Drug Development

Exhibit A in Valeant’s blockbuster R&D boast runs into trouble at the FDA

A couple of years ago, then Valeant CEO Michael Pearson pointed to Vesneo as Exhibit A in the company’s case that it could execute an effective late stage study. He confidently told the world that the glaucoma drug was a blockbuster in the making, on track to earning $1 billion-plus after hitting the market in H1 2016.

Pearson, of course, didn’t survive H1 at the helm of a storm tossed Valeant $VRX. And the best laid plans for Vesneo will have to wait awhile longer. Valeant noted early this morning that the drug – an eye drop formulation designed to lower intraocular pressure for patients with open angle glaucoma or ocular hypertension – has been stiff armed at the FDA, which issued a complete response letter instead of an approval.

Valeant picked up the experimental latanoprostene bunod ophthalmic solution in its acquisition of Bausch + Lomb. The company says the agency doesn’t have any problems with the safety or efficacy of the drug, but Bausch + Lomb’s manufacturing facility in Tampa flunked an inspection, persuading the agency that they aren’t ready to make it yet.

Valeant’s shares have been brutalized in recent months as its entire business model has come unwound, hammered by criticism directed at the company’s strategy of buying marketed drugs and regularly boosting prices. But a couple of years ago Pearson had been wheeling and dealing his way through a series of controversial buyouts while openly scoffing at the idea of taking on R&D risk – a position that would come back to haunt the company. Vesneo came in handy as he tried to win over Allergan shareholders to a buyout at a time the company had been committing a billion dollars a year to research.

Valeant lost that deal anyway.

The delay won’t be welcome news at Nicox, which outlicensed the drug to Bausch + Lomb and then wound up as Valeant’s partner. Nicox’s shares {$COX.PA) plunged 12% on the delay.

It hasn’t been all bad news for Valeant, though. Its bid to win an approval for brodalumab, acquired from AstraZeneca, survived questions about its links to suicide and passed muster at an FDA panel review. That drug still faces a formal decision from the FDA, which will also consider implementing some risk mitigation plans that could severely limit the psoriasis drug’s market potential.

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