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Fed scrutiny over Cell Therapeutics' marketing tactics

By Luke Timmerman
Seattle Times business reporter

November 20, 2004 - Cell Therapeutics said yesterday that the U.S. Attorney's office in Western Washington is asking questions about the company's tactics for promoting Trisenox, an arsenic-based drug for a rare form of leukemia.

Richard Leigh, general counsel for the Seattle biotech company, said the U.S. Attorney had a brief meeting with the company, and has requested more information. He said the company is cooperating and has not received a subpoena, or a lawsuit.

The U.S. Attorney's office had no comment.

In July, Cell Therapeutics told the Securities and Exchange Commission (SEC) that "it is likely" that it has promoted Trisenox for uses that aren't approved by the Food and Drug Administration (FDA), which is called "off-label" drug promotion.

Companies are allowed to make doctors aware of unapproved uses in which their drugs may have potential, but they aren't allowed to actively promote their drugs until the specific uses have been licensed by the FDA.

In Cell Therapeutics' case, off-label sales of Trisenox are important. The drug was approved in the United States four years ago as a treatment for a type of leukemia that affects about 400 patients. At $20,000 per patient, that means its maximum U.S. sales potential is limited to about $8 million a year.

To branch into bigger markets with thousands of patients, the company has tested Trisenox against a deadly bone-marrow cancer, multiple myeloma and a pre-leukemia syndrome called MDS. Because some doctors are prescribing Trisenox for those diseases, Cell Therapeutics has forecast it would sell up to $40 million worth of Trisenox this year.

A week ago, the company said it was falling short of those estimates, and as a result, would lose more than $150 million this year.

Cell Therapeutics has said it tries to make doctors aware of Trisenox's potential "off-label" benefits through medical-education seminars, without crossing the line into clear promotion, like placing ads in medical journals.

Throughout the pharmaceutical industry, companies often try to walk a fine line between what it calls "medical education" and promotion. For medical education, companies often issue press releases to tout new study findings that attract the attention of doctors, investors and the media. It can sponsor a patient-advocacy group, which is then free to actively encourage patients to consider trying a given drug in an unapproved use.

Some of the "off-label" promotional tactics have come under increasing scrutiny from the FDA and other federal investigators. InterMune, a Brisbane, Calif., biotech company, received a subpoena last week from the Justice Department asking for information about its promotional tactics. The company's drug, Actimune, is approved for two rare diseases, but the company has said almost all of its sales come from an unapproved use, as a treatment for idiopathic pulmonary fibrosis.

A former saleswoman at InterMune sued the company after she was fired, for what she described as her unwillingness to go along with off-label promotional practices.

Cell Therapeutics has never made money in its 13-year history, like most biotech companies, but it has been under pressure this year to make progress. It has made $15 million worth of spending cuts to keep from running too deeply in the red while it awaits test results from another cancer drug it hopes will create bigger sales, Xyotax.

Luke Timmerman: 206-515-5644

About LEUKINE

LEUKINE, a man-made form of a naturally occurring growth factor that helps fight infection and disease in appropriate patients by enhancing cells of the immune system, was approved in the United States in 1991, and is marketed by Berlex, Inc.

LEUKINE is the only growth factor approved in the United States for use following induction chemotherapy in older adults with acute myelogenous leukemia (AML) to shorten the time to neutrophil recovery and reduce the incidence of severe and life-threatening infections and infections resulting in death.

LEUKINE has also been approved in the U.S. for use in four additional indications: myeloid reconstitution following allogeneic and autologous bone marrow transplantation (BMT), peripheral blood stem cell (PBSC) mobilization and subsequent myeloid reconstitution in patients undergoing PBSC transplantation, and bone marrow transplantation failure or engraftment delay. LEUKINE has been administered to more than 300,000 patients.

