Sanofi Diet-Pill Rejection Shows Management Missteps

17 Jul 2007 • by Natalie Aster

Sanofi-Aventis SA, whose weight-loss pill was rejected by U.S. regulators last month, may have mismanaged the drug's development by promising too much and failing to heed safety concerns in patient studies, reported The Bloomberg.

The company didn't follow up on thousands of patients who dropped out of clinical tests for Zimulti, the obesity treatment, studies of the drug show. That left Sanofi unable to answer U.S. regulators' questions about side effects, according to documents the Food and Drug Administration released in June. Two weeks before the FDA review, Chairman Jean-Francois Dehecq told Sanofi's annual meeting he expected a ``positive outcome.''

Paris-based Sanofi's shares have declined 7 percent since the decision on June 13 by advisers to the FDA, making the stock the second-worst performing among European drugmakers this year. Sanofi spent more than 10 years developing the product, also known as Acomplia, and the setback may undercut confidence in its other experimental medicines, analysts said.

``What Sanofi needs to learn from this is that they need to consult and liaise better with the regulator,'' said Nick Turner, an analyst at Mirabaud Securities Ltd. in London who has a ``neutral'' rating on Sanofi shares. ``At that stage of development, luck doesn't play a role, it's down to good management.''

Sanofi shares were little changed at 62.37 euros at 9:55 a.m. in Paris. They now trade at 12 times estimated earnings, compared with 13 times for GlaxoSmithKline Plc, Europe's largest drugmaker, and 16 times for No. 2 Novartis AG, according to data compiled by Bloomberg that tracks the performance of the region's 16 biggest pharmaceutical companies.

All 14 members of an FDA advisory panel rejected Zimulti at a public hearing on June 13, saying Sanofi failed to show that the medicine's benefits outweighed risks like suicidal thoughts and depression. The company two weeks later withdrew the U.S. submission, and its research head Marc Cluzel told reporters and analysts on a conference call that Sanofi had ``difficulty understanding'' some of the FDA's concerns. He said Sanofi plans to resubmit Zimulti for approval.

For more than two years, Sanofi executives expressed confidence about introducing the drug in the U.S., the world's biggest market for obesity treatments. The medicine won't reach the company's goal of sales of $3 billion a year without the U.S. revenue, analysts say. The drug, sold in Europe, Mexico and Argentina, generated sales of 31 million euros ($43 million) last year.