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Seattle Genetics (NASDAQ:SGEN) announced a change in the labeling of Adcetris, warning patients on this treatment that they are at risk, albeit extremely small, to develop progressive multifocal leukoencephalopathy (PML) -a rare, but potentially fatal brain infection. The etiology of PML in patients on Adcetris is debatable, but nonetheless the FDA has made this change a requirement. Per FDA guidance to the industry, a boxed warning is warranted mainly under the following conditions:

  • There is an adverse reaction so serious in proportion to the potential benefit from the drug (e.g., a fatal, life-threatening or permanently disabling adverse reaction) that it is essential that it be considered in assessing the risks and benefits of using the drug.

or

  • There is a serious adverse reaction that can be prevented or reduced in frequency or severity by appropriate use of the drug (e.g., patient selection, careful monitoring, avoiding certain concomitant therapy, addition of another drug or managing patients in a specific manner, avoiding use in a specific clinical situation).

or

  • FDA approved the drug with restrictions to ensure safe use because FDA concluded that the drug can be safely used only if distribution or use is restricted (e.g., under 21 CFR 314.520 and 601.42 “Approval with restrictions to assure safe use” or under 505-1(f)(3) of the Federal Food, Drug, and Cosmetic Act (FDCA) “Risk Evaluation and Mitigation Strategies” Elements to assure safe use).

In light of the risk-averse culture at the FDA, this change in labeling for Adcetris, a boxed warning, is nothing new and should be expected. The inclusion of the boxed warning in the labeling of Adcetris will not diminish the prospects of this highly efficacious compound nor will it slow the pace of sales. A number of highly successful medications, some of which are blockbusters, have been required to provide boxed warnings.

Six out of the top 10 drugs for 2010 by sales or 60% have boxed warnings. With 8.5 billion dollars in sales in 2011, the top-selling biologic, Remicade, has a boxed warning.

  • Infliximab (Remicade) by Janssen

o Best-selling biologic in 2011

o Sales of 8.5 billion dollars in 2011

o Boxed warning of “serious infection” that can result in hospitalization or death and “malignancy” that can be fatal.

  • Clopidogrel (Plavix) by Bristol-Myers (NYSE:BMY)

o Ranked #3 in sales in 2010

o Sales of 4.68 billion dollars in 2010

o Boxed warning of “diminished effectiveness in poor metabolizers” which can lead to cardiovascular death, heart attack, or stroke.

  • Salmeterol/Fluticasone (Advair) by GlaxoSmithKline (NYSE:GSK)

o Ranked #4 in sales in 2010

o Sales of 3.66 billion dollars in 2010.

o Although it is FDA approved for the treatment of asthma in patients 4 years of age and older, it has a boxed warning of “increasing the risk of asthma-related death”

  • Oxycodone (OxyContin) by Purdue Pharma

o Ranked #5 in sales in 2010

o Sales of 3.55 billion dollars in 2010

o Boxed warning of “fatal respiratory depression” and “abuse liability.”

  • Aripiprazole (Abilify) by Bristol-Myers (BMY)

o Ranked #6 in sales in 2010

o Sales of 3.51 billion dollars in 2010

o Boxed warning of “increased mortality in elderly patients with dementia-related psychosis” and “suicidality and antidepressant drugs.”

  • Quetiapine (Seroquel) by Astrazeneca (NYSE:AZN)

o Ranked #8 in sales in 2010

o Sales of 3.22 billion dollars in 2010

o Boxed warning of “increased mortality in elderly patients with dementia-related psychosis” and “suicidality and antidepressant drugs.”

  • Duloxetine (Cymbalta) by Eli Lilly (NYSE:LLY)

o Ranked #10 in sales in 2010

o Sales of 2.64 billion dollars in 2010

o Boxed warning of “suicidality and antidepressant drugs.”

Elan's (NYSE:ELN) Tysabri, a treatment for Crohn's disease and multiple sclerosis, had sales exceeding one billion dollars in 2010 with a progressive multifocal leukoencephalopathy boxed warning. With sales of 6.6 billion dollars in 2010, Rituxan by Genentech/Roche (OTCQX:RHHBY) also carries a boxed warning of progressive mulifocal leukoencephalopathy along with fatal infusion reactions, tumor lysis syndrome, and severe mucocutaneous syndrome-all of which can be fatal.

When the news of the labeling change was announced, shares in Seattle Genetics fell over 8% from the previous day’s closing price before recovering.

Worries about the labeling change are persistent, but unwarranted and will have no material impact on the strong sales trajectory of Adcetris. Boxed warnings generally do not have any substantial impact on sales of successful treatments, especially in life-threatening conditions. Adcetris has proven that it is life saving and highly efficacious in relapsed/refractory Hodgkin Lymphoma and Anaplastic Large Cell Lymphoma. Looking further ahead, Adcetris will have a large role in first-line treatment and the boxed warning will be more insignificant.

Disclaimer: All information is provided for informational purposes only and does not serve as investment advice or an offer of management services. There is no guarantee that the information is accurate. All information is subject to change, amendment, and correction without any notice. Any mention of current and past results does not indicate any future expectations or results. All investments are associated with risks and loss of money. Consult with a professional tax, accounting, legal, and/or investment advisor before making any investment decision.

Source: Seattle Genetics: Boxed Warning Is A Non-Event