The FDA on Tuesday approved Guilford Pharmaceutical Inc.'sGliadel as a adjunct to surgery for the most common and aggressiveform of primary brain cancer.

The Gliadel wafer is the first approved product that deliverschemotherapy to the tumor site. It was cleared for use in patients withrecurrent glioblastoma multiforme for whom surgical resection isindicated.

The FDA's approval follows the June 14 recommendation of theagency's Oncologic Drugs Advisory Committee (ODAC). Baltimore-based Guilford had sought approval for use as an adjunct in first-linetherapy for all malignant glioma patients.

Gliadel is a biodegradable polymer wafer implanted into the cavitywhere a brain tumor is removed. The wafers slowly erode, deliveringthe chemotherapy drug carmustine to the site. An average of eightdisks, about the size of a dime, are implanted.

The approval triggered a $20 million cash milestone payment fromRhone-Poulenc Rorer Inc. (RPR), of Collegeville, Pa., which formeda collaboration with Guilford on Gliadel as ODAC was debating thenew drug application. RPR also paid $15 million to Guilford, splitbetween cash and equity investments, when the deal was signed.Another $15 million milestone will be reached if Gliadel is approvedas a first-line therapy.

Craig Smith, president and CEO of Guilford, said the deal with RPRincludes a "combined supply and royalty rate starting at 35 percent ofnet sales, and going up to 40 percent of net sales." The deal,however, went beyond the attractive financial considerations, he said.

"We found a partner that was very enthusiastic about using ourpolymers to deliver cancer chemotherapy, and a partner withproprietary products particularly well suited for polymer deliverysystems," Smith said. "We hope Gliadel will be the first in a series ofproducts for the targeted and controlled delivery of cancerchemotherapy."

RPR has a right of first offer on other products Guilford develops forcancer.

Product Launch Set For January

Smith said Guilford expects to make the first shipment of Gliadel toRPR by the end of the year. Full-scale launch is scheduled for earlyJanuary, Smith said, adding that pricing decisions will be made atthat time. The product still is available under a treatmentinvestigational new drug program.

Smith previously had said a price for one treatment of Gliadel likelywould cost between $7,000 and $8,000. There are an estimated20,000 surgical procedures for brain tumors each year in the U.S.About 12,000 are first-line therapy and 8,000 secondary therapy.

Matthew Geller, an analyst at New York-based Oppenheimer & Co.,said the approval was exactly what was expected following theODAC meeting. "The good side is that it happened very fast," hesaid. "Now surgeons can use it as they see fit."

Guilford recently began a dose-escalation study of Gliadel in patientswith brain tumors. The drug now makes up 4 percent of the wafer.Four additional doses, up to 20 percent, are going to be tested.Studies also are being designed to test Gliadel in patients undergoinginitial therapy, Smith said.

One of the studies on which the new drug application was basedinvolved 222 patients with recurrent multiforme glioma who failedprior therapy. Fifty-six percent of Gliadel-treated patients survivedsix months compared to 36 percent of placebo patients.

The other Phase III trial involved newly diagnosed patients inFinland and Norway. In those patients, Gliadel or placebo waferswere implanted during the first surgery. Survival rates after one year,the primary endpoint, were 63 percent for Gliadel patients vs. 19percent in placebo patients. The study was initiated by NovaPharmaceuticals Inc., of Baltimore, which later merged with SciosInc., of Mountain View, Calif., in 1992. The combined companydropped development of Gliadel, and the pivotal study was stoppedafter 32 of the planned 100 patients were treated.

Guilford gained rights to the drug in late 1993 but it was too late tomanufacture enough drug to continue the study. ODAC deemed thestudy was too small to constitute an adequate and well-controlledstudy.

Geller said there is a chance that the data from the European studywill be published, "which should greatly facilitate reimbursement forfirst-line therapy." He said logic, if nothing else, dictates the productis effective in first surgeries if it is effective in second surgeries.

ODAC's recommendation for approval of Gliadel as a second-linetherapy caused investors to back away from the stock. Guilford(NASDAQ:GLFD) reached a high of $37.75 when the RPR deal wassigned but fell $6.88 per share later that day when ODAC made itsrecommendation.

Guilford's stock gained $1.63 Tuesday to close at $29.25. It hasabout 10.2 million shares outstanding and had about $68 million incash on June 30.

Geller called it a "remarkably low capitalization for a company withan approved product. For Guilford this is the beginning. They have apowerful patent estate from which they are developing a line ofproducts for delivering chemotherapy to the tumor site."

Guilford, which will receive the $20 million milestone this quarter,will get another large payment next quarter when RPR orders fourmonths of product, Geller said. n

-- Jim Shrine

(c) 1997 American Health Consultants. All rights reserved.