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Warning Letter On Ceftobiprole May Signal Progress On NDA Review

This article was originally published in The Pink Sheet Daily

Executive Summary

FDA's citation of J&J's oversight of clinical trials for the antibiotic vindicates the complaints of partner Basilea - but also suggests troubles with the application could be nearing a close.

FDA's warning letter to Johnson & Johnson listing shortcomings with the firm's oversight of the Phase III trials for anti-infective ceftobiprole has potentially two paradoxical bits of good news for J&J's development partner Basilea.

First, the Aug. 10 warning letter may vindicate Basilea's decision to enter into arbitration against its partner in February 2009. Basilea is seeking damages - and, most critically, missed milestone payments - resulting from a string of delays to ceftobiprole's approval, and now it has FDA on record as also saying that J&J made significant mistakes in development.

Even with documentary support, arbitration is still a risky step to take; the partners in theory will be co-promoting the drug one day, and Basilea need things to go smoothly more than J&J does.

But the warning letter's second bit of paradoxical good news is that the citation itself may be a sign that things are smoothing out with the application, which received an "approvable" letter in March 2008.

Basilea and J&J submitted their complete response to FDA in November 2008, and the letter could signal that FDA has got its arms around the scope of the problem and the issue is essentially closed, as long as J&J continues the ongoing review and audit process it is having to carry out, using an independent assessor.

But "we do not have any indication that the warning letter could change the agency's view on the approvability of ceftobiprole," a Basilea spokesman argues, pointing out that the regulator already knew about the concerns raised in the missive before it issued its complete response.

So perhaps the clouds will clear in 2010 for Basilea: maybe the FDA letter will mean it wins the arbitration and secures better-than-expected damages, and just maybe Zevtera will get past the regulators - some sources expect an FDA decision in the first half of the new year.

Or maybe J&J will decide the time is right to buy itself out of any future embarrassment or trouble and snap up the biotech - probably cheaply.

- Melanie Senior ([email protected])

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