Biovail stock sinks after FDA rejects drug component
July 21, 2007
lost about one-fifth of its value yesterday after the drug manufacturer said it has failed to win approval from the U.S. Food and Drug Administration for a component of a new antidepressant.
Biovail shares sank to their lowest level since December on the news, reducing the market value of Canada’s largest publicly traded drug company by nearly $900-million in one day, with nearly 3.8 million shares traded on the Toronto Stock Exchange.
Analyst John Maletic at Scotia Capital Inc. said Biovail was hoping its new drug would counter some of the loss expected when its patent exclusivity expires on Wellbutrin XL, a time-release antidepressant that accounts for a substantial portion of its revenue.
Mississauga, Ont.-based Biovail was expected to launch its once-daily formulation of bupropion, a component to be used in a new anti-smoking drug and antidepressant, in the fourth quarter of 2007, but now that likely won’t happen until the fourth quarter of 2008, said Paradigm Capital Inc. analyst Claude Camire.
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And this delay will affect the amount of competition the drug faces when it’s eventually launched, he said.
“This is a drug that was well-suited to be sold in the next few months because the market landscape is changing. There will be more competition, there will be more generic products out there,” Mr. Camire said. “Drug patents expire, the competition comes in. So just by the sheer fact that it’s being delayed by one year, it will have a long-term impact [on the company].”
Mr. Camire described the drug as a “much improved version of what’s out there,” but said governments in Canada and the United States tend to prescribe generic drugs because they’re cheaper.
“The government will usually prescribe a generic drug first and even though you have to take the drug three or four times a day, or even if there’s a small side effect, they don’t really care, unfortunately. It’s all about money,” he said.
The FDA’s decision had nothing to do with the safety or the efficacy of the drug. It was a technical disagreement over the methodology used in Biovail’s pharmacokinetic studies, said Nelson Isabel, Biovail’s vice-president of investor relations and corporate communications.
“It was a disagreement between ourselves and the FDA on the design of the pharmacokinetic studies used to support our application. They wanted a different methodology used. We believe our methodology was appropriate,” Mr. Isabel, said, adding that it’s not uncommon for the pharmaceutical industry to experience such setbacks in the approval of new drugs.
“We’re going to request a meeting with the FDA, hopefully in the very near term, to discuss the non-approval letter and determine the next step to get the product approved as quickly as possible.”
There is no question the product will get approved eventually, but the company may have to conduct another study, he added.
“We’re not questioning the ultimate approval of the product. It’s a timing matter at this point, in our minds.”
He said the setback is “disappointing” but the program’s not dead.
“We’re still very active in getting the product approved and we want to get it approved as quickly as possible. We’re looking forward to meeting with the FDA promptly to move this forward,” Mr. Isabel said.
Paradigm Capital is planning to revise its 2008 estimate for Biovail downwards, and they are reviewing its price, Mr. Camire said.
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