Forest Settles Criminal Investigation Over Illegal Drug Marketing: Biotech's Latest Mishaps

by: The Burrill Report

Forest Pharmaceuticals (NYSE:FRX) has agreed to pay more than $300 million to settle charges stemming from a multiyear criminal investigation by the U.S. Food and Drug Administration over illegal marketing of drugs. The FDA, working in coordination with the U.S. Department of Justice, said that Forest Pharmaceuticals entered into a plea agreement in which the company accepted responsibility for criminal actions including distribution of an unapproved new drug, distribution of a misbranded drug, and obstruction of an FDA inspection. The settlement included $164 million in criminal penalties. Charges against Forest were primarily for its marketing of Levothroid, an unapproved drug used for the treatment of hypothyroidism.

Arena Pharmaceutical’s (NASDAQ:ARNA) shares plunged nearly 40 percent after a U.S. Food and Drug Administration advisory committee rejected its proposed weight loss drug lorcaserin. The reviewers expressed concern that potential risks of long-term use outweighed its benefit of modest weight loss. A briefing document issued two days earlier noted that the drug caused cancer in lab rats and succeeded by just “a slim margin” in meeting the FDA’s expectations for weight management. That news spurred a sell-off that drove Arena's shares down 38 percent as investors fretted over how the FDA's Endocrinologic & Metabolic Drugs Advisory Committee would vote. The committee’s recommendation often guides the FDA’s final decision on whether or not to grant marketing approval.

Sanofi-Aventis (NYSE:SNY) is closing a Pennsylvania research and development site and cutting more than 400 jobs along with it, reports The Mercury. Clinical supply and related support activities will continue there in Great Valley, according to the report. The decision came after a company review concluded that Sanofi needed to consolidate its R&D activities.

Seattle Genetics (NASDAQ:SGEN) said a mid-stage trial of its experimental drug to treat acute myeloid leukemia failed to extend overall survival. The Bothell, Washington-based company said it would discontinue development of lintuzumab, a naked monoclonal antibody that targets the CD33 antigen. The company said it would continue to focus on advancing its lead product candidate, brentuximab vedotin and other products in its pipeline. The company is expected to report top-line data from two brentuximab vedotin clinical trials within the next six weeks. The company hopes to submit an application to the U.S. Food and Drug Administration in the first half of 2011 for clearance to market the drug.

Neurocrine Biosciences (NASDAQ:NBIX) said top-line efficacy and safety results from a mid-stage clinical trial of its experimental drug GSK561679 in patients currently experiencing a major depressive episode conducted by GlaxoSmithKline (NYSE:GSK) showed no benefit. The company said from a safety perspective, there were no significant adverse events, and the drug was generally well tolerated. Neurocrine said it plans to meet with GSK in the coming months after the full clinical data set is complete to determine the next steps for its depression program.

Transition Therapeutics said that a clinical study of gastrin analogue TT-223 in combination with a Lilly (NYSE:LLY) proprietary GLP-1 analogue in patients with type 2 diabetes did not meet its efficacy endpoints. Given these findings, Toronto-based Transition and partner Eli Lilly are ending further development of TT-223. The study was a randomized, double-blind, placebo-controlled study in approximately 150 patients to evaluate the safety, tolerability and efficacy of daily TT-223 treatments in combination with weekly administrations of GLP-1 analogue, for a combination treatment period of 4 weeks with a 5-month follow-up. Transition and Lilly will continue development of their other diabetes compound as it acts through a distinctly different mechanism of action from gastrin based therapies. The licensing arrangement is unaffected by the TT-223 clinical study results.

AstraZeneca (NYSE:AZN) said the U.S. Food and Drug Administration notified it that it needs additional time to review its application to begin marketing its experimental drug ticagrelor, an oral antiplatelet to treat acute coronary syndromes. The agency is expected to act on the application by December 16, a 90 day delay. Ticagrelor is currently under regulatory review in nine additional territories around the world, including the European Union, Canada, and Brazil.

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