Biodel could be sent back to square one with FDA ruling
It appears that scepticism about Biodel’s chance of getting its ultra-fast acting insulin Linjeta was justified (Event - Biodel's insulin needs to overcome data hurdle, October 21, 2010).
A complete response letter from the FDA, which suggests a completely new phase III programme will be required, has thrown a huge roadblock in the path to market. Whether Biodel can plot a new route depends on talks to be held with the regulator shortly, but the signs are not promising. Investors voted with their feet – shares in the company promptly halved in value in early trade this morning to a record low of $1.78.
Biodel was seeking approval for Linjeta in both type I and type II diabetics. However the company failed to convince the FDA its product was just as good or as safe as standard insulin, in either patient group.
Partly this was due to problems the company had collecting data from trial sites in India – a well known problem and largely expected to scupper chances in winning approval in the type 1 population.
For the type 2 patients, the agency also dismissed the trial as inadequate, describing the analysis as “post-hoc”, a more surprising conclusion. Unequivocal non-inferiority has implications for safety, specifically the risk of hypoglycaemia, and on this the regulator is unmovable.
On a conference call today Biodel’s management said they had yet to understand how the FDA came to this conclusion on the type 2 data. A meeting is now being arranged, to discuss the implications and way forward.
Unfortunately, the agency’s conclusion, that two new phase III trials be conducted using the final commercial formulation, is pretty ominous.
The company has just over $30m in cash, enough to last at least a year, possibly longer if costs are cut, something that management will now be turning its attention to.
The previous pivotal trials cost $15-$17m to run, and took around a year and a half. If the FDA really does make Biodel go back to the drawing board, further funds are going to be required.
The actions of shareholders suggest they are not willing to get their cheque books outs. With the company now only valued at $50m on the stock market, Biodel is going to struggle to find investors with both the inclination and the time to support a second attempt.