Novartis pulls EU filing for $3.4bn eye therapy Xiidra

Novartis has given up trying to get approval for Xiidra in Europe, blowing a hole in the commercial prospects for a drug that it licensed for $3.4bn upfront just a year ago.

The EMA has confirmed that the Swiss drugmaker withdrew its marketing application for Xiidra (lifitegrast) as a treatment for dry eye disease earlier this month, after the agency raised some issues with the clinical trials carried out in support of the filing.

In a nutshell, the EMA said Novartis hadn’t proved that Xiidra was effective for dry eye symptoms in patients who couldn’t get sufficient benefit from the use of artificial tears. The company also hadn’t  included ‘optimal use’ of artificial tears in its studies, according to the regulator.

Faced with that resistance, Novartis decided the EMA’s concerns “could not be addressed within the available timeframe” – even though Xiidra was approved for dry eye disease in the US four years ago.

Novartis licensed rights to the drug from Takeda shortly after the Japanese drugmaker finalised its $62bn takeover of Shire, paying $3.4bn upfront with another $1.9bn tied to milestones – including sales-based payments – some of which will presumably not be forthcoming or substantially delayed. The deal also involved the transfer of 400 Takeda employees.

Takeda said in a statement today that the probability of claiming those sales milestones is now reduced, and it stands to recognise a $200m loss in operating profit in the current quarter, equivalent to $150m in net profit – as a result of Novartis’ decision. For now, it’s not predicting what the total loss will be.

The Xiidra deal was hailed by Takeda as a great way to pay down some of the debt it absorbed after buying Shire, which generated a lot of investor resistance to the deal. At a stroke, it provided a sizeable part of its plan to divest $10bn-worth of non-core assets.

For Novartis, pulling the EU marketing application will make it much harder to cope with the upcoming patent expiry of Lucentis (ranibizumab), its blockbuster drug for wet age-related macular degeneration (AMD).

Xiidra made annual sales of $400m ahead of the acquisition, and had been tipped by analysts at GlobalData to become a $1.2bn product at peak.

Novartis hasn’t given up on EU approval entirely just yet, but the programme there will be substantially delayed at best and the company will have to work hard to compensate, particularly as its successor Lucentis – Beovu (brolucizumab) – has been hit by a safety issue.