J&J partner says EU rejecting drug for MRSA, other skin infections over problems with testing

J&J partner says EU rejecting skin infection drug

Johnson & Johnson said Friday it terminated a partnership to develop a highly touted drug for MRSA and other dangerous skin infections, after European regulators rejected it over concerns that data from tests run by J&J isn’t reliable.

Switzerland’s Basilea Pharmaceutica Ltd. discovered the antibiotic compound, called ceftobiprole. The company had been J&J’s partner since granting the world’s largest maker of health care products an exclusive worldwide license five years ago for a drug some analysts thought would be a blockbuster.

But U.S. regulators turned it down two months ago and on Friday, Basel-based Basilea said the European Committee for Medicinal Products for Human Use refused to approve the drug.

J&J then backed out of their deal, giving Basilea back global rights to the drug, which has only been approved in Canada and Switzerland.

Basilea said J&J would cover costs of a transition to ensure proper management of ongoing testing, manufacturing and other activities. But the money-losing Swiss company had barely $25 million in sales last year, so it can’t fund new studies without outside money.

J&J shares dipped 23 cents to $63.81 in trading Friday. Basilea shares jumped 9 percent to 73.0 Swiss francs in Swiss trading.

“Over time, you need to accumulate a lot of these” mid-tier drugs, so losing this one puts more pressure on the rest of J&J’s pipeline, said Miller Tabak analyst Les Funtleyder.

MRSA, a type of staph infection, is a growing public health concern as it becomes more common — and increasingly resistant to current antibiotics.

Most drugmakers stopped developing antibiotics years ago in favor of more-lucrative medicines patients must take year in and out for chronic conditions like heart disease, arthritis and diabetes.

One new MRSA drug, Vibativ, was launched in November, the first in a couple years, and while about a half-dozen drugs can treat MRSA, all either have side effects or don’t work in some types of infections or patients, said Dr. Brad Spellberg of Harbor-UCLA Medical Center.

“I’m really disappointed,” said Spellberg, who serves on the Infectious Diseases Society of America’s task force to stimulate development of new antibiotics. “We’d like to have more and we’d like to have better” drugs to fight MRSA.

Questions about the quality of clinical testing of ceftobiprole surfaced more than a year ago, and an arbitration process Basilea started last February to recover damages from J&J, based in New Brunswick, N.J., is ongoing.

Basilea officials on Friday wrote in an e-mail that J&J had breached their licensing agreement by delaying approval of the drug and that “Basilea’s initial significant damage claims, including milestone payments and additional damages … will increase as a result of this further delay.”

Last August, the U.S. Food and Drug Administration sent Johnson & Johnson a warning letter, stating “there was a failure to ensure proper monitoring of the studies as well as deficiencies in study conduct.” On Dec. 30, FDA said it would not approve the drug without at least two new studies.

By then, stock analysts had generally written off the drug’s future value to J&J, said Edward Jones analyst Linda Bannister, who earlier had thought “over time, this drug had the potential to be a blockbuster,” with peak sales of $1 billion a year.

“The question now is, is the drug efficacious, or are there safety issues, or was it just that the clinical trials” weren’t handled properly, she said. “If that’s the case, it’s unfortunate for patients.”

A study published in 2008, believed to be the most recent, found the number of MRSA infections jumped 50 percent, to 48 per 1,000 U.S. residents, from 1997 to 2005.

The European advisory committee, known by the acronym CHMP, had recommended in November 2008 that ceftobiprole be approved in the European Union.

However, the European Medicines Agency later took the unusual step of stopping the authorization process to review the quality and monitoring of patient tests at hospitals and other sites around the world.

Basilea said CHMP notified it the inspections found the final-stage human studies on which the approval application was based, run by Johnson & Johnson, “had not been conducted in compliance with (those rules) in some sites.”

“The CHMP indicated that, although the study results suggest that the medicine was beneficial to patients, it was concerned about how reliable the results were,” Basilea said in a statement. “The committee therefore recommended that, in light of the uncertainty surrounding the results, ceftobiprole should not be granted marketing authorization.”

The drug, which also showed promise for treating hospital-acquired pneumonia, would be known by the brand name Zeftera, or Zevtera in Europe.

Basilea and a Johnson & Johnson unit called Janssen-Cilag first applied to European regulators in June 2007 for approval of the drug, which J&J executives had long been touting to analysts.

On Friday, J&J said issued a three-sentence statement saying it had terminated the deal.

That left Basilea “scrambling right now” to find a new partner to fund the new tests that will be needed to get EU and U.S. approval, said analyst Steve Brozak of WBB Securities.

“If they get taken over, it’s a salvage takeover,” and original investors will lose money, he said.