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Viropharma HCV Drug/Drug Development Concerns
  Wyeth's Worries
Matthew Herper, 08.13.07, 6:00 AM ET,
A pair of decisions from the Food and Drug Administration and a stopped clinical trial have left drug giant Wyeth without three of the biggest hopes for future growth.
The bad results, the latest of which have sent Wyeth shares down 7.5%, should raise questions about whether Wyeth (nyse: WYE - news - people ) is doing a good job designing studies that answer the FDA's questions about its medicines' safety and efficacy. It also drives home the trouble that large pharmaceutical companies are having inventing new medicines, even as their old moneymakers approach a time when they will no longer have patent protection.
A Wyeth spokesman said the company has "always had appropriate interactions with the agency regarding our clinical trials and drug development programs." However, he said, the increasingly complex nature of drug development means that only a fifth of new medicines get past the FDA on their review.
Some industry observers have said that Big Pharma firms should try to more actively license drugs from smaller companies and biotech outfits in order to fill out their pipelines of experimental drugs. But Wyeth's troubles point out the problem with this strategy, too, because two of its three setbacks--the two announced today--both come from products it licensed from other companies.
Bifeprunox, a new antipsychotic licensed from Brussels-based Solvay, was supposed to compete with Abilify, an antipsychotic from Bristol-Myers Squibb (nyse: BMY - news - people ) and Otsuka that has seen its sales grow to $1.5 billion a year. Like Abilify, bifeprunox was supposed to be an option that did not cause severe weight gain for schizophrenics and other mentally ill patients.
But, according to Wyeth, the FDA said in a "not approvable" letter to the company that the drug is not effective enough to be used in patients who need short-term treatment. It might be approvable for patients whose schizophrenia is under control but who need to switch antipsychotics because their current drug is causing too much weight gain.
Unfortunately, the FDA also had questions about a patient death and the way the body processes the drug. Another clinical trial will be needed, and that could put off approval for two years. In a note to investors Friday morning, Goldman Sachs pharmaceutical analyst James Kelly wrote, "We believe the market will likely assume that the product will not come to market."
More bad news: Mid-stage trials of a new drug for hepatitis C being developed by Wyeth and biotech Viropharma (nasdaq: VPHM - news - people ) were stopped. An independent safety monitoring board decided that elevated liver enzymes in some patients raised questions about whether the drug was too toxic. Hepatitis C, a virus, is a disease that damages the liver. Viropharma shares plummeted 20%.
And that's not all. Earlier this month, the FDA rejected Wyeth's Pristiq, an antidepressant that was being tested for menopausal symptoms, saying it wants additional clinical trials on the drug's heart and liver side effects. That also is creating doubts about whether Pristiq will be approved as an antidepressant, a major concern since Wyeth's top seller, the antidepressant Effexor XR, is expected to go generic next year.
Even if these medicines get to market, it seems unlikely that they will replace the sales that Wyeth will lose as existing blockbusters face generic competition, according to Barbara Ryan, the pharmaceuticals analyst at Deutsche Bank. She wrote in a note to investors that Wyeth's earnings per share growth may be essentially flat through 2011.
The next big hope for Wyeth's pipeline is a treatment for Alzheimer's being developed with Ireland's Elan Pharmaceuticals. A previous version of the drug showed signs of efficacy but was scrapped because it caused brain swelling. Hopes were raised when the companies decided to start a late-stage trial of the drug, but data from mid-stage trials is not yet available, so it's difficult to know whether that bet will pay off.
Wyeth is also developing another medicine to treat menopause symptoms and a new drug for osteoporosis, a treatment for the side effects of morphine, and an improved version of its Prevnar vaccine, which prevents certain bacterial infections in infants and toddlers.
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