Roche Plans Cutbacks on Pressure From Failures: Biotech's Latest Mishaps

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Includes: ABT, AGN, AZN, CLDX, PFE, RHHBY
by: The Burrill Report

Swiss pharmaceutical giant Roche (OTCQX:RHHBY), stung by recent setbacks and concerned about tightening healthcare budgets, said it will institute a cost-cutting plan. The company, which offered no detail on how deeply it would cut costs or where it would seek savings, said all parts of the organization are undergoing review and analysis and it would have specific measures in place and the potential impact on staffing by year end. The company said despite tightening healthcare budgets, it expects payers will increase allocations for treatments and diagnostic tools providing the highest medical value for patients. Part of its plan is to set the right priorities to ensure a success in the changing healthcare environment. Roche is awaiting a decision from the U.S. Food and Drug Administration as to whether the agency will follow the recommendation of an advisory panel and revoke its approval of the use of its drug Avastin in breast cancer. Roche’s setbacks in recent months include its failure to expand the use of Avastin for gastric cancer, the inability to win priority review for its experimental drug T-DM1, and the scrapping of its Rituxan successor.

Celldex Therapeutics (NASDAQ:CLDX) fell nearly 40 percent after it announced that Pfizer (NYSE:PFE) has terminated its development and commercialization agreement for the cancer vaccine rindopepimut. Celldex will regain full worldwide rights November 1 to the therapeutic vaccine that targets the tumor-specific molecule EGFRvIII in patents with glioblastoma multiform, the most common form of brain cancer. Celldex and Pfizer Vaccines entered into a global development and commercialization agreement in April 2008 for rindopepimut. Pfizer told the company that the program is no longer a strategic priority for Pfizer. Celldex said rindopepimut has met or exceeded all pre-determined safety and efficacy objectives. The program has completed a multi-center phase 2 study, the development of a diagnostic companion product, the manufacture of drug supply for clinical studies, and the execution of discussions with regulatory agencies on the design of a global controlled study.

The U.S. Department of Justice said Allergan (NYSE:AGN) has agreed to plead guilty and pay $600 million to resolve its criminal and civil liability arising from the company’s unlawful promotion of Botox for off-label use. The resolution includes a criminal fine and forfeiture totaling $375 million and a civil settlement with the federal government and the states of $225 million. The DOJ said Allergan promoted Botox for headache, pain, spasticity and juvenile cerebral palsy–none of which were approved by the FDA. According to the agency, Allergan made it a top corporate priority to maximize sales of Botox for such off-label uses. Botox is a prescription biological product containing botulinum toxin type A, a purified neurotoxin. It is approved to treat a variety of conditions including crossed eyes, involuntary eyelid muscle contraction, involuntary neck muscle contraction, excessive underarm sweating, and adult upper-limb spasticity.

The U.S. Food and Drug Administration told AstraZeneca’s (NYSE:AZN) MedImmune that it would not approve its experimental monoclonal antibody motavizumab to prevent serious RSV disease without an additional clinical trial that shows a satisfactory balance between risk and benefit. MedImmune first filed for approval of motavizumab in January 2008, but the FDA sent it a complete response letter at that time.

An Abbott Laboratories (NYSE:ABT) funded study suggested the company’s weight-loss drug Meridia increases the risk of heart attacks and strokes in patients with heart disease, Reuters reported. The study, published in the New England Journal of Medicine, found that patients using Meridia had a 16 percent greater risk of heart problems than patients using a placebo. Patients using the drug, however, showed no increased risk of death. Users of the drug lost an average of 8.8 pounds. The publication of the data comes two weeks before the U.S. Food and Drug Administration holds a hearing to consider whether to take further action against the drug, which has already been withdrawn in Europe.

The U.S. Food and Drug Administration said that use of Pfizer’s intravenous antibiotic Tygacil is associated with an increased risk of death compared to other drugs used to treat a variety of serious infections. The agency has updated the Tygacil drug label to include information regarding increased mortality risk of the drug. The increased risk was determined using a pooled analysis of clinical trials. The agency said the cause of the excess death in these trials is often uncertain, but it is likely that most deaths in patients with these severe infections were related to progression of the infection. The increased risk was seen most clearly in patients treated for hospital-acquired pneumonia, especially ventilator-associated pneumonia, but was also seen in patients with complicated skin and skin structure infections, complicated intra-abdominal infections and diabetic foot infections. Tygacil is not approved for the treatment of hospital-acquired pneumonia (including ventilator-associated pneumonia) or diabetic foot infection. Tygacil is approved by FDA for the treatment of complicated skin and skin structure infections, complicated intra-abdominal infections, and community acquired pneumonia.