U.S. News

Wyeth Shares Fall After Schizophrenia Drug Rejected by FDA


U.S. health officials have determined that a schizophrenia drug developed by Wyeth and two other drugmakers is not approvable, the companies said Friday, dealing Wyeth a second setback in less than a month on a product potentially close to the market. 

And in another blow to Wyeth, its partner on an experimental hepatitis C drug, ViroPharma , said on Friday that the companies were stopping a clinical trial of the medicine due to safety concerns.

Wyeth shares fell as much as 7.7 percent to their lowest point in more than a year.

Shares of Belgium's Solvay and H.Lundbeck of Denmark, which developed the drug with Wyeth, were each fell more than 3 percent. ViroPharma shares were off 20 percent.

Wyeth's problems heightened investor doubts about the company's ability to grow profits. Last month the company said FDA would not approve its Pristiq drug for hot flashes until it completes a lengthy new trial.

The Madison, New Jersey-based drugmaker faces generic competition to its Effexor antidepressant and Protonix ulcer drug in the next few years, and investors had hoped drugs like Pristiq and bifeprunox would help replace those blockbuster medicines.

"This is now three negative events we've seen with Wyeth," said Michael Castor, a portfolio manager with health care fund Sio Capital Management.

"With Wyeth facing the loss of significant (Effexor and Protonix) revenues now in the three-to-four-year time frame, and the new products that were going to replace those revenues either disappearing completely or being pushed out, it casts a big overhang on the company," Castor said.

Deutsche Bank analyst Barbara Ryan said, "Now everybody is focused on the (revenue and earnings) cliff in 2010 and 2011, and increasingly it looks like they don't have sufficient firepower to offset that."

The U.S. Food and Drug Administration concluded that effectiveness data for bifeprunox were not sufficient for approval when compared with other drugs, Wyeth said.

The agency also requested further information on the human metabolism of bifeprunox and the case of a patient who died while participating in one of the clinical trials, according to the company.

Natixis Bleichroeder analyst Jon LeCroy said he had forecast bifeprunox sales of $1 billion in the United States in 2011, but now assumes the product will not reach the market.

Studies have found bifeprunox to be less effective than other schizophrenia drugs but with fewer side effects, according to Wyeth and its partners. Older schizophrenia drugs have been linked to problems such as weight gain and elevated blood sugar.

Wyeth said the FDA action suggested the company could still gain approval for bifeprunox for the long-term maintenance of patients with schizophrenia. Company officials plan to meet with the FDA to determine how other studies might support eventual approval.

On a conference call with analysts, Wyeth officials said the product's approval would be delayed for one to two years while the company gathered clinical data to satisfy regulators.

The officials said the patient death occurred during a trial examining bifeprunox for acute treatment of schizophrenia. They said it was a complex case and the patient was on bifeprunox.

However, asked by an analyst about the issues the company needs to resolve about the drug, Wyeth officials said they were not safety issues.

LeCroy, of Natixis Bleichroeder, said even if the drug won approval for maintenance of schizophrenia, as opposed to acute treatment of the mental illness, such a market appeared limited.

"You're really looking at a case where you'd have to switch from an existing agent on someone who is already under control to this product, and physicians typically won't switch drugs when they're working," LeCroy said. "So I don't know who this would be appropriate for."

Bifeprunox is part of a family of drugs called atypical antipsychotics. It would compete with Johnson & Johnson's schizophrenia drug Risperdal, Eli Lilly's Zyprexa and other medicines.

In the case of the hepatitis C drug, HCV-796, ViroPharma said some patients developed elevated liver enzymes, a warning signal for liver damage. Wyeth and ViroPharma said they would analyze the data before deciding whether to continue development of the drug, but some analysts believe it is dead.

Wyeth shares were down $2.98, or 6 percent, to $46.60 in morning trade on the New York Stock Exchange. They are off more than 16 percent since before the announcement of the Pristiq setback.