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Basilea Pharmaceutica’s arbitration faulting Johnson & Johnson for delays plaguing antibiotic Zeftera may be strengthened by a “scathing” FDA warning letter, sources told Pharmawire.
The two companies are feuding over approval delays that have left the drug -- which would treat complicated skin and soft tissue infections -- in regulatory limbo for more than a year. Basilea has argued that J&J is responsible for lapses in clinical trial oversight that led regulatory authorities in the US and Europe to delay a decision while they undertake expansive audits of the clinical trial sites where the drug was undergoing late-stage testing.
The case is potentially worth hundreds of millions of dollars for Basilea should it triumph; however, the ongoing David vs. Goliath battle with drug giant J&J is severely draining Basilea of resources, sources also noted.
Basilea licensed the compound to J&J for development and marketing in 2005. J&J then submitted an approval application for the antibiotic in the US and Europe in 2007. It was widely expected to be approved in early 2008 until the US Food and Drug Administration (FDA) only issued an ”Approvable Letter,” citing the existence of data integrity issues in the clinical trials. The European authorities later also put an approval decision on hold.
Six sources interviewed by this news service alleged that J&J’s “lack of adequate oversight” and “mismanagement” of the two Phase III ceftobiprole trials is ultimately responsible for the hold up of the drug’s approval. The sources agreed that the severity of the FDA warning letter, issued officially to J&J on 18 August 2009, but dating back to issues first raised in 2008, strengthens Basilea’s case against J&J as it clearly highlights a number of “serious” good clinical practice (GCP) breaches.
Basilea instigated the arbitration in early 2009 with respect to the proper and careful execution of the clinical trials by J&J, sources said.
“We will not comment on the specifics of the ongoing arbitration,” said Ernie Knewitz, a spokesperson for J&J PRD. A Basilea spokesperson said: “Due to the confidential nature of the ongoing arbitration procedure, we regret to be unable to comment.”
Ceftobiprole’s Phase III trials were subcontracted to the clinical research organisation (CRO) Icon (ISE:ICON), this news service has previously reported. “Due to client confidentiality Icon is unable to comment on any studies that they conduct on behalf of their sponsors,” the CRO said.
In this case, the “misadventure” was largely with the CRO in terms of the clinical trial conduct, one source said and others agreed, but despite this, a second source pointed out that the sponsor, J&J, is contractually responsible for the CRO, as the FDA noted in the warning letter.
One independent regulatory consultant confirmed that when biopharma companies contract out clinical trials to CROs, the sponsor company still has a duty to be responsible for overseeing the activity of the CRO, usually by having a monitoring plan in place that requires a certain number of site audit visits at regular intervals and a follow-up monitoring report.
The consultant questioned why J&J didn’t fix the GCP situation earlier if it had adhered adequately to the monitoring plan, which should have uncovered any potential data integrity issues at the clinical sites.
In this case, the first source noted that before J&J took over the development of ceftobiprole, it was Basilea that had actually chosen the CRO Icon. It is understood that at the time J&J took over, one of the Phase III trials was already running and the second trial was being prepared.
“This may be brought up during the arbitration, but ultimately J&J agreed to continue with the CRO chosen by Basilea when it took over the development contract,” the same source said, adding that at this point, J&J became responsible for the CRO.
A third source noted that the licensing agreement called for some degree of co-development between J&J and Basilea, but that J&J “effectively took over” complete control of ceftobiprole’s development from Basilea.
The same two sources pointed out that a key issue is whether J&J adhered to the trial monitoring contract that was agreed between the two parties at the time of the deal. The monitoring contract would detail which company had exact responsibility for what, and which decisions during the development were to be taken jointly, during an executive committee meeting between the two firms that should have occurred periodically, the first source said.
“My understanding is that J&J was responsible for the entire drug development and Basilea was not aware of details of the clinical trial status, unless the executive committee had access to the monitoring records on a regular basis,” the first source added.
Basilea’s chief financial officer Ron Scott recently confirmed that the FDA warning letter was addressed to J&J, and stated clearly that all rights and responsibilities for the clinical trials were transferred to J&J. Basilea entered arbitration “because we were getting no clarification from J&J on why the regulatory delays were occurring,” he added. Scott also indicated that Basilea wishes to resolve the dispute with J&J and it needs the company “on board” to liaise with the FDA regarding the questions it has over the GCP of the trials, as Basilea was “not directly involved and does not have all the answers.”
Sources noted that Basilea is still investigating the matter and in October hired a lawyer experienced in these kinds of disputes - Dr Myriam Gehri – who was until recently, an associate of Pestalozzi’s Litigation and Arbitration group in Zurich.
One source added that they expect Basilea to seek a “very large” sum of money from J&J, “well above” EUR 100m. Another source also speculated that J&J could not afford to give the ceftobiprole license back to Basilea as part of any agreed settlement.
“I think Basilea has a very good case,” said the third source, but questioned whether a drug giant such as J&J could keep this situation tied up in legal limbo for a long time, in the meantime, exhausting Basilea’s resources as the arbitration drags on.
When questioned recently, Scott said the arbitration is ongoing and he does not expect a resolution this year.
Basilea claims EUR 100m in unpaid development milestones is owed by J&J as well as compensation of around two years in loss of ceftobiprole sales in Europe and the US and patent life that the firm estimates has so far been caused by the delay to market. The delay in expected revenues has also resulted in Basilea having to cut back on some of its other research and pipeline projects due to cash restraints. Amid this unanticipated cash vacuum, Basilea has already had to cut operations at its headquarters, which included the loss of more than 30 R&D jobs, many of them senior, and it has also dipped into its cash reserves. Meanwhile, Basilea is also incurring the burden of paying for the Phase III programme of its antifungal isavuconazole, which it is developing on its own.
In addition, a sales and marketing operation that Basilea opened in Boston in early 2008 has now been shut down and Basilea liquidated the US subsidiaries.
The fourth source claimed knowledge that the staff in Basilea’s US office, set up in expectation of co-marketing ceftobiprole in the US, were not permitted to liaise with their co-marketers at J&J. The source cited this as an indicator of the type of relationship between Basilea and J&J.
“My feeling is that after this co-development problem with ceftobiprole, a future working relationship between the two firms is not something that is on the cards for the foreseeable future,” the third source said.
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