Avandia Gets the Thumbs-Up from FDA Panel

Analysts say the meeting may have been a bit better than expected for SmithKline and slightly worse for competitors Warner-Lambert and Eli Lilly.
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BETHESDA, Md.--

Warner-Lambert's

(WLA)

Rezulin

is about to become like the kid who's picked last for the team.

SmithKline Beecham's

(SBH) - Get Report

diabetes drug

Avandia

won unanimous recommendation from a

Food and Drug Administration

panel here Thursday, setting the stage for the approval of a drug to compete with Rezulin. Avandia, a member of the colloquially named glitazone class, works well in helping adult-onset diabetics control their blood sugar. But it doesn't appear to show any signs that it can cause the rapid

liver meltdown that Rezulin does in rare cases.

While the panel generally seemed enthusiastic about the potential for a safer alternative to Rezulin, it recommended that in conjunction with Avandia's approval, doctors monitor the liver enzymes of their patients. The agency's

Endocrinologic and Metabolic Drugs Advisory

panel said the drug could be used alone and in combination with a commonly used diabetes drug, metformin, also known as

Bristol-Myers'

(BMY) - Get Report

Glucophage

.

Analysts say the meeting may have been a bit better for SmithKline than expected and slightly worse for the competitors like Warner and

Eli Lilly

(LLY) - Get Report

, whose glitazone

Actos

is due to be reviewed Friday.

The FDA decided to hold off on a full review of Actos Friday, a slight negative for Lilly. The panel will only discuss the safety of Actos. An FDA official says the decision was made simply because the agency hadn't had time to review the entire data set on Actos. But it may mean that Actos will be approved behind Avandia.

SmithKline finished Thursday up 2 15/16 to 70 3/8. Warner-Lambert rose 1 9/16 to 69 5/16, and Eli Lilly slipped 5/8 to 75 3/8.

The big loser is clearly Warner-Lambert. "Rezulin is finished in monotherapy," or for use alone to treat diabetes, says Ira Loss, who follows the FDA for

HSBC Securities

. "Sales have hit a peak." Rezulin had $748 million in sales last year.

The FDA, which isn't required to accept its panels' advice but usually does, has a May 24 deadline to decide whether to approve Avandia.

It could decide to require fewer liver enzyme monitoring tests than are required for Rezulin. A patient taking Rezulin currently needs get an enzyme test each month for eight months and then every other month for the next four months and periodically thereafter. One of the liver experts brought in by the panel to give advice urged the panel not to overreact on Avandia just because Rezulin has liver problems.

"We're suffering from

troglitazonia nervosa

," said James Lewis, a gastroenterologist from

Georgetown University Medical Center

. While other drugs that turned out to be toxic to the liver showed warning signs that weren't recognized before approval, in this case, he argued, "There's no signal."

"I'm a little torn about monitoring," said Henry Bone, the panel chairman and director of the

Michigan Bone and Mineral Clinic

in Detroit. "It could do more harm than good," if the concerns cause patients to steer away from the drug and it turns out to be perfectly safe. He nevertheless voted in favor of periodic monitoring, "if only to put the issue to bed."

He pointed out that the problem is that the rare and idiosyncratic cases of liver toxicity that lead to liver failure and death with Rezulin may not be the same syndrome as what causes the rising liver enzymes measured by testing. It may be, doctors said, that it's like a switch is thrown in a very small number of patients who take Rezulin and, for them, even if the drug is discontinued, their livers spiral downward toward failure. There is no telling for sure whether Avandia will have the same problem until it's used by more patients than were tested in the clinical trials.

Nevertheless, some on Wall Street were thinking that the FDA might be persuaded to favor the drug. While the majority of the panel recommended that Avandia get the same label, the agency may be looser, says Loss at HSBC. That's a long-shot, however, other analysts say. More likely, the drug will be saddled with liver monitoring for at least its first year on the market.

Wall Street thinks that doctors will likely lean toward prescribing Avandia, rather than Rezulin for new patients because of the appearance of a better safety profile. And there is likely to be some switching off of Rezulin. How much isn't clear.

Avandia didn't come out unscathed, however. There was a higher incidence of fluid retention that could possibly lead to heart problems with the drug. Avandia can cause decreases in red blood cells, leading to anemia. Also, the drug can cause a rise in low-density, or "bad" cholesterol. Though it causes a rise in high-density, or "good" cholesterol too, panel members were concerned about that side effect.

And so the day wasn't totally dark for Warner-Lambert, just dim. Not all doctors are convinced that Avandia is The Answer. At least not immediately. Anne Peters, a diabetologist at

UCLA

who has consulted for all three diabetes companies, said she would consider starting patients with edema (fluid retention) or low red blood cell count on Rezulin rather than Avandia. "I'm not going to switch patients until

Avandia has been out for six to 12 months."

After that, if Avandia is clean, look out Rezulin.