ChemGenex Shares Plunge After Panel Ruling on Drug (Update3)...

ChemGenex Shares Plunge After Panel Ruling on Drug (Update3)
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By Molly Peterson and Simeon Bennett

March 23 (Bloomberg) -- ChemGenex Pharmaceuticals Ltd. plunged the most in 16 years in Sydney trading after U.S. regulators said they want to see more clinical test data before reviewing the company?s leukemia drug.

ChemGenex fell 25.5 Australian cents, or 37 percent, to 44 cents, the biggest decline since December 1993 and the lowest since May. Almost 65 million shares were traded, about 82 times the average daily volume over the past year.

Outside advisers to the Food and Drug Administration voted 7-1 yesterday in Gaithersburg, Maryland, that the agency should require a uniform test to ensure the Australian drugmaker?s Omapro is only used for patients with a genetic resistance to Novartis AG?s Gleevec. While the FDA usually follows its advisory committees? recommendations, it isn?t required to do so.

?The risks are that the data from the trial may be compromised,? Shane Storey, an analyst at Wilson HTM Investment Group in Brisbane, said after lowering his stock rating to ?sell? from ?buy.? ?We are disappointed by this outcome but can?t justify a different view until the question marks over data integrity are unequivocally removed,? he said in an e-mail. Storey owns the shares.

ChemGenex has been working with the FDA on the diagnostic matter and will meet with the regulator on April 9 to review its strategy for having Omapro approved, the Geelong, Victoria-based company said in a statement today.

?I doubt it will be years, but I suspect it will be months? before the test is reviewed and validated, Adam Craig, ChemGenex?s chief medical officer, said after the meeting.

?Sloppy?

Clinical trial data that ChemGenex submitted to the FDA was based on tests that may have mistakenly identified some patients as having the genetic variation, panel members and FDA staff said before the vote. Such misdiagnoses may cost patients the opportunity to be treated with more effective, less toxic therapies, they said.

?This is something that just represents fairly sloppy drug development,? said Gail Eckhardt, the panel chairwoman and head of medical oncology at the University of Colorado in Denver.

Omapro, also known as omacetaxine mepesuccinate, would be the first treatment for blood-cancer patients with a mutation known as T315I that causes resistance to Gleevec and alternative drugs such as Tasigna by Novartis and Bristol-Myers Squibb Co.?s Sprycel. Studies have shown about half of all chronic myeloid leukemia patients develop resistance to Gleevec over five years and 15 percent of those are caused by the T315I gene mutation.

Marketing Rights

ChemGenex said in December it licensed marketing rights for Omapro in Europe, the Middle East and Africa to Lake Forest, Illinois-based Hospira Inc. for 11.1 million euros ($15 million) and as much as 74.1 million euros in performance payments. ChemGenex plans to market the drug in the U.S. itself.

Four of the panel members said Omapro was effective against the disease, and that a test was needed to ensure patients have the mutation before being prescribed the drug. ChemGenex said in 2006 it was working to develop such a test with closely held MolecularMD, based in Portland, Oregon.

?If we had been asked to deliberate about recommending approval based on safety and efficacy, I would have voted yes, but that?s not the question we were asked,? Mikkael Sekeres, an associate professor of medicine at the Cleveland Clinic in Ohio, said in the meeting.

Chronic myeloid leukemia is a slowly progressing condition in which a genetic flaw triggers a person?s bone marrow to produce too many white blood cells. The cells are malignant and don?t perform their normal infection-fighting role.

?Low Response?

About 4,830 people, with a median age of 67, were diagnosed with the disease in the U.S. last year, according to the National Cancer Institute. Kareem Abdul-Jabbar, the National Basketball Association?s all-time leading scorer, said in November he had the disease.

Omapro had a ?low? response rate in the study data submitted by ChemGenex, FDA staff said in a report last month.

In the study, data were submitted from only 66 of the 100 patients who planned to enroll, and 15 percent of the patients responded to chronic treatment. ChemGenex didn?t submit information on how it tested for the T315I mutation, and 35 percent of patients weren?t confirmed to have the gene at the time they started the study, part of the entry criteria, the FDA staff said in the report.

Ellin Berman, an attending physician at Memorial Sloan- Kettering Cancer Center?s hematologic oncology division, was the only panel member to vote against requiring additional test data. Berman said she was ?comfortable? that all patients in the trial were resistant to other leukemia treatments.

?Here we have a drug that works in a portion of these patients,? Berman said. ?It?s a step forward.?

To contact the reporters on this story: Molly Peterson in Gaithersburg, Maryland, at [email protected]; Simeon Bennett in Singapore at [email protected]

Last Updated: March 23, 2010 02:37 EDT