Genzyme Leads Fabry Race

20 January 2003 00:00  [Source: ICB Americas]

Genzyme General, a division of Genzyme Corp., has scored a victory in its race with Transkaryotic Therapies Inc. (TKT) to market Fabry's disease drugs in the US. A vote by a Food and Drug Administration (FDA) advisory panel suggests that Genzyme's product will win orphan drug status, which potentially carries seven years of marketing exclusivity. The news caused analysts to raise earnings per share (EPS) projections for Genzyme for 2004 and beyond, while sending TKT's shares plummeting.

Last week, the FDA advisory panel met to evaluate the merit of the biologics license application (BLA) for both Genzyme's Fabrazyme (agalsidase beta) and TKT's Replagal (agalsidase alfa). The panel ruled 14 to 1, in the only formal vote of the meeting, that the primary end point studied in the Phase III clinical trial of Fabrazyme (clearance of the substrate globotriaosylceramide from the renal capillary endothelium) is an appropriate surrogate marker for purposes of accelerated approval.

Though it did not formally recommend the drug for approval, asking Genzyme to complete a follow-on study, it appears likely that Fabrazyme will be the first drug to hit the market. The panel concluded by a unanimous vote that the clinical data for TKT's BLA for Replagal did not provide substantial evidence of efficacy.

"The negative meeting for Replagal and the same panel's positive meeting on Fabrazyme put Fabrazyme in the lead for US orphan drug status," says Morgan Stanley analyst Caroline Copithorne.

SG Cowen analyst Eric Schmidt projects approval for Fabrazyme in the second half of 2003 with US sales of $44 million in 2004 and $100 million in 2005. His EPS projections rose to $1.55 in 2004 and $1.85 in 2005, up 5 cents and 10 cents respectively. Genzyme's shares rose $3.70 to $32.61 on the news over the course of three trading days.

Because a drug granted orphan drug status wins seven years of marketing exclusivity, the panel decision could prove devastating to TKT. The company's shares were halted at $8.74 on Monday, January 13, and fell just over 25 percent when trading resumed on Wednesday, January 15.

TKT is seeking U.S. approval of Replagal based on functional clinical data of the kidney and heart, as well as renal pathology data as a surrogate end point for a potential accelerated ap-proval. The panel suggested the possibility that a re-read of the pathology data would demonstrate Replagal's effect on surrogate endpoints.

Formal FDA action on Fabrazyme is expected at the end of April. Replagal and Fabrazyme, sold in Europe, are slated to compete in a market estimated at $800 million by 2005. The drugs are genetically engineered forms of the lysosomal enzyme alpha-galactosidase A.

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