November 10, 2015
By Mark Terry, BioSpace.com Breaking News Staff
American Stock Transfer & Trust Co., LLC, a trustee for Genzyme Corporation rights holders, filed a lawsuit against Sanofi SA in Manhattan federal court yesterday.
In 2011, Paris-based Sanofi acquired Genzyme Corp. for more than $20 billion. At the time of the acquisition, Genzyme was developing the multiple sclerosis drug Lemtrada. According to the lawsuit, as part of the deal, Sanofi promised to make “diligent efforts” to get approval for the drug by the U.S. Food and Drug Administration (FDA) by March 31, 2014.
Sanofi issued tradable certificates to Genzyme shareholders that would provide payments if the drug was approved by that date. Additional payments for various sales benchmarks were included.
The lawsuit argues that Sanofi intentionally ignored the FDA’s concerns about its clinical trial design, which essentially led to the FDA turning down Sanofi’s first drug application for Lemtrada. The suit also accuses Sanofi of deliberately under-marketing the drug after its approval in November 2014, instead heavily promoting a different MS drug, Aubagio. This led to Lemtrada failing to hit any of its sales benchmarks, according to the suit, deliberately stalling development and slowing sales in order to avoid paying at least $708 million to the rights holders.
The initial FDA ruling was that the drug didn’t offer enough benefits compared to its risks, which included cancer. The FDA noted that the drug’s “serious and potentially fatal safety issues,” weren’t worth the risk unless Sanofi could show significant clinical benefit.
In a report written by drug reviewer John Marler, the FDA stated that, “The certainty of the risks of potentially lifelong hypothyroidism, serious infusion reactions, melanoma and other malignancies, Graves’s opthalmopathy and other autoimmune disorders, and prolonged increased susceptibility to infection may not be balanced by the uncertainty that exists in the limited evidence of the potential clinical benefits from clinical trials that were not well-controlled.”
The drug hit the market in late 2014 with a price tag of $158,000 per two-treatment regimen. It was also facing two other launches, Biogen Idec, Inc. ’s oral drug Tecfidera, and Novartis ’s Gilenya. Sanofi had also launched another MS medication, also a pill, Aubagio.
Lemtrada was approved as a third-line therapy, a drug to be used after patients didn’t have good results with two other medications. Lemtrada is an infusion medication given for five days in an row, then 12 months later, for three days in a row. Its primary competitor as a long-acting infusion treatment for MS was Merck KgaA ’s Rebif, which costs about $135,000 and raked in $2.5 billion in sales in 2013. Sanofi argued that Lemtrada, which was tested against Rebif in two clinical trials, was a better drug with fewer relapses and less progressive disability. Sanofi claimed that 70 percent of patients on Lemtrada no longer needed treatment after a three-year period, and the drug’s effects could last for five years.
Lemtrada will lose patent protection in September 2017.
The case is American Stock Transfer & Trust Company LLC v. Sanofi, U.S. District Court, Southern District of New York, No. 1:15-cv-08725.
The sum total of the potential payments to the shareholders could have hit $3.8 billion. “Sanofi took those potential milestone payments into account in evaluating Lemtrada’s profitability, embarked on a slow path to FDA approval and departed from its own drug commercialization patterns and those of others in the industry,” the lawsuit states, as reported by The Boston Globe. “As a result, Sanofi missed the contractual milestones and skirted its payment obligations of at least $708 million.”
