AB Science Plunges After Regulator Suspends French Drug Trials

  • EU unlikely to recommend drug approval this week, Kepler says
  • Company has corrected clinical trial flaws, CEO Moussy says

AB Science SA shares plunged the most on record after France’s drug agency ordered the biotechnology company to suspend clinical trials in the country because of flaws in previous studies, making it unlikely the company will win regulatory backing this week for its lead medicine.

The decision by the National Agency for Drug Safety, known as ANSM, resulted from a series of inspections from 2006 to 2016 that showed “repeated and serious violations” of laws and regulations, some of which could have put patients’ safety at risk, the regulator said in a May 11 statement. Paris-based AB Science failed to continuously evaluate the safety of masitinib and to properly manage its database of side effects, the agency said.

“AB Science stock is entering a period of distrust and that it could durably suffer from market skepticism,” Sebastien Malafosse, an analyst at Oddo & Cie, wrote in a report. “It will not be enough, in our view, for AB Science to secure another green light from the health-care regulator in France; the group will also have to motivate patients and investigators in order to pursue its trials.”

AB Science sank 35 percent to 9.96 euros at 9:45 a.m. in Paris, giving the company a market value of 402.2 million euros ($443.6 million), as trading resumed for the first time since Thursday. The decline was the biggest ever for the company, which went public in 2010. AB Science announced the regulatory order before trading opened Friday and asked for a trading halt. Malafosse sees the stock going to 5 euros, down from a previous target of 48 euros.

Moussy’s Approach

The decision adds to a string of setbacks for Chief Executive Officer Alain Moussy in his 16-year effort to bring masitinib to market using an unorthodox approach. The European Medicines Agency’s Committee for Medicinal Products for Human Use is scheduled to decide as soon as this week whether to recommend the drug for approval as a treatment for mastocytosis, a rare disorder of the immune system. The vote will be negative, Arsene Guekam, an analyst at Kepler Cheuvreux, said in a report Friday.

AB Science has corrected the deficiencies and it’s confident it will be allowed to restart studies in France in a few months after independent audits are conducted, it said in a statement Monday. The company will submit in the coming months the results of an analysis it has run since March showing no safety issues, he said. The data cited by ANSM was compiled before AB Science implemented a new quality system in mid-2015, he said.

“We misappreciated the situation in the mastocytosis trial,” Moussy said in a telephone interview Friday. “We closed the study before the quality process was put in place. It’s bad news because it triggers the wrong signal, but it’s temporary.”

While Moussy refused to say whether he expects the EMA to recommend the treatment this week, he said the company is in touch with the agency. AB Science would appeal the decision in case of rejection, with a new deadline in six months, he said.

Independent Audit

The trial suspensions affect less than 5 percent of the patients recruited in ongoing studies, Moussy said.

“All data on safety and efficacy have been remonitored and now we’re in the process to audit this to provide the evidence that it’s been corrected,” Moussy said. “We are in touch with all agencies permanently and all are aware of this decision. There is a way out and we have agreed on the way out.”

If, after the audit, the regulator maintains the clinical trial suspension, “the masitinib project is dead,” Kepler’s Guekam wrote.

Because of the trials’ shortcomings, the company can’t properly establish the drug’s safety profile, the ANSM said. The company failed to follow the criteria for which patients should be included or excluded from studies, possibly putting patients’ safety in jeopardy, according to the letter.

ALS Trial

Moussy says the ANSM decision doesn’t affect a separate study of masitinib in amyotrophic lateral sclerosis, as all trials for that illness are taking place outside France. 

“Everything will be clean in the ALS study,” Moussy said. “We will be in a better position because remonitoring is already done. In mastocytosis we aren’t in an ideal situation because we did it too late, but in ALS we’re still OK. It’s painful, but not too painful.”

While most early-stage pharmaceutical companies test a compound in only a handful of illnesses, AB Science has studied masitinib in more than 20 diseases ranging from asthma to cancer. To keep costs down, the company monitored trials itself rather than hiring contractors, and it started studies with small groups of patients. The EMA rejected two previous applications, to sell masitinib for forms of cancer, saying the trials were insufficient.

In 2012, the French regulators prohibited the biotechnology firm from conducting nine clinical trials of its experimental drug in non-life-threatening illnesses because of the treatment’s side effects.

AB Science doesn’t need to raise money “in the short term,” the company said Monday. It had 58.5 million euros of cash as of March 31, which it said was “sufficient to continue the development of masitinib.” The company didn’t repeat a statement it made in March, when it last raised funds, that it had enough cash to finance operations until the end of 2019.

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