Pipeline Setback for JNJ - Analyst Blog

Johnson and Johnson (JNJ) has received yet another setback related to its pipeline candidate ceftobiprole, a broad-spectrum antibiotic − aiming the methicillin-resistant Staphylococcus aureus (MRSA) − for the treatment of complicated skin infections and nosocomial pneumonia. Johnson and Johnson had licensed the drug from Swiss drug company Basilea Pharmaceuticals in 2005.

Johnson and Johnson received a complete response letter (CRL) from the US Food and Drug Administration (FDA), delaying the approval process further. According to the FDA, there were many flaws in the trials due to which the company has been asked to conduct new studies to evaluate the drug’s safety and effectiveness. Johnson and Johnson intends to discuss its future course of action related to ceftobiprole with the FDA shortly.

The new drug application (NDA) for ceftobiprole has been pending since May 2007. The approval has been getting delayed due to the presence of protocol related issues from initial stages. In November 2008, the FDA issued a CRL recommending additional site audits to be conducted. Following this, the company completed the audits through a third party, the results of which were submitted in June this year.

Ceftobiprole’s path to approval has not been smooth in the EU either. The review process has been halted until a Good Clinical Practice inspection is done. An opinion by the EU Committee for Medicinal Products for Human Use is anticipated in the first quarter of 2010. Given the repetitive delays in the approval process in both the US and EU, Basilea filed an arbitration claim against Johnson and Johnson in Feb 2009 seeking damages. The latest delay would increase the claims in the arbitration process.

On approval, ceftobiprole will have to compete with several established drugs, which include ViroPharma’s (VPHM) Vancocin, Theravance’s (THRX) Vibativ, Cubist Pharmaceutical’s (CBST) Cubicin, Pfizer’s (PFE) Zyvox and Tygacil. Additionally, companies such as Forest Laboratories/AstraZeneca (FRX/AZN) are developing candidates for this market. We are Neutral on Johnson and Johnson.