The FDA has surprised no one with its decision to bat down dapagliflozin, an innovative but potentially risky new approach to treating diabetes. AstraZeneca ($AZN) and Bristol-Myers Squibb ($BMY) reported the agency has spelled out a demand for new data that could include the need for new clinical trials--potentially pushing any final resolution far down the R&D road.
A majority of the agency's expert panel voted against an approval last July after raising concerns about cancer cases seen in studies in addition to evidence of toxicity. Given the agency's vigilance over any safety concerns linked to diabetes treatments--a position that dates back to the storm of controversy that broke out over Avandia's side effects four years ago--most analysts were quick to write off any near-term approval. And in this case the rejection also spells trouble for an entire class of diabetes drugs in the clinic known as SGLT2 inhibitors, which spur the body to excrete sugar in urine. Johnson & Johnson ($JNJ), Pfizer ($PFE), a Lilly and Boehringer partnership, Lexicon and others have their own SGLT2 inhibitors in development.
Analysts were quick to note this is AstraZeneca's third pipeline setback in recent months and a second for BMS, which earned a string of notable successes last year. The rejection has to be particularly stinging for AstraZeneca, which has failed to impress observers with its late-stage pipeline. Now that analysts are further discounting the potential of a drug once thought to be worth $600 million to $700 million a year in peak sales, pressure will mount on the pharma company to show it can deliver new and important drugs.
Dapagliflozin does have some high profile defenders. The Cleveland Clinic picked the drug, which works independently of insulin, as one of the best potential game-changing technologies in healthcare. The prominent cardiovascular expert Steve Nissen has discounted any link with cancer and highlighted the therapeutic effects of the drug. And Savvas Neophytou of Panmure Gordon told Reuters he hasn't given up hope on seeing an approval as the first Type 2 diabetes drug given without insulin.
"To us, this product either becomes multi-billion (dollar) or it never sees the light of day in the market," he said. Others still hold out hope for an approval, but potential sales estimates are dwindling as drugmakers advance other treatments into an already crowded market.