Lou Gehrig’s Disease Drug Suffers Setback, Manufacturer’s Stock Plunges
NEW YORK (AP) _ Safety questions arose about a highly touted but experimental biotech drug to treat deadly Lou Gehrig’s disease, causing shares of the drug’s maker to plummet Friday.
While the news also pulled down many other biotechnology shares, analysts called the decline mild, which they saw as a sign of Wall Street’s rising confidence in the science of genetic engineering.
Cephalon Inc., of West Chester, Pa. said late Thursday night that the Food and Drug Administration delayed expanded use of the drug Myotrophin. The agency acted after a European study on 183 patients reported more people died who took the drug than those taking a dummy medicine.
Shares of Cephalon fell $12.50, or 35 percent, to $23.37 1/2 Friday on the Nasdaq Stock Market. Cephalon’s marketing partner, Chiron Corp., of Emeryville, Calif., lost $5.50, or 5 percent, to $104.
But the Nasdaq Biotechnology Index of 97 stocks fell a less dramatic 1.5 percent.
Analysts said the concerns about Myotrophin appear overblown and it still has a good chance of eventually gaining FDA approval as only the second drug in history to treat the disease.
Wall Street used to run away from biotech stocks whenever there was a research failure, accounting for extreme stock volatility and making the industry a highly risky investment.
David Stone, with Cowen & Co. in Boston, said investors have matured, along with the industry.
In fact, Stone said biotech may be on the verge of a breakthrough year.
``We see the potential for as many as 15 product approvals and launches this year, compared to six or seven last year and an average over the past 10 years of three. So this may be one product generating uncertainty in the minds of investors, but it’s one of many wending their way toward approval,″
Myotrophin is one of the highest profile medicines in biotech.
Last summer, unexpectedly positive test results on the drug on 266 people in North America helped trigger a powerful biotech stock rally that saw the Nasdaq biotech index soar 90 percent.
Lou Gehrig’s disease, also known as amyotrophic lateral sclerosis, is one of medicine’s deepest mysteries. It kills nerve cells so that victims eventually can’t breathe or eat. Victims often die within 3-5 years and there is no cure. About 30,000 Americans are afflicted.
Cephalon released a statement Thursday night saying the FDA had delayed expanded testing on the drug. The agency is apparently concerned that _ during the nine month European study period _ 14 percent of the patients who took Myotrophin died vs. only 9 percent of those who took a placebo.
Normally, findings that drug that kills more people than it helps are a fast ticket to the research waste heap.
But analysts said the results could be an aberration, especially since the earlier North American study was so successful. For instance, the earlier study reported that Myotrophin kept patients alive more than five months longer and extended the time that their muscles stayed strong.
Wole Fayemi, with Genesis Merchant Group Securities in San Francisco, said the death rates aren’t consistent with past studies.
``This drug has been in the clinic for the last seven or eight years under the guise of several companies and it’s been dosed two to three times higher and there never has been any mortality bias or even any side effect issue,″ he said.
Meirav Chovav at Salomon Brothers cautioned, however that the European findings can’t be ignored because they could delay full approval for the drug, which had been expected late this year or in 1997.
Mary Fisher, a spokeswoman for Cephalon, said the company and FDA have agreed to talk further and the agency may then OK the company’s plans for expanded use with several hundred more patients.
``We obviously believe Myotrophin has a role in the treatment of ALS and remain focused on our goals of pursuing not only discussions with the FDA but eventual application for approval as well,″ she said.
Edmund Debler, an analyst with the New York research firm Mehta & Isaly, said the pressure on the FDA to approve the drug is reduced because late last year it approved the first drug for ALS. Rilutek by Rhone-Poulenc Rorer Inc. extends the life of victims by about three months, but isn’t a cure.