Alexion Hammered in FDA Inspection
March 29th, 2013 // 1:57 pm @ jmpickett
One of the darlings of the biotech industry has suffered a blow following an FDA inspection of its Rhode Island facility. Alexion Pharmaceuticals disclosed this morning that the agency issued a so-called 483 inspection report, which refers to a failure to adhere to various good manufacturing practices. This plant is where Alexion manufactures Soliris, an orphan drug that is used to treat a rare form of anemia and costs more than $400,000.
The disclosure, which was made in a filing with the US Securities and Exchange Commission, prompted a 2 percent drop in Alexion shares on initially heavy trading volume and the manufacturing problems were describe as being a “serious issue” by Leerink Swann analyst Howard Liang in an investor note. The warning letter, by the way, is not yet publicly available, but you can read the SEC filing by clicking here.
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Alexion did not respond to a request for comment, but in its SEC filing, the biotech attempts to reassure investors that sufficient supplies of Soliris will reach patients. How so? Alexion has an agreement with an unnamed third party, which Liang identifies as Lonza, to continue manufacturing the medication. The biotech also explains that an additional third-party facility was validated last year to produce Soliris and hopes to receive regulatory approval toward the end of this year.
“Based on current information, we believe that the supply of Soliris to patients will not be interrupted and that the Warning Letter does not restrict production of Soliris or shipment of Soliris from the Rhode Island facility,” Alexion (ALXN)Â states. “We estimate that our current inventory of Soliris licensed for commercial sale is sufficient for at least four-thousand patient-years of patient treatment.”
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Consequently, Liang believes the manufacturing issues amount to a “manageable risk… We do not anticipate a material impact on both commercial sales of Soliris as well as registration of late-stage pipeline… Alexion had the foresight to build duplicate manufacturing capacities, and when (the Rhode Island facilit) was brought on line, it was meant to supplement the then-existing external Lonza facility, as opposed to a way of reducing cost.”
UPDATE: In an investor note this afternoon, Deutsche Bank analyst Robyn Karnauskas writes that she spoke with Alexion management, who believe that, even if the Rhode Island facility was to close, they have enough product to complete all five Soliris clinical trials. They also maintained their situations differs from Genzyme, which entered into a consent decree with the FDA over manufacturing problems, because they have more facilities and more product on hand.
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