three years to complete and if milestones aren’t met, the FDA can require a fine of $15,000 a day, for each affected drug, until everything is on track. Then, there is five years of oversight and annual reports. The biotech’s troubles began two years ago, when its Allston Landing plant was shut down for several weeks to remediate viral contamination. Later, bits of trash were found in some products (see here).
The setbacks prompted outrage from large shareholders, notably a proxy fight launched by Carl Icahn, but also weakened Genzyme stock to the point where Sanofi-Aventis (SNY) agreed to acquire the biotech for $20 billion (look here), or $74 a share, plus an unusual contingent value rights (CVR) that will be priced depending on various factors, such as fixing manufacturing problems and whether the Campath leukemia med is approved for multiple sclerosis.
ISI Group biotech analyst Mark Schoenebaum wrote in an investor note that Genzyme “does not believe this news will impact its ability to hit the CVR threshold of 79,000 units of Fabrazyme production in 2011 that is required for the CVR payment. In other words, the 79,000 unit goal includes an assumption for some failed lots.” He added that Genzyme also maintains the 79,000 unit production can be achieved even if the Framlingham plant is not approved this year. However, the company does expect the new plant to be approved, and notes that this provides a ‘buffer’ to achieve the 79,000 unit level.