Eyetech Drug Reviewed by FDA Panel

A decision is awaited on the company's treatment for a common eye disease.
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Updated from Aug. 26

A Food and Drug Administration advisory committee met Friday to determine if an experimental drug for a pernicious eye disease represents as big an improvement over existing therapies as its developers claim.

The disease -- called wet age-related macular degeneration, or AMD -- distorts, diminishes and destroys eyesight. Tests of the experimental drug Macugen suggest greater hope in retarding the progress of a disease for which the few current treatments are often meager, expensive and impermanent.

The FDA Advisory committee met to review the drug developed by the small New York-based biotech company

Eyetech

(EYET)

, which is collaborating with

Pfizer

(PFE) - Get Report

.

An FDA staff report issued Thursday took no formal stand on the drug, but it did recommend a series of questions that the advisory panel's members should address. Most importantly, it said the experts should determine if sufficient data have been submitted. It also says the panel should decide if additional analyses of current data are needed.

Despite the questions, investors seemed enthusiastic about Macugen's prospects. Eyetech's stock closed Thursday at $39.20, gaining $3.92, or 11.1%. It was halted most of Friday before easing slightly to $37.46.

A favorable opinion by an FDA advisory committee doesn't guarantee approval by the full agency, but the FDA usually follows the advice of its advisers.

As its name clearly states, the biggest cause of wet age-related macular degeneration is advancing age. It is the "single leading cause of irreversible severe vision loss in developed countries," according to a presentation by Eyetech and Pfizer. Wet AMD "remains an area of high unmet medical need and is a major public health issue in an aging population," the companies say. (There is also a dry form of the disease, which affects more people but is less damaging.)

So it's not surprising that Macugen has created a buzz among investors because wet AMD affects an estimated 1.6 million Americans, and is growing at about 200,000 U.S. patients per year.

"This large and growing patient pool represents an enormous commercial target for new AMD therapies," said Ken Kulju of Credit Suisse First Boston, in a recent report to clients. "The retina specialist community needs new therapeutic options, with interest running high on Macugen's unique mechanism of action and broader efficacy," he added.

Assuming no regulatory snags, Kulju predicts Macugen could reach the U.S. market early next year and grow to a $675-million-a-year sales drug by 2008. (Kulju doesn't own shares in Eyetech or Pfizer. He rates Pfizer as outperform. His firm has no investment recommendation on Eyetech because it's on the firm's restricted list. His firm has an investment banking relationship with Pfizer.)

Eyetech and Pfizer are seeking FDA approval based on tests that show patients taking Macugen lose less vision to the disease than patients receiving a placebo. The vision quality was measured by how many letters a person could detect on an eye chart.

The disease is caused by an overgrowth of new blood vessels in the macula, which is part of the retina and enables fine detailed vision. When these vessels leak blood or fluid, the macula bulges. That causes distorted vision and a decrease in central vision. In many cases, peripheral vision remains, but the blotting out of central vision can create legal blindness if the disease attacks both eyes.

Right now, patients have two choices for treating wet AMD. They can have their wet AMD treated with thermal lasers, which are fired into the eye, cauterizing the runaway blood vessels. But the lasers just halt the disease's progression, leaving a permanent blind spot where AMD has already done its damage. Lasers don't stop new blood vessels from developing.

The other treatment, which has been available for just over four years, works only for a fraction of wet AMD patients. This treatment involves the intravenous injection of Visudyne, a drug made by the Switzerland-based drug giant

Novartis

(NVS) - Get Report

and the Canadian biotech company

QLT

(QLTI)

.

Visudyne chemically sensitizes the eye, which is then exposed to infrared light, also known as a cold laser. This therapy stops the unwanted blood vessels from leaking. It doesn't cause blind spots. Like the thermal laser; it doesn't restore lost vision and doesn't stop the development of new blood vessels.

Called photodynamic therapy, this treatment is expensive, costing $4,000 to $8,000 a year, according to a report issued earlier this summer by Bear Stearns. Patients require treatment every three to four months, the report says. Only 20% to 25% of the wet AMD patients could be helped by this therapy.

The Eyetech-Pfizer approach tries to choke off the unwanted blood vessels before they can spread, leak and cause damage. Macugen inhibits the activity of vascular endothelial growth factor, or VEGF, a protein that plays a key role in the development of new blood vessels.

This is the same strategy used by

Genentech

(DNA)

in its colon cancer drug Avastin. The drug tries to stop the formation of new blood vessels that feed the growth of cancer tumors. In fact, Genentech is working on an anti-VEGF drug for wet AMD. The drug, Lucentis, is still in late-stage clinical testing.

One big drawback to Macugen is the fact that a doctor must inject it into a patient's eyeball every six weeks, causing some analysts and doctors to say that some elderly patients may avoid this treatment. (Genentech's Lucentis is administered to the eyeball every four weeks.)

Eyetech maintains that such injections are "commonly used" and "generally accepted by patients facing the prospect of blindness and other serious back-of-the-eye complications." However, a therapy that is less invasive "may have a competitive advantage," the company said in its 10-K report issued in March.

Eyetech and Pfizer say these injections were "well tolerated," adding that few patients dropped out of the tests. "No systemic safety issues were apparent," the companies say.

Another experimental drug is Retaane, from the eye care giant

Alcon

(ACL)

. Retaane is a steroid that also fights the development of new, unwanted blood vessels. This drug is given every six months. Instead of being injected into the eyeball, it is delivered via a tube directly in contact with the outer surface of the sclera, the fibrous outer envelope that covers much of the eyeball.

Alcon says this approach avoids the risk of intraocular infection and retinal detachment. Analysts expect Retaane to follow Macugen into the marketplace, perhaps by a year. Alcon is expected to complete its Retaane application to the FDA by the fourth quarter.

Eyetech's stock was halted Friday while the FDA advisory committee debated Macugen. So far, the company has been the darling of analysts who track initial public offerings. Founded in early 2000, Eyetech went public in late January 2004 with an offering price of $21. On the first day of trading the stock closed at $32.40. The stock climbed to $49.12, but shares have retreated since mid-June.

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