Weekly Pharma Roundup: GSK Settles, Vivus Disappoints, Ely Lilly Axes

by: The Burrill Report

GlaxoSmithKline (NYSE:GSK) said that it expects to record a legal charge for the second quarter of 2010 of $2.36 billion relating to settlements of product liability litigation concerning its diabetes drug Avandia and anti-trust litigations relating to Paxil and other products, as well as the U.S. government’s investigation into its former manufacturing facility in Cidra, Puerto Rico. The company confirms it has reached an agreement in principle with the U.S. Attorney’s Office for the District of Massachusetts and the U.S. Department of Justice to pay a total of $750 million in the settlement of the Cidra investigation. The legal charge announced includes provisioning for settled cases and an estimate for those cases which GSK has received and are still outstanding. Terms of the settlements reached are confidential. The charge also includes provisioning relating to other legal matters.

The U.S. subsidiary of Novartis Pharmaceuticals (NYSE:NVS) said it agreed to pay $152.5 million as part of a settlement of alleged sexual discrimination. In addition, the company will fund improvements to policies and programs with approximately an additional $22.5 million. Novartis contends that the alleged behavior described during the trial in the Southern District of New York is not systemic, but acknowledged there had been problems.

“The trial revealed that some of our associates had experiences influenced by managerial behavior inconsistent with our values,” says Joe Jimenez, CEO of Novartis AG. “As a company we are now even more strongly resolved to ensure that all our employees act and behave in accordance with our corporate values. We aspire to be a leader in diversity and inclusion, and I am committed to implementing decisive measures to ensure that we act in accordance with our values.”

Vernalis (OTCPK:VNLPY) and Biogen Idec (NASDAQ:BIIB) are discontinuing development of their experimental Parkinson’s drug vipadenant despite positive mid-stage clinical results because of a review of preclinical toxicology studies. Vipadenant is an A2A receptor antagonist and the two companies will continue to advance an alternative compound in the group that is also in development. Vernalis and Biogen Idec expect to progress the next generation compound into early-stage clinical studies in early 2011.

An FDA review of closely watched prescription obesity drug Qnexa ended in disappointment for its developer, Vivus (NASDAQ:VVUS), as concerns about a lack of long-term safety data led experts to recommend against the drug’s approval. The news delivered a drubbing to Vivus’ stock, which fell more than 60 percent following the vote, wiping out more than $500 million in market cap for the company. The FDA's Endocrinologic and Metabolic Drugs Advisory Committee split, with 6 members recommending approval of Qnexa and 10 recommending against approval, according to reports. The agency almost always follows the committee's recommendation, although Vivus holds out hope that it may not in this case.

Eli Lilly (NYSE:LLY) plans to eliminate 170 jobs from its manufacturing and quality division as part of ongoing cost cutting efforts as expirations of key patents approach, the Indianapolis Business Journal reported. The cuts represent about 5 percent of the manufacturing personnel in the United States. In September 2009 the company said it was seeking to cut 5,500 workers as part of an effort to reduce annual expenses by $1 billion.

The U.S. Food and Drug Administration is adding information on severe liver injury to the Boxed Warning of Arava (leflunomide)–a drug used to treat rheumatoid arthritis and marketed by Sanofi-Aventis (NYSE:SNY). The boxed warning is meant to highlight the risk of severe liver injury in patients using this drug and how this risk may be reduced. The agency previously required a Boxed Warning stating that leflunomide was contraindicated in pregnant women, or women of childbearing potential who were not using reliable contraception.

Although a bolded warning statement on severe liver injury was added to the leflunomide drug label in 2003, FDA determined that information on severe liver injury should be included in the Boxed Warning to highlight the importance of appropriate patient selection before starting treatment, and monitoring once treatment has begun. The decision to add information on severe liver injury to the Boxed Warning was based on FDA’s 2010 review of adverse event reports which identified 49 cases of severe liver injury, including 14 cases of fatal liver failure, between August 2002 and May 2009. The greatest risk for liver injury was seen in patients taking other drugs known to cause liver injury, and patients with pre-existing liver disease.