DID - March 17, 2009 Issue

Vol. 8 No. 52

Schering-Plough Resolves Lawsuit Alleging Cover-Up of GMP Problems

Schering-Plough will pay $165 million to resolve a class-action lawsuit alleging it failed to disclose manufacturing issues that resulted in delayed FDA approval for its allergy drug Clarinex.

The plaintiffs claim Schering-Plough violated federal securities laws by failing to disclose “the alleged depth and severity” of manufacturing issues affecting plants in New Jersey and Puerto Rico, according to a Feb. 27 company filing with the SEC.

Plaintiffs in the suit had acquired Schering-Plough shares from July 25, 2000, to Feb. 15, 2001. The company’s failure to disclose the extent of its manufacturing problems falsely implied there were no roadblocks to obtaining approval for Clarinex (desloratadine), according to court documents. The plaintiffs claim in the court documents that they were harmed because they bought Schering-Plough’s stock at prices that were artificially inflated by the company.

Plant Deficiencies in 1999

Schering-Plough reported in September 1999 that it was recalling some of its aerosol inhaler products because of manufacturing deficiencies at plants in New Jersey and Puerto Rico. “Unbeknownst to the public, the manufacturing problems that the Company was experiencing were much more severe and widespread than were being disclosed,” the plaintiffs allege.

The company issued a number of press releases in the next year showing its net income had increased compared with the same quarter in 1999, leading financial analysts to give the stock high ratings. 

Schering-Plough also maintained that Clarinex approval was imminent until Feb. 15, 2001, when it disclosed the full extent of its manufacturing problems and was forced to reduce sales and earnings expectations for the first quarter and full year, the plaintiffs say.

At the same time, the company revealed the FDA would not grant final approval for Clarinex until all manufacturing deficiencies were resolved, according to court documents. The company’s stock sank in after-hours trading from $48.32 a share to $38.75, according to court documents. Shortly thereafter, a number of shareholders filed suit.

The U.S. District Court for the District of New Jersey preliminarily approved the settlement Feb. 18. A final hearing to resolve the case, In Re Schering-Plough Corporation Securities Litigation, is scheduled for June 1, according to the company’s Feb. 27 SEC filing. — Elizabeth Jones


Shire Pulls European Application for Daytrana

Shire has withdrawn its EU marketing authorization application for Daytrana to treat attention deficit hyperactivity disorder (ADHD), citing European regulators’ request to conduct an additional clinical trial in a European population.

The company, which licenses Daytrana (methylphenidate) from Noven Pharmaceuticals, also cited its recently announced plans to acquire the worldwide rights (excluding Barbados and North America) to other ADHD treatments, Equasym IR (methylphenidate HCl) and Equasym XL, as another reason for withdrawing the application for Daytrana in Europe. The drug-rights acquisition is expected to close in the second quarter.

Shire said it is committed to selling Daytrana in the U.S., where the product has been used as a pediatric ADHD treatment since 2006.

Shire is working on introducing its other ADHD treatments, including Vyvanse (lisdexamfetamine dimesylate), outside the U.S. The company is enrolling patients in two European ADHD trials for that drug.

Noven’s 2009 revenue will not be affected by Shire’s decision to pull its European application for Daytrana, Michael Price, Noven’s vice president and chief financial officer, says in a statement. — Martin Gidron


United Therapeutics Probably Faces Approval Delay for Inhaled Drug

United Therapeutics has announced that FDA approval of its Tyvaso pulmonary hypertension drug probably will be delayed.

The company, which had anticipated an April 30 action date on Tyvaso (treprostinil), cites agency questions about whether patients can understand instructions for use (IFU) of the OptiNeb portable nebulizer that delivers Tyvaso.

Roger Jeffs, United Therapeutics’ president and chief operating officer, says in a statement that following recent discussions with the FDA, the company agreed to test patient understanding of its revised IFU to show it leads to proper use of the device by patients who hadn’t used this OptiNeb nebulizer before.

“This relatively small study in normal subjects will test the new IFU in its ability to guide patients to accomplish such tasks as proper device assembly, drug administration, disassembly and cleaning, among other things,” Jeffs says.

Martine Rothblatt, United Therapeutics’ chairman and CEO, says, “We felt it was our responsibility to inform our shareholders in advance of any formal notice from the FDA. We hope that any delay related to this issue will be limited to just a few months.”

The FDA refused to comment on the anticipated delay, citing federal regulations. — David Belian


Barr Is Sued by Shire for Infringing on Renal Drug Patent

Shire has sued Barr Laboratories, the wholly owned subsidiary of Teva Pharmaceutical Industries, for infringing on its patent for the drug Fosrenol, which reduces serum phosphate in patients with end-stage renal disease.

Shire alleges in the lawsuit filed in the U.S. District Court of the Southern District of New York that Barr is infringing on three of its patents for Fosrenol (lanthanum carbonate) by filing an ANDA to market generic versions of the drug in 500-, 750- and 1,000-mg doses.

“Under the Hatch-Waxman Act, because Shire filed its patent infringement lawsuit within 45 days of receiving Barr’s Paragraph IV notification letter, the FDA must refrain from approving Barr’s ANDA for 30 months, or until a District Court decision finding that the patents are invalid or not infringed, whichever occurs earlier,” Shire says in a statement.

The stay will expire April 26, 2012, unless terminated earlier. One of the three patents cited in the suit expires in October 2018, and the other two expire in August 2024.

Teva spokeswoman Denise Bradley declined to comment on the suit. — Martin Gidron


Meda’s Insomnia Drug Wins FDA Approval

The FDA has approved Edluar, Swedish drugmaker Meda’s short-term insomnia treatment.

Edluar (zolpidem) was approved in 5- and 10-mg formulations and uses Swedish drugmaker Orexo’s patented sublingual tablet. Orexo will get a $5 million milestone payment based on the product labeling and also receive royalties on Meda’s sales of the drug, according to an agreement between the two companies.

Meda hopes to launch the product in the second half of the year, Torbjorn Bjerke, CEO of Orexo, says in a statement.
“Edluar provides a convenient sublingual administration and we believe that this offers insomnia sufferers an effective alternative,” Bjerke said. — David Belian

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