By Randall Osborne

Late last year, Maxim Pharmaceuticals Inc. found out how an FDA rule about publishing panel review documents ahead of time can affect a company.

And Maxim found out the hard way.

The agency's advisory committee voted 14-0 against approval for Maxamine, the firm's histamine hydrochloride injection for patients with melanoma metastasized to the liver. After the Oncologic Drugs Advisory Committee handed down its decision, Maxim's stock dropped more than 21 percent.

That was bad enough, but the company's shares had taken an even worse hit the day before ­ plunging 44 percent ­ when unfavorable review documents for Maxamine appeared on the FDA's web site.

"Only in the last couple of years have they published the FDA's review documents ahead of time," said Eric Schmidt, analyst with S.G. Cowen Securities. "Under the Freedom of Information Act, they're required to put those up. It's a great story."

The Maxim imbroglio may have been the first major casualty of the FDA policy to get wide attention, Schmidt noted, but there have been other episodes.

Schmidt cited United Therapeutics Corp.'s roller-coaster ride earlier this month with Remodulin, its drug for pulmonary arterial hypertension.

"After the FDA panned [Remodulin in the review documents], it got a favorable panel vote," he said. The company's shares dropped about 27 percent just before the meeting, and soared 59 percent afterward.

Stock price disruptions are always troubling, but that one was particularly watched because Remodulin was reviewed by the same panel that evaluated ­ and recommended for approval Tracleer, developed for the same indication as Remodulin by Genentech Inc. and Actelion Ltd.

Tracleer won the nod 9-0, and the vote for Remodulin was 6-3. Both are orphan drugs.

What happened with Remodulin?

"The panel isn't strictly part of the FDA," Schmidt pointed out. "It's just a separate group of physicians and outside experts." Although FDA officials (whose views appeared on the web site in the briefing documents) recommended a thumbs-down, panel members debated the data, as well as reports of a pain side effect, and ultimately chose to give patients another option in a condition that has many sufferers, and few recourses.

In fact, the only treatment available now for pulmonary arterial hypertension is GlaxoSmithKline plc's comparatively costly Flolan (epoprostenol), made from prostaglandin and administered by continuous infusion, as compared to Tracleer and Remodulin, a pill and subcutaneous treatment, respectively. A spokeswoman for United Therapeutics said she hoped the two new drugs might be approved and used together.

At the time of the panel vote, an FDA official said that publishing the briefing papers used by all advisory committees the day before the panel convenes began in July 1999, as a result of a court case brought by the Public Citizens Health Research Group, a consumer watchdog organization.

Steve Lawton, vice president and general counsel for the Biotechnology Industry Organization, said the PCHRG "certainly has sued the FDA on several occasions over the years, and the NIH."

The matter of disclosing anything ahead of time is "a very serious issue to us, especially for smaller companies" that can be hurt more by the release of information, Lawton said.

He said the debate is properly part of a larger controversy brewing over a proposed, pending FDA rule change that relates only to gene therapy and xenotransplantation research.

"We've filed comments on the rule that point out statutory, constitutional and policy problems with it," Lawton said. "This all needs to be sorted out and handled as one [issue], not separately."

The proposed rule switch, as summarized in BIO documents objecting to it, "would require the public disclosure of the existence as well as the substance of all [investigational new drug applications] involving gene therapy and xenotransplantation products."

Such information, BIO said, "traditionally recognized by the FDA as confidential commercial and trade secret information for drugs and biologics, has never previously been made public by the FDA during the investigational stage of a product's development."

Specifically, the rule would require a company to submit a separate version of its IND for the agency to use when it responds to requests under the Freedom of Information Act, which Schmidt said was cited by the PCHRG in its action that led to the pre-panel meeting publication of briefing materials on the FDA web site.

The changed rule would require disclosures "far beyond" what federal securities law demands, and would represent a "dramatic reversal" of the FDA's decades-old confidentiality policy, with regard to investigational research.

"The whole issue of greater public disclosure of information on the status of our products prior to their approval raises significant trade secret and confidential commercial information issues," Lawton told BioWorld Financial Watch. "We strongly believe the proposed rule does not address these issues."

Lawton added, "If the FDA is changing the game by releasing that type of information on the web site, that's very serious, and the rule in our view reflects a misunderstanding of the advantage of some of this information to competitors."

Current regulations, he noted, say "the very existence of an IND is a trade secret."

Another drug candidate to suffer twice because of FDA web site disclosures was Genelabs Technologies Inc., which lost 53 percent of its value when investors spotted the discouraging data online regarding the firm's lupus treatment, Aslera (prasterone). Trading of the stock was halted for a day, and then gained 57 percent when it resumed.

The panel, asked by the FDA not to recommend approval, went along with that request in April. In June, the agency sent Genelabs a not-approvable letter, citing issues the company did not specify and sending the stock down again, this time by more than 43 percent.

Aslera would have been the first new treatment for lupus in 40 years. Genelabs said it would continue to work with the agency to iron out problems.

Craig West, an analyst with A.G. Edwards, said he's not opposed to web site publication of the review documents.

In trying to "make high-powered decisions with a lot of imperfect data," he said, having more data only adds precision to his task. As long as the documents are thorough and not misleading, everyone benefits, he said.

"The exchanges could simply halt the stock the day the documents come out, so that part is easily solvable," he said. "For me, doing what I do for a living, I think it's great, and I think it's good for physicians and patients for the same reason."

Problems arise when not everything is available, West said.

"We've had a lot of trouble getting some of the documents," he told BioWorld Financial Watch. "Sometimes they are there, sometimes not. It's pretty disjointed, how it happens."

The outcome for Maxim was as it should have been, he added.

"That's a story where they said they had prospectively defined a certain type of analysis, but really they hadn't," West said. "I've never heard a panel be that negative. That doesn't bother me, because it's consistent with the documents. But to get whipsawed down five points and up five points [when the review documents don't line up with the panel decision], that's never good for the market, investors, or the industry."

Observers should also "keep in mind the FDA is paid to hate data," so negative documents need not come as a shock, he said.

As for the separate issue of proposed rule changes about gene therapy and xenotransplantation, West said, his firm covers GenVec Inc., and expects evidence "in the next year or two" that gene therapy might live up to its promise.

"In 1982, people thought it was going to save the whole world," he said. "But things that turn out to be revolutionary, and advancement in general, are built on a web of advancement throughout society."

If the time isn't right, he added, "the Luddites come out of the woodwork and put the kibosh on it."

West agrees with Lawton that the issue of disclosure should be handled more broadly, and at once not separated into web site disclosures or divided according to technologies such as gene therapy and xenotransplantation.

"That's a curious selection, and narrowing of the rules," he said.