[Editor's Note: This is an updated version of a story that first appeared on BusinessWeek.com June 12.]
Could Sanofi Aventis's new obesity drug be a bust instead of a blockbuster? On June 14, shares in the Paris-based pharma giant tumbled 8%, wiping out $9 billion in market value, after a medical advisory panel to the U.S. Food and Drug Administration voted unanimously against approving the drug, known as Zimulti in the U.S. The panel said the drug's weight-loss benefits were outweighed by psychiatric side effects, including a heightened risk of suicide.
While the vote is nonbinding, it virtually assures that Sanofi (SNY) will be unable to sell Zimulti in the crucial U.S. market before 2010—and maybe never. Sanofi, the global No. 3 drugmaker, had been counting on U.S. approval to lift global sales of the drug to $3 billion annually, compensating for drugs in its current lineup that will soon lose patent protection. Without Zimulti, Sanofi could be forced to seek a merger with another pharma group. A likely candidate: Bristol-Myers Squibb (BMY), which already has a marketing deal with Sanofi for the blood thinner Plavix. Bristol's shares were up less than 1% in early New York trading June 14.
Zimulti, known as Acomplia in Europe, is already on sale in Europe and in Mexico, but the FDA has repeatedly delayed a decision on approving U.S. sales. Now, analysts say, the agency almost certainly will wait for results of an extensive clinical trial of the drug, now under way and scheduled for completion by 2010. "Though U.S. approval remains a remote possibility, it will not come this decade," analysts at Goldman Sachs wrote in a June 14 research note. Goldman was among several banks that lowered their ratings on Sanofi shares.
A briefing document, released in advance of the FDA panel's June 13 meeting, spells out significant worries that emerged during clinical trials of Zimulti. A 20mg dose of the drug, along with a low-calorie diet, reduced weight about 5% more than diet alone over a period of a year, the document says. But Zimulti also doubled the risk of suicidal thoughts and other psychiatric problems. Even though patients with a history of psychiatric illness or attempted suicide were screened out of the trials, two patients committed suicide while taking Zimulti, the document says.
There were also reports of psychotic behavior among patients taking Zimulti, including one man who attempted to strangle his daughter and another who tried to beat his wife. The data emerging on Zimulti are "very scary," says Amit Roy, a pharmaceutical analyst for Citigroup (C) in London, who first highlighted the drug's potential risks last February.
No Long Term Data
The drug is the first of a new class of compounds under development to block receptors called cannabinoid type 1 (CB1), which are found in both the brain and in fat tissue. Sanofi-Aventis Chief Executive Officer Gerard Le Fur describes the drug as a sort of "anti-marijuana" because the receptors are the same ones activated by cannabis, causing the famous post-marijuana-consumption hunger. Blocking them dampens urges that can lead to excessive food intake or chronic tobacco use (see BusinessWeek.com, 12/27/04, "The End of Obesity as We Know It").
But as there are no long-term studies assessing this new class of drug, no one knows the consequences of interfering with this part of the brain. What doctors do know is that "stimulating this part of the brain has the potential to cause not just depression, but Parkinson's-type symptoms," says Citigroup's Roy. He points to the fact that the FDA data show that neurological side effects, including dizziness, tremors, memory loss, and seizures, nearly double in patients taking Zimulti vs. those on the placebo.
Potentially even more worrying: Six Zimulti patients developed multiple sclerosis either during or shortly after the trials, compared with just one taking the placebo, although it remains unclear whether the drug is directly linked to the onset of MS.
Sanofi-Aventis is hoping to persuade the FDA that such risks are manageable. Its strategy is to recommend the drug not be used in patients with any psychiatric illness such as severe depression. And to ensure the drug is properly prescribed, Sanofi aims to conduct an educational outreach program for doctors, pharmacists, and patients.
In its own defense, Sanofi argues that the FDA recognize Zimulti's ability to produce clinically significant weight loss. True, but analysts point out that when patients stop taking the drug they regain the weight. Sanofi's solution: Patients should take it for life. At the company's annual meeting on May 31, Sanofi's Le Fur told shareholders, "This is not a cosmetic product."
Rethinking European Approval
Indeed, for Sanofi it is a critical product. The drug is key to the Paris-based drugmaker's future growth. Sanofi expects sales of at least $3 billion a year from Zimulti as its older blockbuster drugs bestsellers, including the sleeping pill Ambien, go off patent. Getting approval in the lucrative U.S. market is essential if Sanofi is to keep growth on track (see BusinessWeek.com, 11/24/06, "Will Sanofi's Wonder Drug Save the Day?").
If the FDA holds off on approval once more, as many expect, European authorities also could revisit their decision. The FDA briefing includes data that were submitted after European authorities approved Acomplia last year. There is a chance that, if the FDA decides to hold off, European authorities might issue new prescription guidance or change the labeling of the drug. Either of those measures could dent sales.