(NVS) Novartis Gets Setback From FDA Panel

Novartis (NVS) received a setback recently when an advisory panel to the US Food and Drug Administration (FDA) recommended against approving its pipeline candidate ACZ885 for the proposed indication.

Novartis was seeking approval to expand the use of ACZ885 for the treatment of patients suffering from severe gouty arthritis, commonly known as gout, who failed to derive adequate relief from the currently available options like non-steroidal anti-inflammatory drugs (NSAIDs) or colchicine.

ACZ885 is currently marketed for the treatment of cryopyrin-associated periodic syndromes (CAPS) under the trade name Ilaris. In Japan, however, the drug is under review for this indication.

The panel strongly backed the efficacy but was concerned about safety of ACZ885. The panel believes the candidate can be used in a narrower patient population. The panel’s recommendation was based on data from two late stage trials of ACZ885 for treatment of gout.

The data showed that ACZ885 was more effective in reducing patients’ pain at 72 hours than an injectable steroid (triamcinolone acetonide) used for treating gouty arthritis attacks. ACZ885 also reduced the risk of new attacks by 56% compared to triamcinolone acetonide over 26 weeks.

Novartis filed regulatory applications in the EU and US for ACZ885 for the treatment of gouty arthritis in December 2010 and February 2011, respectively. The company has also submitted regulatory applications for the indication in Canada and Switzerland. A decision from the FDA is expected in the third quarter of 2011. Although the FDA is not bound to accept the recommendation of the advisory committee, it usually does so.

Gouty arthritis is the most common form of inflammatory arthritis in adults and affects roughly 8.3 million adults in the US. It leads to severe pain in the joints which can last for a week or more. There is significant unmet need for the treatment of gouty arthritis as the currently available options like NSAIDs or colchicine may be unsuitable for patients who have coexisting medical problems.

The company is also looking to expand the use of the candidate and is currently conducting studies for several additional indications. Novartis is studying ACZ885 for type II diabetes in mid-stage trials.

The company is also studying the candidate for the treatment of systemic juvenile idiopathic arthritis (SJIA), the most severe form of arthritis in children. A late stage trial for SJIA met the primary endpoint and a second pivotal study is currently ongoing.

Novartis is banking on new drug approvals and successful label expansions to overcome the adverse impact of the upcoming patent cliff. Pipeline setbacks like this can be a blow to the company’s plans.

Our Recommendation

Currently, we have a Neutral recommendation on Novartis. The company carries a Zacks #3 Rank (Hold rating) in the short run. Though pleased with Novartis’ wide range of products and its efforts to diversify further, as is evident by the acquisition of eye-care company Alcon, we prefer to remain on the sidelines due to the imminent patent cliff faced by the company.

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