Eli Lilly and Incyte Shares Drop as FDA Raises Concerns about Arthritis Drug

Ahead of next Monday’s U.S. Food and Drug Administration (FDA)committee review of Eli Lilly and Incyte’s baricitinib for rheumatoid arthritis, concerns over blood clots, may scuttle the drug’s chances.

The FDA rejected the company’s application last year, asking for more data about safety concerns and dosing. After resubmitting, the committee is scheduled to review the materials, but briefing documents have investors skittish about the likelihood of success. Lilly shares dropped about 1.8 percent premarket and Incyte shares dropped about 3.1 percent premarket.

The conclusion of the FDA briefing document stated, "Overall, the additional data provided in the resubmission did not substantially alter the efficacy and safety data in the original submission. Thus, questions remain regarding the benefit/risk assessment of baricitinb for RA patients."

Kurt Kemper, an analyst with Hilliard Lyons, told Reuters, "At this point, approval in the U.S. is in jeopardy."

Safety date indicated the lower 2 mg dose was safe, but a 4 mg dose still had issues, which raises questions about whether there is additional benefit, and the limited safety data on the lower dose makes a risk-benefit analysis difficult, according to FDA staffers. The 4 mg dose has been more widely tested, and also has shown more efficacy. It also has increased risk of blood clots.

The FDA brief also stated, "Since most of the safety data are with the 4 mg dose of baricitinib and there are limited placebo control data, interpretation of the safety data is challenging, particularly when events continue to accrue in patients treated with open-lable baricitinib. This raises the question of whether the 2 mg dose has a favorable benefit/risk profile; however, an important issue is whether there is sufficient safety data to inform the benefit/risk assessment of the baricitinib 2 mg dose."

Baricitinib is a JAK inhibitor, which block enzymes called Janus kinases that cause inflammation. According to Reuters, "Agency staffers noted that the risk of thrombosis, or blood clotting, appeared unique to baricitinib and had not been observed in other therapies, especially Pfizer Inc’s already approved Xeljanz."

Analysts with Credit Suisse wrote in a note to investors, "This could be a positive for competitors such as AbbVie and Gilead and Galapagos that have their own oral JAK inhibitors in late-stage development."

The FDA is not required to follow the recommendations of its panels, but typically does. Alex Arfaei, an analyst with BMO Capital Markets, wrote in a note to clients, "We doubt the Adcom will alleviate the FDA’s safety concerns since they typically take a conservative approach, particularly when there is not a dire unmet need."

If the panel has a negative vote, it’s possible the drug will be rejected. Or the agency might requestmore clinical trials, although it’s currently an open question whether Lilly would want to invest more money into the drug.

Badrul Chowdhury, director of the FDA’s Division of Pulmonary, Allergy, and Rheumatology Products, wrote, "There will need to be further safety data generated to understand the thrombosis risk for baricitinib, and it would be reasonable to obtain the data and address this safety risk pre-approval."

Chowdhury is leaving the agency to take on the role of senior vice president of research development at AstraZeneca and MedImmune, so he will not be involved in the review

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