recently struck out in its third attempt to win U.S. approval of its most promising drug, the company immediately cried foul.
In a nutshell, Encysive claimed that the Food and Drug Administration had changed the rules of the game in the final inning and, in a seemingly desperate move, the company vowed to seek a formal review that could raise its final score.
However, based on a play-by-play analysis of events, Encysive hasn't always stuck close to the rules itself.
Go back to the beginning, when Encysive first announced results of its pivotal trial (popularly known as Stride) of Thelin, a treatment of pulmonary arterial hypertension, in 2002. Notably, Encysive admitted at the time that its preferred 100-milligram dose of Thelin had failed to meet its chief goal of significantly raising peak oxygen uptake, or VO2, among PAH sufferers.
Rather than dwelling on this setback, Encysive chose to focus on a secondary endpoint -- which the drug had met -- in future trials instead.
"While percent predicted peak VO2 was the primary endpoint in the Stride trial, the six-minute-walk distance has been the regulatory standard," Encysive stated as it geared up for a new study the following year. Thus, "the soon-to-initiate second pivotal trial, Stride II, will utilize six-minute-walk distance as the primary endpoint and will not include VO2 testing."
With some irony, after the FDA this month issued a third call for further clinical data to prove Thelin's effectiveness, Encysive complained that the agency had adopted a new formula that "resulted in the moving of goal posts" when measuring the Stride II results.
Larger drugmaker ICOS, which had joined forces with Encysive to help develop Thelin, seemed to smell trouble even before that trial started. ICOS, now owned by
, agreed to sell its own Thelin rights to Encysive after seeing the original Stride results.
Meanwhile, Encysive, under the leadership of new CEO Bruce Given at the time, moved forward with its plan to establish six-minute-walk improvement as the true measure of Thelin's success. In fairness, rival
recently obtained FDA approval of its own PAH drug based on that same metric.
Thus, Encysive felt downright cheated in the end.
"You will all remember that Stride I missed its primary endpoint although performing well in the key secondary endpoints, most notably six-minute walk," Given stressed after the company's latest FDA setback for Thelin earlier this month. "To obtain the FDA's approval on the basis of one pivotal trial with six-minute-walk distance as the primary efficacy endpoint, we took the considerable time and effort to document a special protocol assessment, better known as SPA, with the FDA. ... We believed then -- and remain convinced now -- that Stride II had met the regulatory requirements."
Stephen Brozak, a veteran biotechnology analyst at WBB Securities, can't figure out who's to blame.
"That's the problem," says Brozak, who has no position in Encysive or its competitors. "There's no standardized method of quantifying how certain drugs get approved and other drugs do not.
Still, I'm long past giving the FDA any benefit of a doubt."
Meanwhile, investors have given up on Encysive anyway. Through a massive selloff in recent weeks, they have driven the company's shares down about 60% to $1.68 -- lows unseen since Encysive lost ICOS as its partner four long years ago.
In early 2005, Encysive's gamble on changing Thelin's endpoint looked like it could pay off big.
Notably, Stride II showed that Thelin significantly boosted six-minute-walk distances among PAH patients and also posed little threat to their livers, boasting a lower toxicity rate than placebo. With approval of Thelin looking almost imminent, Encysive's stock rocketed toward $12 a share.
Behind the scenes, however, concerns had started to surface. A warning letter issued by the FDA hinted at "numerous protocol deviations/violations" stretching back to the early days of Stride II. Specifically, the FDA complained that one of Thelin's clinical investigators had failed to properly manage his arm of the trial and, moreover, that by 2006 -- some three years after the agency's first site visit -- had yet to remedy the situation.
"This letter is not intended to be an all-inclusive list of deficiencies with your clinical study of an investigational drug," the FDA stated. But "failure to adequately and promptly explain the violations noted above may result in regulatory action without further notice."
For its part, Encysive has since portrayed that complaint as a "red herring" that cannot explain the FDA's treatment of Thelin. Even without the results collected by the test site in question, the company claims, Thelin would have still hit its targets and should have therefore gained regulatory approval.
Still, just two months after the test site tried -- but failed -- to satisfy the FDA with a written response, the agency issued its first "approvable" letter for Thelin instead of the full-blown blessing so many had expected. Encysive soon won an expedited review, however, and seemed poised to overcome that temporary setback.
Then, in a devastating blow, Encysive last summer fielded a second approvable letter suggesting that one major concern remained.
The FDA's own analysis, employing a formula that reportedly deviated from the SPA, left Thelin coming up short of its goals without further clinical trials. Encysive first threatened to fight the FDA, using a formal dispute-resolution process, but quietly agreed to negotiate with the agency instead.
In the months that followed, three foreign regulatory agencies approved Thelin as a safe and effective new treatment for PAH. But after that, the FDA once again blocked Thelin while
blessing Gilead's competing PAH treatment -- which is still seeking its first approval elsewhere -- on the very same day.
Desperate Encysive investors felt like victims of a conspiracy. Meanwhile, Encysive itself clearly felt shortchanged.
"While our patience and our resources have been stretched and tested by the drawn-out course of this iterative process, because we believed that we were prevailing, we persevered," Given stated shortly before being
replaced as Encysive's CEO this week. "We have successfully answered efficacy questions during the reviews of our regulatory submission by the European, Australian and Canadian regulatory authorities.
Moreover we remain convinced that we adequately addressed the substantive item raised by the FDA in the second approvable letter, and we are deeply disturbed by
the agency's decision."
Given its painful history, however, should Encysive be altogether surprised by its setback?
Just look at what happened to the company a decade ago. Encysive, operating in 1997 as Texas Biotechnology, reported strong phase III results for a blood-thinner suitable for patients intolerant of market-leading heparin. The company soon won a "priority review" from the FDA and started gearing up for fast-track approval of the drug.
But the following spring, in a stunning setback, Texas Biotechnology received a nonapprovable letter for its blood-thinner instead.
Texas Biotechnology responded in a manner that, to current Encysive shareholders, might seem eerily familiar. Originally,
The Houston Chronicle
reported, the company refused to disclose the reason behind the FDA's rejection. Only later did the company reveal that regulators wanted changes in the study design.
Texas Biotechnology complied and, after two long years, finally won the FDA over. David McWilliams, who served as CEO at the time, felt that the company's regulatory strategy had paid off in the end.
"Granted, we didn't do it in the smoothest of fashions," he confessed to
in the summer of 2000. "But no matter how you get there, getting there is the point.
"Tenacity is 99% of the biotechnology business -- I'm convinced."
Oddly enough, another company formerly run by McWilliams encountered similar regulatory setbacks. Zonagen, now known as
, saw the FDA change course and issue new study requirements for its own drug -- a potential competitor to Viagra -- as well.
Zonagen found itself scrambling to sell itself as a result. Yet, unlike Encysive, the company stopped short of blaming the FDA for its problems.
"I think, in many ways, the regulatory process is viewed as a scapegoat to explain our failures," Zonagen CEO Joseph Podolski told
The Houston Chronicle
in 2001. "But that's just the nature of the business."
WBB Securities' Brozak still sees problems with the current system.
By now, Brozak has spent more than a decade studying the drug-approval process. He has seen some companies stumble badly and others prevail without real clear reasons along the way.
"Encysive is like a microcosm of everything I've seen over the last 10 years involving biotechnology companies and government regulators," Brozak proclaims. "As difficult as this has been for Encysive, it hasn't made things any easier for other biotechnology companies looking to instill confidence in their investor bases.
"But this is just business as usual when it comes to dealing with biotech companies and the regulatory bodies that serve as the gatekeepers of their drugs."