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A “refusal to file” letter from the Food and Drug Administration is never a good look for a biopharmaceutical company.
That was true for Alkermes PLC ALKS, -21.96% on Monday, when the drugmaker said it had received such a letter for its major depressive disorder drug ALKS 5461 due to “insufficient evidence of overall effectiveness.”
Alkermes shares dropped nearly 22% in extremely heavy Monday trade, to the lowest level since October 2016.
The FDA also told Alkermes that additional clinical trials, along with a bioavailability study, are needed to re-file, suggesting there may be a lengthy detour on the path to approval.
A “refusal to file” letter suggests that a new drug application (NDA) isn’t complete enough to review, something pharmaceutical companies often can get a sense of during pre-filing interactions with the FDA.
But Alkermes management said that the FDA didn’t raise concerns before, and that they don’t quite understand what those objections even are.
Alkermes expects to meet with the FDA in the next month, at which point it should have more information, management said. It also plans to update financial guidance on its first-quarter earnings call.
“Obviously, we’re very disappointed and, based on our previous interactions with the agency, surprised,” Chief Executive Richard Pops said on a Monday morning conference call. “We expected them to render a judgement based on a full review of the data.”
ALKS 5461 is intended to treat major depressive disorder, also called clinical depression, in patients who haven’t responded well to other therapies. Major depressive disorder affects an estimated 17 million in the U.S., with symptoms like depressed mood and loss of interest in the day-to-day.
Depression is a notoriously difficult disease to develop treatments for, and not all of the clinical trial results for ALKS 5461 have been positive. Alkermes decided to file an NDA with the FDA after positive results in a late-stage trial in fall 2016.
Another phase 3 trial was likely necessary for the drug to get approved, “given how the various Ph 3s played out,” said EvercoreISI analyst Umer Raffat.
But a need for multiple new clinical trials “is critical and clearly below expectations,” he said.
Read: Alkermes shares plunge after drug misses trial goals
There has been some hope on Wall Street that an ongoing phase 3b trial for the drug might satisfy the FDA’s request for new clinical trials.
Called study 217, it began last summer, and aims to study how much ALKS 5461 improves depressive symptoms.
But whether that is possible is “entirely dependent on what the FDA feels is deficient in our current package,” Pops said. “So until we know what that is, we can’t fix it.”
Read about other recent ‘refusal to file’ letters: Celgene shares drop 9% after blunder with high-profile drug and Acorda stock plummets 26% on ‘surprising, puzzling, disconcerting’ FDA drug decision
Study 217 was designed to start studying other measures than the Montgomery–Asberg Depression Rating Scale, a common psychological tool to evaluate depression’s severity.
Thus, if study 217 has to be used for a new drug application submission, the trial’s goals, power and logic changes; “we never designed it as the backup study for approval,” Pops noted.
Along with a need for more clinical trials, the FDA also asked for a bioavailability study for more bridging data between ALKS 5461 and the opioid medication buprenorphine. ALKS 5461 is a combination of buprenorphine and samidorphan, an opioid antagonist that blocks opioid receptors.
But Pops appeared disdainful of the request, describing it as unclear.
Bridging data is the “easiest thing in the world,” he said. “We could have done that anytime in the last 10 years. So for it to come up now is surprising.”
Alkermes shares have tumbled 19.1% over the last three months, compared with a 4.8% drop in the S&P 500 SPX, -2.23% a 9.2% drop in the SPDR S&P Pharmaceuticals ETF XPH, -3.75% and a 5.1% drop in the SPDR S&P Biotech ETF XBI, -4.42%