J&J Returns Drug Rights



In a major setback for Johnson & Johnson (JNJ: 63.31 0.00 0.00%), the company has decided to return global rights of ceftobiprole to its Swiss partner, Basilea Pharmaceuticals. The decision was taken following rejection of the marketing application for the drug in Europe.
 
The European Committee for Medicinal Products for Human Use (CHMP) recently found the study results of the phase III program of ceftobiprole to be beneficial to patients. However, the Market Authorization Application (MAA) was rejected since the committee found that studies were not done in compliance with "good clinical practice" (GCP) in some sites.
 
Ceftobiprole, a broad-spectrum antibiotic [(for methicillin-resistant staphylococcus aureus (MRSA)] indicated for the treatment of complicated skin infections and nosocomial pneumonia witnessed the same fate in the US as well. In late 2009, Johnson & Johnson received a complete response letter (CRL) from the US Food and Drug Administration (FDA) delaying the approval process. According to the FDA, there were many flaws in the trials due to which the company was asked to conduct new studies to evaluate the drug's safety and effectiveness in treating such infections.
 
The new drug application (NDA) for ceftobiprole has been pending since May 2007. The approval has been delayed due to the presence of protocol-related issues in the initial stages. In the EU too, ceftobiprole's review process was halted until a GCP inspection was done.
 
Given the successive delays in the approval process in both the US and EU, Basilea filed an arbitration claim against Johnson and Johnson in February 2009 seeking damages. Basilea will currently focus on its damage claims under the arbitration; a decision is expected before the end of 2010. We have a "Neutral" recommendation on JNJ.