ChemGenex shares battered after FDA panel setback

After dealing a heavy blow to Cell Therapeutics, the FDA's oncology panel turned around and dealt another to Australia's ChemGenex, saying in a 7 to 1 ruling that they want to see a validated diagnostic test to identify patients before they can give a green light to its leukemia drug Omapro. Unhappy investors responded by further beating up an already battered stock price, forcing it down 47 percent.

"The fact the vote was limited to diagnostics was a surprise to us," CEO Greg Collier told The Australian after the vote. "I think the market misunderstood what (the committee) voted on. We hope that investors will see this as a short delay in the process."

"I doubt it will be years, but I suspect it will be months" before a test can be validated, said ChemGenex CMO Adam Craig.

Members of the panel raised questions about the company's trial data and its testing strategy. The therapy is designed to treat leukemia in patients with a specific genetic mutation, and researchers used various tests to identify patients for the clinical trials. The experts want a single clean, validated diagnostic test to make sure the right patients are being given the drug. "This is something that just represents fairly sloppy drug development," said Gail Eckhardt, the panel chairwoman.  

Adding insult to injury, analysts at Criterion criticized management, saying they need to do a better job communicating with regulators and shareholders. ChemGenex has licensed the therapy in Europe and plans to market it themselves in the U.S.

- read the Bloomberg story
- here's the story from The Australian