No one knows when it will happen, but in the coming days, weeks or months, the
U.S. Food and Drug Administration
will render one of the most unusual decisions in the agency's history.
At stake is a first-of-its-kind treatment for patients suffering from Fabry disease, a rare, painful and fatal genetic disorder. Only about 5,000 people worldwide suffer from the disease, but at an estimated treatment price of $175,000 per year, Fabry represents an $875 million market.
What makes the FDA's upcoming decision so unusual is that two drug makers --
-- are in a biotech version of a photo finish to get their respective drugs approved first. The companies filed their competing applications within two weeks of each other -- an unprecedented time margin -- and both have been waiting since January for the FDA to render a decision.
And being first to gain approval could be the only thing that matters in the U.S. The FDA is rendering its decision under "orphan" drug status rules, which means that one drug will be given exclusive rights to the U.S. market. The loser will have to sit on the sideline for seven years, content with sharing the European market.
Or will they? Some observers are betting the FDA will give the green light to both Genzyme and Transkaryotic. The "winner," then, will be determined by which drug works better, or which company has the most effective marketing and sales force. Both drugs have won tentative approval from European regulators and will compete there.
Whichever way it goes down, the drama has biotech observers and investors watching with rapt attention. Transkaryotic was hammered in January after the company lost a key patent battle with
. But shares in the company have climbed back about 90% to more than $30. A favorable ruling from the FDA for Transkaryotic -- which would give the company its first drug approval -- could push shares even higher. A loss will send the stock tumbling.
Genzyme is a trickier investment story because it already has drugs on the market, and has been one of the best-performing, and most expensive, stocks in the biotech sector, rising more than 150% in the past two years, adjusted for a 2-for-1 stock split. A win for its Fabry disease drug will no doubt add to those gains, but a loss may not have as devastating an effect.
Transkaryotic's drug is called Replagal; Genzyme's is called Fabrazyme. Neither company is talking about where they stand with the FDA, leaving the reading of the tea leaves to outside observers.
"If I was to rank my guesses, I'd say the FDA approves both. If not, it will approve only Transkaryotic," says Bill Tanner, biotech analyst at
, adding that there's a smaller chance the FDA rejects both drugs or solely approves Genzyme's drug. Tanner rates Genzyme a strong buy and Transkaryotic a buy, and his firm hasn't done underwriting for either company.
Tanner bases his predictions on opinions already published by European drug regulators, as well as from conversations with independent physicians in the U.S. who have examined each company's test results. What this shows, he says, is that both drugs seem to work, but Transkaryotic's drug is more effective and is easier for patients to take.
"If you believe the data in hand, Transkaryotic gets the nod because the FDA should be inclined to approve the clinically superior drug," he says. Yet Tanner and his colleagues still expect both drugs to get approved because there are a lot of differences of opinion on this -- too many to place bets on one drug over the other, he adds.
There is a precedent for the FDA granting co-orphan drug status. The drugs Betaseron and Avonex -- sold by
, respectively -- enjoy exclusive rights to the U.S. multiple sclerosis market. Betaseron was approved first, but Avonex was granted approval later because tests showed it to be more effective.
If both Replagal and Fabrazyme get approval here and in Europe, which drug stands the best chance at grabbing dominant market share? One institutional money manager, who prefers to remain anonymous, believes Transkaryotic gets the edge, again.
"Fabry disease patients are very well organized. They read all the literature about these drugs. So if they read that Replagal makes them feel better and can be taken at home in 45 minutes, rather than two hours in a hospital like Fabrazyme, then they're going to take Replagal," he says. This fund manager owns a small position in Genzyme and recently sold his position in Transkaryotics.
But don't discount Genzyme's marketing and sales clout, counters SG Cowen's Tanner, who sees things as much more even. Many doctors who treat Fabry patients also treat patients with Gaucher disease using another Genzyme drug. That gives these doctors a familiarity and comfort with Genzyme, not to mention a financial incentive, to use Fabrazyme over Replagal.
"I think Genzyme and Transkaryotic split the
outside-U.S. market 50/50," says Tanner, adding that the U.S. market is still too uncertain to call. European sales should reach between $300 million and $400 million annually.
Fabry disease is a genetic disorder that causes lipids, or fats, to build up inside a person's cells. Normally, the body produces an enzyme that breaks down those fats, but not in Fabry patients. As those fats build up in tissues like nerves, kidneys or the heart, patients suffer from severe pain, their organs start to deteriorate and they eventually die.
"Medically, while these FDA guys sit on their thumbs, Fabry patients are in constant pain, some are dying," the fund manager says. "It's been six months beyond a reasonable time frame for a decision, but for some reason, the clock is still ticking."
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