ChemGenex and Stragen Pharma Create Alliance to Accelerate Clinical Development and Commercialization of Ceflatonin(R)

MELBOURNE, Australia, and MENLO PARK, Calif. and GENEVA, June 27 /PRNewswire-FirstCall/ -- ChemGenex Pharmaceuticals Limited (ASX: CXS, Nasdaq: CXSP), based in Melbourne, Australia and Menlo Park, California, U.S.A., and Stragen Pharma S.A., based in Geneva, Switzerland, today announced an international alliance to accelerate the clinical development of ChemGenex's lead anti-cancer therapeutic, Ceflatonin®.
Ceflatonin® is currently in a Phase 2 Clinical Trial at the M.D. Anderson Cancer Center in Houston, Texas treating chronic myeloid leukemia (CML) patients who are resistant to Gleevec®. In addition to CML, Ceflatonin® has established clinical activity in other hematological malignancies (blood cell cancers) including myelodysplastic syndrome (MDS) and acute myeloid leukemia (AML).

ChemGenex and Stragen will combine their respective strengths to pursue clinical approval of Ceflatonin® in the US, Europe, Australia and other territories. ChemGenex provides expertise in drug development and clinical trial management while Stragen offers GMP manufacturing, distribution, and marketing expertise.

Stragen has a patented manufacturing process for a semi-synthetic highly purified form of homoharringtonine, the active molecule in Ceflatonin® and has patented a suite of derivative molecules of homoharringtonine. ChemGenex will exclusively license the global rights to Stragen's manufacturing process and novel analogues under the terms of the alliance.

Under the terms of the alliance ChemGenex will be responsible for the global clinical development of Ceflatonin®, as well as registration and marketing in North America and Asia-Pacific. Stragen will be responsible for drug production and global supply, as well as facilitating regulatory approvals within Europe. In addition, ChemGenex will engage Stragen's established European clinical network to accelerate the development of Ceflatonin®. Once Ceflatonin® is approved in Europe, the alliance partners will market the product under the ChemGenex brand. The eventual profit split of sales in this territory will be shared ChemGenex 49%, Stragen 51%.

"The alliance with Stragen is a great opportunity for both companies to capitalize on our respective strengths and to accelerate the development of Ceflatonin® as a potential new therapy for chronic and acute leukemia," said Greg Collier, Ph.D., chief executive officer and managing director of ChemGenex Pharmaceuticals. "This alliance expands ChemGenex's global presence and gives us an outstanding partner with whom to progress regulatory approval and eventual marketing of Ceflatonin® in Europe."

"We are very pleased to be able to partner with ChemGenex on the development of this promising anticancer drug," said Jean-Luc Tetard, president of Stragen Pharma. "Stragen's manufacturing capabilities and established European drug distribution and marketing network, combined with ChemGenex's strong clinical development and pharmaceutical marketing capabilities make this an ideal partnership for the development and commercialization of Ceflatonin®."

Benefits of the alliance

-- Access to a European investigator network to accelerate clinical
development.
-- A strong combined patent portfolio around homoharringtonine and
related analogs to provide broader and longer market exclusivity.
-- Leverages each party's respective strengths in clinical development,
marketing and manufacturing.
-- Establishes a commercial infrastructure for ChemGenex in Europe.

About ChemGenex Pharmaceuticals Limited (http://www.chemgenex.com)
ChemGenex Pharmaceuticals is a gene-based pharmaceutical company dedicated to improving the lives of patients by developing therapeutics in the areas of oncology, diabetes, obesity, and depression. ChemGenex currently has two compounds in Phase 2 clinical trials, Ceflatonin® for leukemia and Quinamed® for solid tumors, and has a significant portfolio of anti-cancer, diabetes, obesity and depression programs. The company's diabetes and obesity program is partnered with Merck KGaA and the depression program is partnered with Vernalis plc. ChemGenex currently trades on the Australian Stock Exchange under the symbol "CXS" and the NASDAQ exchange under the symbol "CXSP".

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