Washington Editor

The FDA issued an approvable letter for Dacogen (decitabine) injection, a treatment for myelodysplastic syndromes (MDS) that is partnered between MGI Pharma Inc. and SuperGen Inc., but a request for more material put a slight dent in shares of both companies.

The partners late Thursday assured conference call listeners that they would quickly supply all requested information to the agency.

On Friday, MGI's shares (NASDAQ:MOGN) dropped 64 cents to close at $26.40, while SuperGen's stock (NASDAQ:SUPG) fell 20 cents to $6.77.

"We are very pleased that the FDA has based this approvable letter decision on the overall response rate endpoint, which includes the clinical benefit of transfusion independence in this patient population," MGI President and CEO Lonnie Moulder said. "We're confident that we can fulfill the agency's requests and look forward to making Dacogen injection available to health care providers and their patients with MDS."

The companies are working to complete a requested analysis of red blood cell and platelet transfusion data from the drug's Phase III trial in order to provide the information to the FDA early next quarter, though Moulder declined to specify the exact nature of that analysis. But given a mixed outcome on that pivotal trial's primary endpoint, in which two statistical measures were used and only one came up positive, there had been questions as to whether the product would even receive approval. (See BioWorld Today, April 2, 2004.)

In the approvable letter, the FDA also called for additional information that Moulder termed secondary to the blood transfusion analysis, as well as for discussions on labeling.

Although both firms' stocks dropped after the announcement, many observers agreed that the letter would lead to an acceptable resolution.

"It's plausible to think that the questions the FDA has are very minor," Christopher Raymond, an analyst with Robert W. Baird & Co. in Chicago, told BioWorld Today. He added that the companies' indication that a response could be mounted "within a few months" corroborates that assumption.

Another analyst, Joseph Schwartz with Leerink Swann & Co. in Boston, expects more clarity in the near term. "Approvable letters are often short and not very detailed," he told BioWorld Today, "so investors may learn what additional information FDA wants after MGI meets with them in the next 30 days, or after the company submits the additional analysis in the fourth quarter."

Minneapolis-based MGI plans to be ready to launch the product within two months of the FDA's nod, which could come in May, and consensus estimates are calling for $40 million in sales for the remaining months of next year. Raymond said his firm has modeled $39 million in sales next year, though he acknowledged that if the FDA acts quicker than May, such estimates would shift higher. Schwartz's Boston firm moved its launch projection further right, to the fourth quarter of next year, "given labeling discussions, packaging and distribution requirements that could take a couple of months in this case."

When such timing issues are resolved, Dacogen is poised to enter a market that includes 20,000 to 30,000 new diagnoses each year in the U.S., according to estimates from the Aplastic Anemia and MDS International Foundation.

"I think Dacogen is MGI's next leg up for growth," Raymond added. "And it's pretty important that they get it approved in 2006, both in terms of the company's growth rate and for management's credibility."

Speaking to the latter, he pointed to MGI's recent "penchant for buying distressed assets" such as Dacogen and Guilford Pharmaceuticals Inc. The $177.5 million acquisition of Baltimore-based Guilford, reported six weeks ago, is expected to close next quarter. (See BioWorld Today, July 22, 2005.)

The approvable letter marked MGI's one-year anniversary of its in-licensing deal on Dacogen, an agreement that eventually could be worth $85 million to SuperGen, of Dublin, Calif. Also a year ago, MGI acquired a pair of companies: A buyout of Lexington, Mass.-based Zycos Inc. added a human papillomavirus-targeting product called ZYC101a to the pipeline, and its purchase of Princeton, N.J.-based Aesgen Inc. brought on board Saforis for oral mucositis. (See BioWorld Today, Sept. 2, 2004.)

"We've made significant progress with each of these candidates," Moulder said, "and with the receipt of an approvable letter for Dacogen injection, we're moving closer to a final FDA approval."

Myelodysplastic syndromes, or MDS, are a group of diseases in which bone marrow stops making healthy blood cells and instead produces poorly functioning and immature blood cells that can progress to acute leukemia. Primarily affecting patients older than 60, MDS reduces life expectancy to a range between six months and five years, depending on its progression at the time of diagnosis.

A hypomethylating agent, Dacogen remains the subject of more than 40 ongoing clinical trials, including a pivotal program in patients with acute myeloid leukemia. Additional studies are evaluating alternative dosing regimens for Dacogen, for which prior clinical trials have demonstrated activity in several hematological malignancies as well as solid tumors. A regulatory submission also is on file in Europe.

For SuperGen, royalties on the drug could escalate to 30 percent, depending on how high its sales climb. Also in its portfolio is Orathecin (rubitecan), an investigational drug for pancreatic cancer, the marketed leukemia drug Nipent (pentostatin for injection) and another marketed chemotherapy product, Mitomycin.

MGI's portfolio includes four marketed products: Aloxi (palonosetron hydrochloride) injection, Kadian (sustained-release morphine capsules), Salagen tablets (pilocarpine hydrochloride) and Hexalen (altretamine) capsules. The company directly markets its products in the U.S. and collaborates with partners in international markets. And work on a new drug application is under way for Saforis, representing a coming highlight among MGI's investigational pipeline.

"We intend to build a leading biopharmaceutical company," Moulder said, "with strong product franchises in both oncology and acute care."

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